SLIM VAT 2 is the second amendment introducing a package of changes improving the quality of VAT regulations in Poland. The amendment was made, among others, in response to the judgments of the Court of Justice of the European Union (C-335/19 and C-895/19), which proved that Polish law is, at the time of the ruling, inconsistent with EU regulations.
Although the SLIM VAT 2 was officially published on September 6th, 2021, the effective dates for new regulations were set depending on the subject field. Generally, the amendment comes into force on October 1st. However, there are some minor exceptions: regulations effective from September 7th (which we wrote about here) and from January 1st, 2022.
This article will guide you through the most important SLIM VAT 2 provisions.
As for the context: On October 15th, 2020, the ruling of the Court of Justice of the European Union was published on the non-compliance with EU regulations of the conditions of the so-called bad debt relief (judgment of October 15th, 2020, case C-335/19). As a consequence, SLIM VAT 2 law introduces specific and related changes, such as:
Starting from October 1st, the taxpayer will be able to deduct the VAT amount with the help of tax adjustment (correction) of past settlements. The mechanism is to include an expense to be deducted in the tax return for the period in which the right to deduct VAT arose, and for one of the three subsequent accounting periods after the tax period in which this right arose. Note, in the case of the so-called small taxpayer (Article 99 (2) and (3)): for one of the two following tax periods, no later than five years from the beginning of the year in which the right to reduce the amount of tax due arose.
In terms of obligations related to the real estate trading, taxpayers were so far obliged to submit declarations on the choice of VAT taxation of real estate at the latest before the date of delivery of the building, structure, or part thereof. The recipient of such a declaration was the head of the Tax Office competent for the buyer.
The SLIM VAT 2 amendment introduces an additional possibility of submitting such a declaration in the notarial deed itself. A statement must be consistent between the seller and the buyer. Therefore, SLIM VAT 2 abolishes the obligation for additional submission of a document in the form of a declaration on the choice of VAT taxation. The entry in the notarial deed may be the only and legitimate basis for the choice.
A chain transaction is the sale of goods characterized by:
At the beginning of this year, the first edition of SLIM VAT introduced a provision regulating chain transactions. Art. 7 sec. 8 of the VAT law stated that if several entities deliver the same goods in such a way that the first of them deliver the goods directly to the last buyer, it is considered that the goods were delivered by each of the entities participating in these activities.
The amendment to SLIM VAT 2 goes a step further. It introduces the obligation to clearly define which delivery will be assigned the shipment or transport of goods when in a chain transaction it is not the buyer or the intermediary entity that organizes the transport. The regulation will apply to the export or intra-community delivery of goods. Accordingly, if the shipment will be arranged by the first buyer, the shipment will also be arranged by the first in the chain of transactions. If the transport of goods is organized by the last buyer, the shipment will also be organized by the last buyer.
The VAT account also received several new regulations that organize the activities available to taxpayers:
Law of August 11th, 2021, amending the Law on Tax on Goods and Services and the Law – Banking Law (Journal of Laws of 2021, item 1626), published in the Journal of Laws, on September 6th, 2021.