Poland – changes coming into force as of 1 April 2020

As of the 1st of April 2020 a number of changes will come into force in Polish VAT, namely:

  • Replacement of the currently separately submitted VAT returns (VAT-7 and VAT-7K) and SAF-T files with a combined extended SAF-T file upload called ‘JPK_VAT’ (i.e. JPK_7M’ for monthly filing frequency and JPK_V7K’ for the quarterly one). The new SAF-T file not only will combine the information that is currently reportable within the VAT returns and SAF-T files, but it will also include some additional pieces of information, which has never been required to date to be reported to the Polish tax authorities for VAT purposes, i.e. on the sales side it will be necessary to mark certain transactions with a specific code assigned to each category of products, services or types of documents. E.g. certain waste supplies will need to be marked with a code ‘05’, supplies of certain intangible services like consultancy, accountancy will need to be marked with a code ‘12’, distance sales made from Poland will need to be marked with a code ‘SW’, transactions subject to the split payment mechanism will need to be marked with a code ‘MPP’. Each error made on the new combined extended SAF-T file may be subject to a fine of PLN 500 (GBP 100; EUR 115; USD 125). The submission of the new combined SAF-T files from 1 April 2020 will be mandatory only for large companies (those with at least 250 employees or with an annual turnover exceeding EUR 50m). The remaining companies will be obliged to submit these new combined SAF-T files only starting from 1 July 2020.
  • New reduced VAT rates matrix – currently the goods and services falling under one of the two reduced VAT rates in Poland (5% and 8%) are identifiable by the Polish Classification of Goods and Services (PKWiU) whereas as of April 2020 the goods, to which a reduced VAT rate can apply will be listed using the Combined Nomenclature (CN) codes. Moreover, the scope of the application of the reduced VAT rates will slightly change, i.e. the aim of the Polish legislator was to simplify and make the application of reduced VAT rates more transparent and user-friendly by: i) covering as much as possible the entire product groups (CN divisions) with one rate; ii) general reduction of rates (‘downward equation’) if it was necessary to change the rate for given products. E.g. the VAT rate for tropical and citrus fruit will decrease from 8% to 5%, VAT rate for some spices like mustard or ground pepper will decrease from 23% to 8%, VAT rate for some hygiene products or products for babies and children like food, dummies, nappies, car seats will decrease from 8% to 5%. To balance out the effect of the reduced VAT rates simplification, on few selected goods the tax rate will increase (e.g. lobsters, octopus, crabs, shrimps as well as dishes which include these products will be subject to 23% standard VAT rate instead of the current 5/8% rate).
  • ‘Binding Rate Information’ (in PL ‘WIS’ – Wiążąca Informacja Stawkowa) –separately to the already existing institution of a ‘binding ruling’ (in PL ‘Indywidualna Interpretacja’) a new institution of a ‘binding rate information’ will be introduced. Currently, in order for a taxpayer to receive a binding ruling on the applicability of a reduced VAT rate to its products, the applicant of the ruling has to inform the tax authorities of the relevant Polish Classification of Goods and Services (PKWiU) code applicable to its products and the Polish tax authorities are not competent to interpret within the ruling whether or not the provided PKWiU code is correct (and the opinion issued by the Statistical Office was not binding as such). The new ‘Binding Rate Information’ will be an administrative decision, in which, on the basis of the taxpayer’s description of the supply/ingredients of the product etc., the tax authorities will confirm i) the CN (for goods), Polish Classification of the Building Objects (PKOB) or PKWiU (for services) code and ii) the relevant VAT rate applicable to the goods or services. Moreover, the ‘Binding Rate Information’ will be published by the National Tax Information in the Public Information Bulletin under the following link and it will be binding not only the person, to whom it was issued, but also other persons supplying identical goods or services:


  • Accounting for import VAT in VAT returns – taxpayers accounting for import VAT under the simplified provisions within the VAT returns will no longer be required to provide the tax authorities with the evidence of the import VAT having been accounted for in the VAT return.



With effect from 1 February 2020 the VAT split payment mechanism in Romania was abolished. It used to be applicable on a mandatory basis to insolvent or VAT indebted suppliers however, following the EU Commission’s warning that the measure was incompatible with the EU VAT Directive as it was disproportionate to the aims which it wanted to achieve, this mechanism was withdrawn by the Romanian government.


New Zealand

A wide ranging review of New Zealand GST is underway. The authorities have sought public comments on changes to the zero rating of land, the treatment of cryptocurrencies, the treatment of fund management services, new invoicing rules and treatment of second hand goods. The consultation document can be found here https://taxpolicy.ird.govt.nz/sites/default/files/2020-ip-gst-issues.pdf

Non-resident providers of B2C digital services: Obligation to VAT Register

Regular VATLife readers will know that in almost every edition we cover new countries adopting this rule for providers of internet based digital products. The latest countries to come on board with such an obligation for foreign suppliers of B2C e-services are as follows:

  • Mexico – 16% of VAT applicable on both B2C and B2B digital services as of 1 June 2020;
  • Canadian province of British Colombia– 7% of provincial sales tax (PST) will be applicable as of 1 July 2020;
  • Algeria – reduced VAT rate of 9% applicable as of 1 January 2020;
  • Cameroon – 19.35% of VAT should apply with effect from 1 January 2020;

The additional countries that are considering to impose VAT/GST on the B2C digital services provided by foreign suppliers are:

  • Fiji – 9% of VAT (planned effective date: unknown yet);
  • Ukraine – 20% of VAT (planned effective date: January 2021) subject to reaching the annual sales threshold of UAH 1m (circa USD$40,200, EUR€36,500, GBP£30,800);
  • Chile – 19% of VAT (planned effective date: unknown yet but should be late 2020).
  • Moldova – 20% of VAT (draft effective date: April 2020);
  • Kazakhstan – 12% of VAT (draft effective date January 2021).

Non-resident digital service providers: Obligation to VAT Register: New countries from January 2020

Forcing non-resident suppliers of digital services to register for VAT is a relatively easy way for tax authorities to generate windfall revenue. As a result, this provision, trailblazed by the EU, continues to spread across the world. Regular VATLife readers will know that we’ve covered many states as they have this measure. For January 2020, the new states are:

  • Uzbekistan – 15% VAT chargeable
  • Malaysia – 6% of digital service tax chargeable
  • Singapore – 7% GST chargeable, but subject to a limit of B2C digital sales into Singapore exceeding SGD 100k (EUR 66.5k; USD 74k; GBP 56,5k) and global sales exceeding SGD 1mln (EUR 665k; USD 740k; GBP 565k)

Paraguay and Ecuador are also introducing provisions to tax digital downloads locally, but they will do this via a withholding obligation on the payment provider. Suppliers will therefore need to factor this cost into gross sales figures.

UK: Digital ‘Newspaper’ Can Enjoy Zero Rating

The UK applies a VAT zero rating for books, newspapers and magazines. As these sectors have rapidly digitalised over the last years, the authorities have sought to strictly limit that privilege to the printed hard copy products originally envisaged when the law was drafted. A recent court case, however (News Corp UK & Ireland Ltd v HMRC Commissioners) has found in favour of the taxpayer that their digital ‘newspaper’ edition does, in fact qualify for zero rating. This could open up the prospect of significant VAT refund claims by similar providers. However, it is a ruling or relatively junior court (The Upper Tax Tribunal) and could be the subject of appeal. For the full ruling see here: http://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j10349/TC06385.pdf

The EU has introduced four measures as of 1 January 2020 to help standardise and (allegedly!) simplify cross-border transactions in the Single Market. They are commonly called Quick Fixes as they are intended to be interim measures before a long-planned review of the entire intra-EU trade regime later in the 2020’s.

Fix 1 – call-off stock simplification

Cross-border call-off stock (where a supplier sends goods to a customer’s location but sells them to the customer only as and when the customer needs them) has long been a difficult area. Under basic EU VAT law logic, the supplier would be required to treat the sales as local sales in the customer’s country and register for VAT there. However, to avoid unnecessary registrations, some Member States have long applied a simplification of treating these as intra-Eusales by the supplier and acquisitions by the customer. This simplication is now mandatory throughout the Union. It should be noted that this applies only to call-off stocks, where one customer is involved, not consignment stocks, where are shipped abroad and then allocated to multiple cusomers’ orders.

Fix 2 – chain transactions

Intra-EU chain transactions refer to successive supplies of the same goods with the goods being dispatched from the first supplier in the chain in one EU country directly to the last customer in the chain in another EU country. Therefore there are two or more consecutive supplies however there is just one intra-EU movement of those goods, leading to the question of which should enjoy the zero rating available for a trasaction involving an intra-EU movement. There has been a certain level of uncertainty in the legislation as to this matter, leading to frequent litigation and complex case law.

As of 1 January, it is now stipulated that the transport of goods should be ascribed to the first supply in the chain, that made to the intermediary operator, unless the intermediary operator is VAT registered in the country of dispatch of the goods and he communicates this number to the supplier, in which case the transport of goods should be allocated to the supply made by the intermediary operator (i.e. the first supply will be domestic one taxable in the country of dispatch and the second supply will be the exempt intra-Community one).

Fix 3 – mandatory VAT identification number of the customer for intra-Community supply

Currently in most EU countries it is already a requirement for the supplier to obtain and quote the customer’s valid EU VAT number on the invoice in order to exempt/zero-rate an intra-Community supply. However, even the European Court of Justice ruled it a merely ‘formal’ requirement, which has led to relaxed enforcement in some Member States.

As of 1 January 2020it will be a ‘substantive’ requirement in all Member States that a valid EU VAT number of a customer is obtained and quoted on the invoice. This means that, without it, the zero rating is legally lost and the supplier becomes liable to account for VAT on the supply. Furthermore, the transaction must also be reported on the recapitulative statement (European Sales List) in order to qualify for the exemption.

Fix 4 – proof of intra-Community transport

Currently there is no pan-EU criteria for the documentary evidence required to claim an exemption for intra-Community supplies. Each Member State can determine which documents are acceptable and sufficient as a proof of delivery of goods from one EU country to another. Consequently, the evidence is open to interpretation by different fiscal authorities (or even individual tax inspectors).

From 1 January 2020 there will be a ‘rebuttable presumption’ that the condition regarding the documentary evidence required to claim an exemption for intra-Community supplies of goods has been fulfilled if:


  • The supplier is responsible for the and holds two non-contradictory pieces of evidence, such as:
    • – Customer-managed relationship documents, bills of lading, or airfreight or carrier invoices;


  • One piece of evidence such as that above, plus:
    • – An insurance policy in relation to the transport of the goods; Or
    • – Banking documents in relation to the movement of goods
    • – Official documents issued by a public authority confirming arrival of goods in the Member State of destination, or
    • – A receipt from a warehouse


  • the customer is responsible for the shipment of the goods and the supplier holds:
    • – Two non-contradictory pieces of evidence as above (but not the alternatives, only the non-contradictory pieces of evidence) and:
    • – A written statement from the customer that it has acquired the goods into another Member State keeper for storage of goods in the Member State of destination.

As can be seen from the complexity of the list, this ‘simplification’ may be a double-edged sword. While bringing taxpayers certainty in some Member States where inspectors have been making excessive or even vexatious demands for documentation, it is likely to raise the bar for compliance in those Member States that have had a more relaxed enforcement of this matter.

If you would like to read more on the Quick Fixes, you can access a detailed EU summary here: https://ec.europa.eu/taxation_customs/sites/taxation/files/explanatory_notes_2020_quick_fixes_en.pdf

There are always VAT rate changes at New Year. 2020 is not a ‘bumper’ year for these, but there are a few:


A reduced 13% VAT rate is to apply in Croatia in the hospitality sector (i.e. preparating and serving of meals, including desserts, in and outside a catering facilities) from 1 January 2020.


With effect from 1 January 2020 Hungary will reduce its VAT rate for accommodation services from 18% to 5%.


As of 1 January 2020 a new reduced VAT rate of 5% will be introduced in Slovenia and it will apply to publications (both printed and e-books).



Brexit is now set to go ahead on 31 January, with the terms of the Withdrawal Agreement of 17 October 2019 applying (although, as at publication, the European Parliament has not yet formally ratified this). The agreement stipulates a transition period up to 31 December 2020, during which the UK will remain in the EU VAT zone and VAT impacts for business should be minimal. The post-transition regime is yet to be laid out in detail. For a full copy of the agreement see here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/840655/Agreement_on_the_withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union_and_the_European_Atomic_Energy_Community.pdf


Split payment mechanism on certain supplies in place from November 2019

As of November 2019 taxpayers in Poland are obliged to apply a split payment mechanism when making the bank transfer payments to their suppliers in respect of supplies above PLN 15k (GBP 3,5k; EUR 4k; USD 4.5k) in value, or all supplies in certain high risk sectors.

For supplies falling under the mandatory split payment mechanism, the supplier should have included a statement ‘Split payment mechanism’ on the invoice.

Under the split payment mechanism the purchaser splits the payment when making the bank transfer to the supplier, with the net amount being paid to the supplier’s regular account and the VAT amount being paid to a special ‘VAT account’ of the supplier held by his bank.

Funds held by a taxpayer in its ‘VAT account’ can be used to make the payments of VAT, corporate income tax, excise, customs and social security liabilities. A taxpayer can also apply to the Polish tax authorities for the funds gathered on the ‘VAT account’ to be transferred to its regular bank account.

You can read more about the system (in Polish) on the Polish government website here https://www.gov.pl/web/rozwoj/bezpieczna-transakcja-mechanizm-podzielonej-platnosci-split-payment-w-praktyce

New obligation from January 2020 to verify suppliers in ‘White List’ of taxpayers

Starting from 1 January 2020, businesses registered for VAT in Poland making bank transfers to their suppliers in respect of invoices documenting transactions of supplies exceeding PLN 15k (GBP 3,5k; EUR 4k; USD 4.5k) should verify whether the bank account of the supplier is listed in the so-called ‘White List’ of verified taxpayers.

The ‘White List’ is an online database run by the Polish tax authorities allowing companies to verify the VAT status (e.g. VAT registered vs. unregistered), as well as certain other information, about their business counterparties.

Penalties for paying to a non-White list account can be avoided if, within 3 days from ordering such a payment, he notifies the local tax office of the supplier of the bank account details, to which the payment was made. Alternatively, a company can pay the invoice using the split payment mechanism to avoid the joint and several liability for VAT purposes.

According to the recently published by the Polish Ministry of Finance ‘Explanatory Notes’ of 20 December 2019 concerning these new obligations, the foreign bank accounts will not be displayed within the ‘White List’ database.

You can access the White List search page here https://www.podatki.gov.pl/wykaz-podatnikow-vat-wyszukiwarka


The UAE has published the decision that official participants of Expo 2020 will be allowed VAT refunds even if they are not UAE VAT registered.

Expo 2020 is a registered exhibition due to take place in Dubai from October 2020 to April 2021. Official participants of the Expo are countries and intergovernmental organisations that have accepted the official invitation from the UAE to participate as an exhibitor.

The decision differentiates between operating expenses and the expenses incurred in relation to the exhibition space. Participants are eligible to claim VAT on supplies relating to the operations of the participant’s office and imports of goods for the personal use of the representative, staff and beneficiaries.  VAT-registered official participants may also be able to recover input tax incurred on making a taxable supply.

If the participant isn’t VAT registered, a refund entitlement certificate must be obtained from the Bureau Expo 2020 Dubai office to be audited and approved which will then allow them to claim input tax on supplies relating to the construction and dismantlement of the exhibition space and the operations and presentations within the space in addition to the operating expenses.  The VAT refund will be paid directly to the participant from the Federal Tax Authority (FTA) once approved.

If participants are UAE VAT registered, their process for recovery of VAT on operating and commercial activities will be through their VAT return submitted directly to the UAE Federal Tax Authority (FTA).

Input VAT recovery is possible on vehicles and mobile phones within Bahrain and the National Bureau for Revenue (NBR) where there is both business and personal use.

The NBR has released guidance on how to determine a fair and reasonable allocation as well as a simplified method that can be applied to make the calculation.  Under the simplified method, a fixed percentage is used to determine business and personal use; 40% fixed on all costs for motor vehicles and 60% fixed costs for mobile phones.

A review of VAT refund procedures for businesses located in the European Union has been launched to assess if they are compliant with EU law and Court of Justice of the European Union case law. The review, which began on the 8th March, will run for 8 months and will scrutinise the ease with which businesses are able to recover VAT credits both in their own country and in other EU countries.

The European Commission has identified that a lack of access to a simple and fast VAT refund procedure has a major impact on cash flows (especially for small businesses) and on the competitiveness of those businesses.The tax provisions in each member state will be assessed and non-compliance with the rules could well launch infringement procedures against member states for breaking the rules.

Of particular interest to the study will be the length of time necessary to finalise refund procedures in each country as well as any unwarranted burdens in the system that may create financial risks for business. Currently, there are no uniform arrangements within the EU, with some states refunding on a month by month basis and other states forcing businesses to wait for 21 months before being able to actually submit a claim – and waiting 12 months or longer for the money to be refunded.

The review forms part of the EU Commission’s plan for a single VAT area which aims to provide a consistent approach to VAT refunds throughout the 28 member states in order to reduce administrative burdens for micro-businesses and SMEs.


Switzerland:  VAT rate reduced

The Swiss tax office will be reducing their VAT rates with effect from 1st January 2018.  The normal VAT rate will be reduced to 7.7% and the special rate for accommodation will be 3.7%.  The reduced rate of 2.5% will remain unchanged.

Norway: Translations required

The Norwegian Tax Office has requested that foreign Certificates of Tax Status are accompanied by a translation with the exception of Norwegian, Swedish, Danish or English.

Netherlands: Increase in Reduced VAT Rate

It has been announced that the Dutch Government is set to increase the reduced rate from 6% to 9% from January 2019.  The standard rate of 21% will remain unchanged.

Germany & Austria

There has been a level of inconsistency at the tax offices recently regarding restyled invoices.  We have now had confirmation that the date of the amendment should still determine the claim period.

Italy: VAT rate increases delayed until 2019

In October 2017, VAT rate increases were scheduled under Law Decree no. 148/2017 to be effective 1 January 2018.  However, the draft budget law 2018 does not provide for VAT rate increases in 2018.  Instead, the draft budget law postpones a gradual increase in the VAT rates to 1 January 2019.

The schedule for the VAT rate increases are proposed to be:

The “reduced” 10% VAT rate would increase:

  • From 10% to 11.5% as of 1 January 2019
  • From 11.5% to 13% as of 1 January 2020

The “standard” 22% VAT rate would increase:

  • From 22% to 24.2% as of 1 January 2019
  • From 24.2% to 24.9% as of 1 January 2020
  • From 24.9% to 25% as of 1 January 2021

These VAT increases, however, would not apply if certain budgetary targets are met.

VAT Refunds from Germany simplified

Refunds of the 19% German VAT (called MWSt) are possible on such items as exhibition and conference costs, car rental, entertainment, and taxis, although it is likely that exhibition costs will fall under the Reverse Charge mechanism.

Some expenses, such as hotel bills, will bear the reduced rate of 7%.  All European travelers and many from outside of Europe can claim refunds.  Contact us to check eligibility (OR link to 13thD guidelines on website)

It is important that invoices are correctly issued.  They should bear the name and address of the supplier, their VAT number and a breakdown of the total, clearly indicating the VAT element.  It should also show the recipient’s business name and address.

Smaller receipts, such as restaurant bills must be machine generated, with the exception of taxis which can be handwritten.

For more detailed advice contact www.quipsound.co