The government adopted the SLIM VAT 3 package - new solutions from April 2023

On 24 January 2023, the government adopted the SLIM VAT 3 (Simple Local and Modern VAT) package, which will introduce several of the proposals made by entrepreneurs, such as a reduction of the formalities required and an easier and less time-consuming invoicing process, expected to improve their financial liquidity. The adopted changes cover several areas, many of which concern VAT settlements made by entrepreneurs, including the so-called small taxpayers.

Easier to become a small taxpayer

The solutions developed by the Ministry of Finance are aimed at improving the liquidity of businesses. One key change of the Slim VAT 3 package is:

• to increase the sales value limit for small taxpayers from EUR 1.2 million to EUR 2 million, so that more taxpayers will be entitled to use the cash accounting method and quarterly VAT settlements.

 Moreover, the amendment to the provisions of the Value Added Tax Act provides for more options to use funds from the VAT account. As indicated by the Ministry of Finance, these funds will also be able to be used to pay the tax on the extraction of certain minerals, the retail sales tax, the sugar tax, the shipbuilding tax and the tonnage tax, as well as to regulate the levy on small bottles of alcohol.

In accordance with the adopted solutions, the taxpayer will not have to present a VAT invoice when deducting value added tax (VAT) on intra-Community acquisitions of goods, as it is the case now.

Simplified invoicing

The SLIM VAT 3 package will also provide for a number of simplifications in invoicing and sales recording with cash registers, such as:

• adaptation of the conditions for issuing an invoice to the electronic receipt (e-receipt),
• option to waive the obligation for taxpayers to print fiscal documents,
• introduction of a new distribution system for e-receipts.

Fewer fees and access to tax knowledge

The draft regulations also provide for the elimination of the fee for an application for WIS, that is, Binding Tax Rate Information. At present, the cost of issuing such an application is PLN 40. What is more, the rules for issuing and applying WIS and WIA (Binding TAX Excise Information) are to be unified, and there is to be just one authority responsible for issuing WIS, WIA, WIT (Binding TAX Tariff Information) and WIP (Binding TAX Origin Information). Nowadays, for example, WIP is an administrative decision issued by the Director of the Tax Administration Chamber in Warsaw and WIA is issued by the Director of the Tax Administration Chamber in Wrocław.

Other changes

The draft SLIM VAT 3 regulates the transfer of funds between VAT accounts in a group as well. Funds are to be transferred from the VAT account of a group member to the VAT account of a representative of the same group.

It will also be easier to make adjustments. The legislator has decided that it will no longer be necessary to make an adjustment if the difference between the initial proportion and the final proportion does not exceed 2 percentage points and, moreover, the rules for applying the conversion rate if the invoice was issued in a foreign currency have been clarified for adjustment invoices.

Furthermore, the Ministry of Finance will replace the obligation to agree in the form of a protocol with the head of the tax office the proportion of input tax to be deducted, with a requirement to notify the head of the tax office of the proportion adopted.

The amount for which a taxpayer's proportion of deduction is 100% will also be increased from the current PLN 500 to PLN 10 000, and this change is to allow the entire amount of VAT to be deducted by taxpayers with a significant proportion of their turnover consisting of activities subject to VAT. The change applies to taxpayers performing taxable and VAT-exempt activities as part of their business.

SLIM VAT 3 - deadline for the new rules to come into force

The SLIM VAT 3 package now goes to Sejm for further consideration. The government plans that the new regulations will come into force on 1 April 2023. However, everything depends on the pace of further legislative work. The business community/VAT payer community is looking forward to the simplification of VAT settlements.

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