The SLIM VAT 2 package - tax simplifications from 1 October 2021

The SLIM VAT 2, Simple Local and Modern VAT 2 package, adopted by the government, constitutes the second set of solutions regarding the tax on goods and services, as the first SLIM VAT package came into force in January this year. SLIM VAT consists of a number of simplifications, developed in consultation with the business community, which are intended to reduce some of the current obligations of entrepreneurs in relation to the settlement of VAT.

The Slim VAT 2 package is also a response to the demands of entrepreneurs addressed to the Prime Minister and the Minister of Finance regarding the need to counteract the negative socio-economic effects of the COVID-19 pandemic.

SLIM VAT 2 package key solutions

The solutions proposed within the SLIM VAT 2 package concern, among others, settlements of WNT, import of services and settlements of tax on import of goods. They also assume implementation of several changes to the Banking Law Act. However, despite the fact that the draft bill is quite extensive, the primary objective of the new regulations is to reduce the number of obligations for entrepreneurs.

The key solutions of the SLIM VAT 2 package include:

• facilitation of the use of the Split Payment Mechanism for VAT;
• introduction of the possibility to transfer funds between VAT accounts in different banks;
• increase flexibility in exercising the right to deduct VAT, increase the number of settlement periods in which a taxable person may deduct by adjusting the return;
• option to declare the choice of real estate taxation directly in the notarial deed;
• abandonment of the condition that makes the deduction of tax calculated in the same period in which due tax has been reported, upon presentation of VAT due within three months of the end of the month in which the tax obligation arose (implementation into the Polish legal system of the judgment of the Court of Justice of the European Union in Case C-895/19 A);
• option to make an adjustment for the importation of goods directly in the tax return if the correct amount of tax was not accounted for by the taxable person in the original return;
• 100% deduction of expenses on cars (extension of the deadline for filing information on incurring the first expense on a motor vehicle used exclusively for the business activity of a taxpayer, in connection with the moment of filing the JPK for the closed period);
• more time to take advantage of the bad debt relief (extension of the deadline from 2 to 3 years, starting from the end of the year in which the invoice documenting the debt was issued);
• extension of the application of the bad debt relief - the debtor does not have to be registered for VAT on the date of delivery of goods/services and on the day preceding the date of filing the correction, and may be at that time under bankruptcy or liquidation proceedings;
• regulating the release of funds transferred from a closed VAT account to the so-called technical account;
• increased VAT neutrality in international transactions, the introduction of a regulation specifying to which supply dispatch or transport should be allocated in the case of export of goods or intra-Community supply of goods;
• permission to release funds from the VAT account if the taxable person's tax arrears have been deferred or paid in instalments;
• allowing the funds accumulated in the VAT account to be used to pay a contribution to the National Agricultural Fund (KRUS).

SLIM VAT 2 package – from when?

Most of the solutions of the SLIM VAT 2 package are expected to come into force on 1 October 2021.