Poland Law Alert

    View Author October 2008
    On 15 October 2008 the Sejm adopted a range of major amendments to the VAT Act. Those amendments, which will undergo further legislative work, will probably be approved by the Senate (Upper House) and go into effect on 1 December 2008 (with the exception of certain provisions, which will become effective on 1 January 2009).

    Time limit for VAT refunds

    The rules for refunds of input VAT are to be significantly amended. It has been proposed that a basic 60-day time limit be introduced for VAT refunds (formerly it was 180 days). Also, the requirement that a sale subject to VAT be performed within the same period in which the taxpayer applies for a tax refund will be lifted.

    Simplification with regard to consignment warehouses

    Foreign entities that supply goods to a consignment warehouse of a Poland-based business partner will not have to register for VAT purposes in Poland.

    Correction invoices

    The issue of whether a supplier has to be in possession of confirmation that the buyer has received a correction invoice to decrease the arising output VAT has been highly controversial. Confirmation of that kind will be required, and this is to be confirmed clearly in the act.

    VAT sanction

    The 30 percent VAT sanction is to be abolished in the Polish VAT system.

    Guarantee deposit

    The Sejm has also said it is in favor of lifting the guarantee deposit, which has been challenged by the European Court of Justice. Under current law, a business beginning intracommunity trade is required to make an advance payment of PLN250,000 to recover the surplus VAT within 60 days rather than 180 days. In its place, however, other forms of security will be introduced amounting to the equivalent of the anticipated refund (for instance, a bank guarantee, insurance or bill of exchange).

    Simplification of the procedure for settlement of VAT on imports

    Under the proposed amendments, it will be possible to settle VAT on imports in a simplified VAT declaration procedure.


    Re-invoicing, which should minimize the risk of disputes with tax authorities in this area, will officially be introduced into the Polish VAT system.

    Quarterly settlement

    All VAT payers will be entitled to file VAT declarations on a quarterly basis (optional filing of declarations on a monthly basis will also be possible). However, VAT payers will still, in principle, be obligated to pay VAT in the monthly system (on the basis of actual value or in the advance payment system).

    An organized part of a business enterprise

    In light of the envisaged changes, the sale of an organized part of a business enterprise will not be subject to VAT. Under the current VAT Act, this exemption applies only to the transfer of a whole self-accounting enterprise or branch (establishment) that draws up its own balance sheet.

    Suggested changes to VAT may have a major impact on the process of handling tax settlement. Many of these are intended to simplify the process of applying VAT law; however, the true effects of the changes adopted by the Sejm will appear when they are put into practice.