On January 31, 2022 the Ministry of Finance have announced the commencement of pre-consultations concerning a new package of solutions concerning VAT settlements, the so-called Slim VAT 3 package.

In line with previous announcements, the Slim VAT 3 package should, among other things, simplify VAT settlements, improve companies' liquidity and unify the rules for the application of exchange rates to correcting invoices.

Easier VAT settlements

Under the current procedure, the right to deduct VAT on intra-Community acquisition of goods (hereinafter: "ICA") can be exercised on condition that the taxpayer has received an invoice documenting such a transaction not later than within three months after the end of the month in which the tax obligation arose. If the invoice is not obtained within that period, the taxpayer is obliged to adjust the amount of input VAT against the amount of input VAT in the current tax return.

According to the assumptions of the Slim VAT 3 package, the above-mentioned procedure is to change completely, since according to the draft, it will not be compulsory to be in possession of an invoice when deducting input VAT on ICA, and therefore both input and output VAT on ICA will always be settled in exactly the same accounting period.

Furthermore, the Slim VAT 3 package provides for a higher threshold for businesses to be deemed as small taxpayers. According to the proposed changes, the taxpayers whose sales (including the applicable tax) did not exceed a PLN equivalent of EUR 2,000,000 in the previous tax year (currently, the threshold is EUR 1,200,000) will be entitled to use cash accounting and quarterly settlements.

Financial liquidity improvement

The VAT subaccount has from the outset given rise to considerable concerns among businesses as the funds gathered in it cannot be used freely, thus potentially leading to liquidity problems. 

Consequently, as part of the Slim VAT 3 package, the Ministry of Finance have decided to extend the catalogue of liabilities which can be paid with funds from a VAT subaccount, viz.:

• tax on retail sales;
• tax on the extraction of certain minerals;
• tonnage tax;
• lump-sum tax on the value of production sold;
• tax on ‘miniatures’;
• levies on foodstuffs.

Sorting out the rules concerning the use of conversion rate for correcting invoices

Foreign currencies in respect of correcting invoices, as they are not regulated in the VAT Act, are currently being converted in accordance with an established practice. Since this practice may lead to some doubts among taxpayers, the Ministry of Finance have decided to regulate this issue. Under the proposed regulations, in the case of invoices correcting in minus, the exchange rate applicable to the invoice should be the rate resulting from the original invoice. In the case of in-plus invoices, the exchange rate will be the average exchange rate announced by the National Bank of Poland for the last business day preceding the day on which the reason for the increase in the taxable amount arose.

Furthermore, in the case of an aggregated correcting invoice, the taxpayer will be entitled to use a single average exchange rate for the currency in question, as announced by the NBP for the last business day preceding the day on which the correcting invoice was issued. It will no longer be necessary to separately apply the original exchange rate applicable to each of the adjusted transactions.

The Ministry of Finance estimates that the proposed amendments will come into force in the last quarter of 2022.

Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.

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