MDR reporting - obligation returns as from 1 August 2023

As a result of the cancellation of the state of epidemic emergency in Poland, reporting of domestic MDR tax schemes is again mandatory as from 1 August 2023. What does this mean for companies?

Return of MDR domestic tax scheme reporting

On 1 July 2023, the state of epidemic emergency was revoked in Poland by regulation of the Minister of Health. This resulted in the return of a number of important obligations in both labour and tax law. Learn more: End of the state of epidemic emergency – major changes for employers as of 1 July

One of the obligations returning is the reporting of domestic MDR tax schemes. MDR reporting will again become mandatory from 1 August 2023. This obligation had been suspended under the provisions of the so-called Covid Law since 2020. Such status shall remain in force until the 30th day following the date of revocation of the state of emergency, i.e. up to and including 31 July 2023.

When discussing the return of MDR reporting, it is worth noting that from 1 August 2023, all MDR schemes from the entire 3-year suspension period will have to be reported. MDRs from the 3-year period will therefore have to be reported, along with any new ones already existing after the suspension.

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Tax scheme reporting - sanctions for non-compliance

Failure to comply with tax scheme reporting (MDR) obligations may result in severe sanctions. The following financial fines apply for failure to report or other non-compliance with tax scheme reporting:

up to more than PLN 34.5 million for natural persons for non-reporting or untimely submission of information under individual criminal and fiscal liability;
additionally up to PLN 2 million for the lack of an internal procedure for the Promoter.

It is also worth mentioning that, if convicted of a tax offence relating to a breach of the tax scheme reporting provisions, the court may also order a ban on carrying out certain business operations.

MDR reporting - key information

On 1 August 2023, the obligation to report domestic tax schemes returns. What does reporting consist of and what is a tax scheme?

In Poland, MDR reporting is carried out under the Tax Schemes Reporting Regulations which are part of the 2019 amendments to the Tax Ordinance (Chapter 11a of the Act). These provisions implement the EU DAC6 Directive but have a broader scope than the Directive.

The legislation recognises two types of tax schemes:

cross-border tax schemes (this is an arrangement that meets the cross-border criterion and
a) meets the main benefit criterion and possesses any of the general characteristics set out, or

b) has a specific identification characteristic,

standardised non-cross-border tax schemes (a tax scheme that can be implemented or made available to more than one beneficiary without requiring a change in its material assumptions, in particular regarding the type of activities undertaken or planned under the tax scheme).

A tax scheme, on the other hand, is an arrangement that:

meets the main benefit criterion and has a general identification characteristic,
has a specific identification characteristic, or
has another specific identification characteristic.

Moreover, the obligation to provide information on tax schemes, according to the Act, applies to three categories of entities:

promoter - a natural person, a legal person or an organisational unit without legal personality, in particular a tax adviser, an advocate, a legal adviser, an employee of a bank or another financial institution who advises clients, even if he or she or it does not have a domicile, a seat or a management board in this country;
beneficiary - a natural person, a legal person or an organisational entity without legal personality to whom the arrangement is made available or by whom the arrangement is implemented or who is prepared to implement the arrangement or who has carried out an action to implement the arrangement;
supporter - a natural person, a legal person or an organisational unit without legal personality, in particular a chartered accountant, a notary, a person providing bookkeeping services, an accountant or a financial director, a bank or another financial institution, as well as their employees, who, with the care generally required in the performance of their duties, taking into account the professional nature of their activities, their area of expertise and the subject-matter of their activities, undertook, directly or through others, to provide assistance, support or advice in developing, marketing, organising, making available for implementation or supervising the implementation of the arrangement.

Tax scheme information is submitted electronically to the Head of the National Tax Administration (KAS). The Head of the National Tax Administration assigns a special tax scheme number NSP, unless the tax scheme information contains a NSP assigned by another European Union Member State.

The tax scheme information shall include:

identification of the person providing the information and of the beneficiary to whom the tax scheme was made available, including information on the business name or first name and surname, date and place of birth, tax identification number, place of residence, registered office or place of management board, and, for a person who is not resident in the Republic of Poland or who does not have a registered office or management in the Republic of Poland, the number and series of his/her passport or other identification document or other identification number if the person does not have a tax identification number, and for cases in which the arrangement relates to persons who are related parties to the promoter or the beneficiary;
the legal basis for the provision of information on tax schemes, together with an indication of the grounds on which an arrangement is considered to be a tax scheme, including the identification characteristic and the role of the person providing the information;
an indication as to whether the tax scheme information to be provided relates to a standardised tax scheme or a cross-border tax scheme;
a summary description of the arrangement constituting the tax scheme, the name of the arrangement, if any, a description of the economic activity to which the tax scheme applies, without disclosing data covered by trade, industrial or professional secrecy or the production process;
a comprehensive description, on the basis of the submitter's knowledge, of the arrangement that constitutes the tax scheme, including an indication of the value of the subjects of the arrangements, the assumptions of the arrangements, the activities under the arrangements and their chronology, and the relationships between the related parties;
an indication of the objectives known to the submitter which are to be achieved by the tax scheme;
the tax law provisions which, to the knowledge of the submitter, are applicable to the tax scheme;
the estimated value of the tax benefit or the approximate value of the asset in deferred tax, if any and known to or estimable by the submitter;
an indication of the activities carried out which have resulted in the reporting of the tax scheme, together with an indication of the date on which the first activity to implement the scheme was or will be carried out;
an indication of the stage at which the tax scheme is, to the best of the submitter's knowledge, in particular information on the dates of its release or implementation or the date of the activities under the arrangement;
an indication of the identification data, known to the submitter, of the entities involved, which are to be involved in the tax scheme or which may be affected by it, and of the countries and territories in which these entities are resident, established or have their place of management, or to which the scheme may be applicable;
an indication of the identification data, if any, known to the submitter of the information of other entities obliged to provide information on the tax scheme;
the address for electronic delivery of the acknowledgement of receipt of the NSP and other communications, whereby mentioning this address shall be treated as consenting to service only by electronic means;
an indication of the NSP granted by another EU Member State in respect of a cross-border scheme, if the NSP has been granted to the scheme by another EU Member State.