Tax customs & excise

VAT simplifications for capital groups

The VAT group specified in the mentioned amendment may be formed by entities with financial, economic and organisational links. According to its provisions, these links must be fulfilled continuously for the period in which the group has the status of a taxpayer.

A financial relationship occurs if one of the taxpayers that is a member of the VAT group holds directly more than 50% of the shares in the share capital of the other taxpayers that are members of the group.

An economic link shall exist if:

1. the principal activities of the members of the VAT group are of the same nature; or

2. the activities of the members of the VAT group are complementary and interdependent (for example, if goods or services are consumed jointly by the members of the group), or

3. a member of the VAT group carries out an activity which is wholly or largely used by the other members of the VAT group (situations in which an entity directly supplies goods or services to another member, even though the latter’s activity is not necessarily dependent on those supplies).

In turn, taxable persons are considered to be organisationally linked when:

1. legally or de facto, directly or indirectly, they are under common management, or

2. they organise their activities wholly or partly in concert.

VAT groups can be formed by both entities with a seat in the territory of the country, as well as foreign entrepreneurs conducting their activity in Poland as a branch.

According to the current legal status, taxpayers connected in the manner described above are accounted for separately. Transactions between them are documented with VAT invoices, and each of the entities is obliged to submit the JPK_VAT file independently.

Formation of a VAT group by taxpayers will result in lack of obligation to pay VAT on transactions concluded between its members. Therefore, such transactions will be VAT-neutral, which means that there will be no obligation to document them with VAT invoices (for example, issuance of an accounting note will be sufficient).

Therefore, there will be a possibility of preparing a collective JPK_VAT file by the entire VAT group and it will not be necessary to conduct an analysis of VAT deduction within the group. It is only one of the group’s entities, being its representative, that will be obliged to make a collective settlement of the group and prepare a JPK_VAT file for it, including the recording and declarative part.

The amendment also provides that supplies of goods and services by an entity belonging to the group to an entity not belonging to the group are deemed to have been made by the group. Similarly, the supply of goods and provision of services to an entity belonging to a VAT group by an entity not belonging to it shall be deemed to have been made to the group.

Intra-group transactions will also not be subject to the obligation to use the split payment mechanism.

In order to form a group, the constituent entities will be required to enter into a written agreement to form a VAT group. The group shall be represented by a representative and shall acquire the status of taxable person on the date specified in the agreement, but no earlier than the date of its VAT registration. The agreement must specify, in particular, the name of the group, the identification details of its members, the appointment of the representative and the period for which the group is formed (not less than 3 years).

The entities forming a VAT group will be jointly and severally liable for its VAT obligations due for the duration of the VAT group. This principle will continue to operate also after the termination of the group.

Author team leader DKP Legal
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