Service-Tax

VAT tax 2014 (part 2) - Change in the definition of the tax base

The amendments to the VAT Act, which entered into force on 1 January 2014, were very significant as they applied to virtually all taxpayers. The most hype was caused by the modification of the provision on the moment of the tax obligation. However, apart from that, there were a number of other modifications, including those related to the definition of the tax base.

Tax base - new definition

At the end of 2013, the entire Art. 29 of the VAT Act, thus introducing new provisions from 1 January. Pursuant to Art. 29a, the taxable amount is everything that is the payment that the supplying goods or service provider has received or is expected to receive for a sale from a buyer, service recipient or third party, including received subsidies, subsidies and other surcharges of a similar nature having a direct impact on the price of the goods supplied or services provided by the taxpayer.

In the case of the free transfer by a taxpayer of goods belonging to his enterprise - in particular for his personal purposes, household members or employees - upon purchase of which he was entitled to deduct VAT, the taxable amount is the purchase price of these goods or similar goods. And when there is no purchase price - the manufacturing cost, specified at the time of delivery.

Concerning the definition, the change in relation to the wording of the previous provisions consists mainly in clarifying what elements constitute the tax base. The amended act does not include, inter alia, the provision that appeared earlier in Art. 29 sec. 9. It assumed that in the case of performing taxable activities for which the price was not specified, the taxable amount is the market value of the goods or services less the amount of tax. In the light of the judgments issued by the Court of Justice of the EU, the tax base should, however, be actual payments, i.e. actually received payments or those that, according to an objective assessment, should be received. Hence, it was necessary to adjust the national provisions to those contained in Directive 2006/112 / EC of 28 November 2006.

Elements increasing the tax base

In art. 29a paragraph. 6 contains the obligatory elements that are included in the VAT tax base. These are:

taxes, duties, fees and other charges of a similar nature, except for the amount of tax,

ancillary costs, such as commission, packaging, transport and insurance costs, charged by the supplier or service provider to the buyer or recipient.

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The above elements are applicable not only in domestic trade, but also in the case of intra-Community acquisition of goods (intra-Community acquisition of goods), as indicated by the newly added art. 30a of the VAT Act.

Taxpayers who are just starting to buy from EU contractors often struggle with the problem of what values to include in the tax base. Does the transport of goods not constitute an import of services, as it is in principle a service? However, the regulations describe this issue exactly. If the seller organizes the transport of the order and charges the recipient with the costs of shipping or insurance in such a way that the buyer, in addition to the price of the goods, also pays for other elements - then the entire amount due to the seller is the basis for WNT taxation. This value, converted into PLN, should be included both in the VAT-7 declaration and in the VAT-EU summary information.

Items Not Included in the Tax Base

The act also includes elements that are not included in the tax base (Article 29a (7)). These are the amounts:

constituting a price reduction in the form of a discount for early payment,
discounts and price reductions granted to the buyer or recipient, taken into account at the time of sale,
received from the buyer or customer as a reimbursement of documented expenses incurred on behalf and for the benefit of the buyer or customer and recognized temporarily by the taxpayer in the records kept by him for tax purposes.

The elements mentioned in the first two points therefore relate to situations that arise even before the sale is made.

Example 1.

In his online store, the seller offers goods X for PLN 50. The company "MAX", which is a regular recipient, already has a discount on purchases in the amount of 10%. The price reduction is therefore established before the sale, hence the tax base is PLN 45.

The taxable amount does not include the value of packaging, if the goods are delivered in returnable packaging and the deposit for them has been collected or specified in the contract for the delivery of goods. Only when the buyer does not return such packaging, its value is included in the tax base:

on the day following the date on which the contract provided for the return of the packaging - if the packaging was not returned within the time limit specified in the contract, or
60 days from the date of delivery of the packaging - if the contract does not specify the date of return of the packaging.

Tax base reductions

Pursuant to Art. 29a paragraph. 10 of the Act, the determined tax base may also be reduced by:

amounts of discounts and price reductions granted after the sale,
value of returned goods and packaging,
all or part of the payment returned to the buyer received before the sale, if it did not take place,
value of the returned amounts of grants, subsidies and other payments of a similar nature.

In the case of the first three points of reduction of the tax base in relation to the base specified in the issued invoice with the indicated tax, it is made provided that the taxpayer has a confirmation of receipt of the correcting invoice.

Receipt of a correcting invoice and the possibility of reducing VAT

The necessity to have a confirmation of receipt of a correcting invoice is specified in Art. 29a paragraph. 13. Pursuant to the aforementioned provision, in order to be able to reduce the VAT due, one must have a confirmation of receipt of the issued correction. This confirmation must be received before the deadline for submitting the tax declaration for the given accounting period in which the buyer of the goods or the recipient of the service received a correcting invoice. If the taxpayer receives this confirmation after the deadline for submitting the VAT declaration, he will be entitled to reduce the tax due for the period in which the confirmation was received.

This provision also applies to other cases, including mistakes that result in a VAT reduction.

Example 2.

On January 30, the taxpayer issued a correcting invoice, which reduced the value of the order and thus lowered the value of the VAT due. The document was sent by post with acknowledgment of receipt, which was returned with the signature of the contractor on February 13. This means that the taxpayer may reduce the tax base in January. If the confirmation of receipt (by post or other, e.g. electronic means) was received after February 25 - the tax reduction could be made in the settlement for the period in which this confirmation was obtained.

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The VAT Act also provides for cases where confirmation of receipt of the correction is not required. This is the case when:

export of goods and intra-community delivery of goods,
supplies of goods and services for which the place of taxation is outside the territory of the country,

sale of: electricity, heat or cooling energy, line gas, telecommunications and radiocommunication services and services listed in item 140–153, 174 and 175 of Annex 3 to the Act,
when the taxpayer has not obtained the confirmation despite the documented attempt to deliver the corrective invoice and the documentation held shows that the buyer of the goods or the service recipient knows that the transaction was carried out in accordance with the conditions specified in the correcting invoice.

The last point indicated is a novelty. It will be used in the case of, for example, electronic shipment of a document, where the taxpayer has not received any confirmation of receipt of the message or feedback, and the payment received on the bank account is reduced by the value of the correction. However, such cases should be approached with a certain degree of caution and the need to have a documented attempt to deliver the correction that took place earlier than the payment with a reduced value.

Tax base for importing goods

Amendments to the VAT Act, which entered into force in January 2014, also apply to the import of goods. Newly added Art. 30b indicates that the taxable amount for importing goods is the customs value increased by the duty payable. If the subject of import are goods subject to excise duty, the taxable amount is the customs value plus the duty and excise duty due.

It should also be borne in mind that:

in the case of goods placed under the outward processing procedure, the taxable amount shall be the difference between the customs value of the compensating or replacement products released for free circulation and the value of the temporarily exported goods, plus the duty payable. If the subject of import under outward processing are goods subject to excise duty, the taxable amount is the difference between the customs value of the compensating or replacement products released for free circulation and the value of the goods temporarily exported, plus the duty and excise duty due;
for goods placed under the temporary admission procedure with partial relief from import duty and for processing under customs control, the taxable amount shall be the customs value plus the duty that would have been payable had the goods been placed under the release for free circulation procedure. Where goods subject to excise duty are imported under the temporary admission procedure with partial relief from import duties or for processing under customs control, the taxable amount shall be the customs value plus the duty that would be payable if the goods were to be released for free circulation, and about the excise tax.

The tax base also includes fees and other charges, if the customs authorities are required to collect these charges for the import of goods.

We encourage you to read the next parts of the cycle: