Draft bills - SLIM VAT 3 and combating VAT fraud

Two draft bills prepared by the Ministry of Finance have been submitted to inter-ministerial arrangements and public consultations. The first draft relates to the introduction of SLIM VAT 3 and provides for a number of simplifications to the current legislation, while the second draft of changes aims to improve the effectiveness of the fight against VAT fraud through the implementation of new tools such as cross-border payment records.

SLIM VAT 3 - VAT simplification

The draft bill amending the Goods and Services Tax Act and certain other acts, the so-called SLIM VAT 3, is another VAT simplification package. It implements the judgment of the Court of Justice of the European Union in Case C-935/19 by amending the sanctions provisions. The new provisions are intended to allow tax authorities to set VAT sanctions on an individualised basis, taking into account the specific circumstances of the case.

The SLIM VAT 3 simplification package, among others, includes:

• fewer invoicing obligations, including the abandonment of the obligation for online cash registers to print documents (read also: Mandatory structured invoice from 2023),
• simpler invoicing and the introduction of new exchange rate conversion rules for corrective invoices,
• improved liquidity for companies by liberalising the conditions for cashless taxpayers, VAT refunds in 15 days,
• facilitation of the VAT e-commerce package,
• reduction of VAT sanctions,
• fewer formalities for VAT in international trade,
• wider scope of VAT exemptions,
• friendly VAT settlements and fewer adjustments.

Moreover, the announced improvement in companies' liquidity will also apply to the use of the split payment mechanism. This is because funds from the VAT account will be able to be reused to pay further tax and fee dues.

The legislator has also proposed an increase in the limit on the value of sales entitling to hold small taxpayer status. The limit will increase from €1 200 000 to €2 000 000. The cash accounting method, whereby VAT is only accounted for in the period in which payment from the purchaser has taken place, will also become more available.

Consultation on the draft SLIM VAT 3 will run until 26 August 2022 and the proposed effective date for the new regulations is 1 January 2023.

Learn more: VAT groups postponed until 1 January 2023  and SLIM VAT 2 package

Greater effectiveness in combating VAT fraud - draft amendments

The second bill concerns the introduction of new tools to increase the effectiveness of the fight against VAT fraud, particularly in the area of e-commerce. It implements the provisions of Directive 2020/284 amending Directive 2006/112/EC regarding the introduction of certain requirements for payment service providers.

The proposed legislation sets out the introduction of new obligations for providers of cross-border payment services such as, among others, national banks, branches of foreign banks, credit institutions, etc. These obligations will include two key requirements:

• the necessity to keep and maintain records of payments and payees in respect of cross-border payment services for a period of 3 years (records to be kept if the payment service provider makes more than 25 such payments to the same payee in a quarter),
• the requirement to make records available to the Head of the National Tax Administration (KAS) (the data will be stored by the Head of KAS and will also be placed in the EU CESOP system).

Consultations on the draft will last until 23 August 2022, while Poland is required to implement the provisions of the Directive by 31 December 2023 at the latest.