SLIM VAT 2 - new VAT proposals

After the mid-year changes to the tax on goods and services, referred to as SLIM VAT, the legislator decided to introduce another package of amendments to the regulations under SLIM VAT 2. Most of the changes discussed entered into force on October 1, 2021, so it is worth taking a closer look at closer to new solutions.

Optional choice of taxation of the sale of real estate exempt from VAT

The first change worth paying attention to concerns the choice of taxation of real estate supplies, which in principle benefit from VAT exemption.

Let us recall that pursuant to Art. 43 sec. 1 point 10 of the VAT Act, the supply of buildings, structures or parts thereof is exempt from tax, except when:

1. the delivery is made at or before the first settlement;
2. a period of less than 2 years has elapsed between the first occupancy and the delivery of the building, structure or parts thereof.

However, taxpayers may opt out of the described exemption. This usually takes place when the sale takes place between entrepreneurs, where the buyer depends on the deduction of input tax from the transaction (which would not be possible if the transaction was exempt from VAT).

Pursuant to Art. 43 sec. 10 of the VAT Act, the taxpayer may resign from the tax exemption referred to in para. 1 paragraph 10, and choose the taxation of the supply of buildings, structures or parts thereof, provided that the delivering and the buyer of the building, structure or parts thereof:

1. are registered as active VAT payers;
2. will submit:

1. before the date of delivery of these objects to the head of the tax office competent for their buyer or
2. in the notarial deed concluded in connection with the delivery of these objects

- a consistent statement that they choose to tax the delivery of the building, structure or parts thereof.

The previous wording of the provision allowed only for the submission of a declaration to the competent head of the tax office. The positive possibility of submitting the said declaration in a notarial deed will certainly simplify the entire procedure, taking into account the fact that notarial deeds of real estate sale are transferred by notaries to the competent head of the Tax Office anyway.

Pursuant to SLIM VAT 2, a declaration of resignation from the exemption referred to in Art. 43 sec. 10 of the VAT Act can be submitted already at the stage of drafting a notarial deed for the sale of real estate.

New deadline for submitting VAT-26 information

The aforementioned VAT-26 information applies to taxpayers who intend to use a motor vehicle only for the purposes of their business activity, which entitles them to fully deduct VAT in relation to the expenses incurred on such a car.

The previous wording of the provision indicated that the taxpayer had only 7 days to submit this information, starting from the date of incurring the first expenditure related to the motor vehicle.

Failure to meet this deadline is associated with the tax consequences specified in art. 86a paragraph 13 of the VAT Act. In the light of this provision, if the VAT-26 information is not submitted on time, it is considered that the motor vehicle is used only for the taxpayer's business activity only from the date of its submission. As a result, the taxpayer may lose the right to deduct a large part of the input tax.

From October 1, 2021, Art. 86a paragraph 12 of the VAT Act - regulating the deadline for submitting VAT-26 information - has a new wording. Currently, taxpayers using only motor vehicles for business, for which they are required to keep a vehicle mileage register, are required to submit information about these vehicles to the head of the tax office by the 25th day of the month following the month in which they will incur the first expenditure related to these vehicles, however not later than on the day of sending the records referred to in Art. 109 paragraph. 3.

One of the changes introduced under SLIM VAT 2 is the extension of the deadline for submitting VAT-26 information from 7 days to the 25th day of the month following the month in which the taxpayer incurred the first car expenditure.

New rules for VAT deduction as part of the correction of the tax declaration

In principle, a VAT payer can deduct VAT for the period in which the right to deduct arises or for one of the three consecutive monthly or two quarterly tax periods.

In the event that the above-mentioned deadlines are exceeded, the taxpayer may still make a deduction, but by making an adjustment of the input tax, but this may not be later than 5 years from the beginning of the year in which the right to reduce the amount of tax due arose.

Start a free 30-day trial period with no strings attached! Until now, the taxpayer could only correct the declaration that gave rise to the right to deduct VAT. Currently, pursuant to Art. 86 sec. 13 of the Act, corrections can be made:

1. for the period in which the right to reduce the amount of tax due was established, or
2. for one of the next three settlement periods, or for one of the two quarterly settlement periods, after the settlement period in which the right to reduce the amount of tax due arose

- but not later than within 5 years from the beginning of the year in which the right to reduce the amount of tax due arose.

The amendment under SLIM VAT 2 extended the period for which corrections of VAT declarations with the shown input tax for deduction can be submitted.

SLIM VAT 2 and VAT deduction on import of services and intra-Community acquisition of goods

The content of Art. 86 sec. 10b point 2 of the VAT Act. Previously, this standard indicated that VAT input tax may be deducted in the same settlement period in which output VAT is shown, provided that output VAT is shown in the appropriate declaration, no later than within 3 months from the end of the month in which a tax obligation arose.

As a result of the introduced changes, the condition relating to the period of 3 months was removed.

Currently, therefore, the right to deduct is available in the settlement for the period in which a tax obligation arose in relation to the purchased goods or services, provided that the taxpayer includes the amount of tax due on these transactions in the tax declaration. This applies to both WNT and import of services.

The above change resulted from the judgment of the CJEU of March 18, 2021 (C-895/19), which ruled that the time limit of three months established in Polish regulations is inconsistent with EU regulations.

Currently, when deducting VAT on VAT or importing services, the receipt of an invoice after 3 months gives the right to deduct in the settlement for the settlement period in which the taxpayer took into account the amount of tax due for this purchase. Previously, he could do this only in the settlement for the period in which he received the invoice.

The SLIM VAT 2 package is another set of significant amendments to value added tax, which are designed to simplify taxpayers' VAT settlement.