Tax news for financial institutions

30 June 2022 is the extended deadline for taxpayers (whose tax year corresponds to the calendar year) to submit their annual CIT-8 returns for 2021. Such returns (with small exceptions) are to be signed and submitted to a Polish tax office electronically. Some taxpayers (who are not entered in the Polish commercial register) are additionally required to provide the Polish tax authorities with their financial statements (also in electronic form). A failure to submit a tax return on time, even if no tax was due, may result in a fine.

Furthermore, the deadline for annual CIT reporting is connected with a compliance obligation applicable to the use of taxable arrangements (as defined in DAC6 / mandatory disclosure rules). Cross-border taxable arrangements in respect of income taxes, which were executed or brought tax benefits in 2021, should be reported electronically on the MDR-3 form by the end of June 2022. The deadlines set for domestic taxable arrangements (also to report the use of schemes – MDR-3) are still suspended until Poland lifts the state of COVID-19 pandemic threat.

Last but not least, 30 June 2022 is also the deadline for CRS (OECD AEOI) and US FATCA reporting with regard to 2021 financial accounts. In case of FATCA, nil reporting is obligatory as well.

The Polish government and Parliament decided to postpone the introduction of VAT grouping from 1 July 2022 to 1 January 2023 (please refer to April 2022 Tax News for Financial Institutions for details). Therefore, not until the next year will Polish taxpayers be entitled to establish a group for VAT purposes (which means that transactions between VAT group members are not subject to output VAT and do not give the right to deduct input VAT).

As a side-effect, transactions between a branch and its head office (if a VAT group is involved) may be subject to VAT also only starting from the next year. VAT grouping regulations (including those which will come into force on 1 January 2023) seem to implement some solutions from the Danske Bank (C-812/19) and Skandia (C-7/13) cases. Implementation is not perfect, but Polish tax authorities have begun to argue that transactions between a branch and its head office being part of a VAT group – are subject to VAT as if concluded between separate taxable persons.

Most probably starting from 2024, issuing and receiving a new type of e-invoices, i.e. structured invoices, will be mandatory for all VAT taxpayers established in Poland.

This follows from the draft decision of the European Commission on the application of a special measure derogating from certain provisions of the VAT Directive. The obligatory invoices are to apply only to entities established in Poland. This means that entities which are not established in Poland, even if they are registered for VAT purposes in Poland (e.g. branches or other fixed establishments), may not be obliged to accept or issue electronic invoices.

For intra-community transactions (ICS / ICA) it should still be possible to issue invoices in paper form.

This is good news as there should be more time to get ready for such a fundamental change. We recommend that this process should begin as soon as possible and the available time be used effectively.