12 major new regulations that will impact businesses in 2020

The beginning of the year tends to bring a lot of changes that may affect your business operations and how you pay your taxes. If you fail to follow the new regulations or fail to comply with the new obligations, you may face severe penalties, and these should be avoided by preparing well in advance.

RSM Poland experts present 12 major changes to the Polish legislation that either entered or will enter into force in 2020 and will clearly affect business operations and the effectiveness of taxpayer’s businesses.

Below you will find a list of major changes:

1. Bad debt relief in income taxes

2. Changes of documentation requirements for 0% rate

3. Binding Rate Information and changes in the VAT matrix

4. Entry into force of amended regulation on the withholding tax (WHT)

5. Retail tax

6. Central Register of Ultimate Beneficial Owners as a new obligation for entrepreneurs

7. Electronic Register of Entrepreneurs of the National Court Register as of 1 March 2020

8. Obligatory dematerialisation of shares and roll-out of the Company’s Shareholder Register

9. “White List” of VAT payers

10. Obligatory split payment

11. Microaccount

12. JPK_VDEK, i.e. obligation to submit SAF-T on a monthly basis instead of a VAT return

1. Bad debt relief in income taxes

Under the new regulations, the creditor has the right to decrease the tax base by the amount of receivables earlier recognised as due income, provided that this amount has not been paid within 90 days after payment deadline and other statutory conditions have been met. This right is followed by the debtor’s obligation to increase the tax base by the amount of receivables earlier recognised as costs, if this amount has not been paid within the above time limit.

2. Changes of documentation requirements for 0% rate

The Council Implementing Regulation (EU) 2018/1912 of 4 December 2018 has been in force as of 1 January 2020, introducing new regulations concerning the evidence required for tax exemption (0% rate) in the Intra-community supply of goods. The regulation introduces two types of evidence attesting to the transport of goods. What is important, documentation requirements differ, depending on whether the goods were dispatched by the supplier or the carrier who was contracted for the supply or by the acquirer or a third party acting on his behalf. The Polish taxpayer has the right to apply less stringent provisions on documentation of intra-community transactions laid down in the Polish VAT Act that is still in force.

3. Binding Rate Information and changes in VAT matrix

WIS (Binding Rate Information), i.e. a decision on a tax rate applicable to given goods or services that is binding for the tax office thus protecting the taxpayer, was introduced by the Act of 9 August 2019 amending the Value Added Tax Act and certain other acts (Journal of Laws of 2019, item 1751). These regulations will enter in force in their entirety on 1 April 2020, but already as of 1 November 2019 taxpayers may request Binding Rate Information in its limited version. At the same time, from 1 April 2020 a new matrix of VAT rates will be in force, based on what is known as Combined Nomenclature (CN).

4. Entry into force of amended withholding tax (WHT) regulations

In late December 2019, the Minister of Finance issued two regulations postponing the entry into force of a new withholding tax mechanism in PIT and CIT until 30 June 2020. Under these regulations, the tax shall be withheld for payments over PLN 2 million for the benefit of a given taxpayer in a given fiscal year, and there will be no option of exemption or applying reduced rates under regulations implementing EU Directives and double taxation treaties. According to the information from the Ministry of Finance, at the end of the first quarter of 2020, efforts will be made to amend these regulations; it is not yet known, however, what direction this amendment will take.

5. Retail sales tax

Most probably, a tax on retail sales will enter into force on 1 July, and will apply to retailing entrepreneurs: natural persons, legal persons, civil partnerships and unincorporated organisational units. The new tax will cover revenues over PLN 17 million annually and will be calculated on a progressive scale. The introduction of this tax is going to have a major impact on the operating costs of medium-sized and large trading companies; however, its costs are going to indirectly affect consumers, as well.

6. Central Register of Ultimate Beneficial Owners as a new obligation for entrepreneurs

Under the amended Act on Countering Money Laundering and Terrorist Financing of 1 March 2018 (Journal of Laws of 2018, item 723), the Central Register of Ultimate Beneficial Owners was established on 13 October 2019. Under this Act, all commercial law companies, with the exception of partnerships and public joint stock companies, are obliged to disclose information on the ultimate beneficial owner in this register. The information about the ultimate beneficial owner shall be reported in the form of an electronic document via the website of the Ministry of Finance. For an application to the Register to be effective, it must have a qualified electronic signature or an ePUAP trusted profile provided by a person authorised to represent the company. The deadline for reporting is 7 business days from the date the company is entered to the register of entrepreneurs of the National Court Register. For companies that registered with the National Court Register before the amended act entered into force, the deadline for reporting their ultimate beneficial owner shall be 6 months from the date of the entry into force of the amendment, i.e. 13 April 2020. If you fail to meet the deadline indicated by the legislator, you will receive a fine in the amount of up to PLN 1 million.

7. Electronic Register of Entrepreneurs of the National Court Register from 1 March 2020

Under the amended Act on the National Court Register of 20 August 1997 (Journal of Laws No 121, item 769) that will enter into force on 1 March 2020, the registration shall be performed online only via the S-24 System. This means that all requests for registration in the register of entrepreneurs of the National Court Register concerning companies as well as branches will have to be made online in a dedicated programme, and then signed and submitted to the Register with qualified electronic signatures or trusted ePUAP profiles of members of the body representing this entity.

8. Obligation of dematerialisation of shares and roll-out of the Company’s Shareholder Register

As of January 2020, important amendments of the Act: Code of Commercial Companies of 15 September 2000 (Journal of Laws No 94, item 1037) came into force, introducing new obligations for joint stock companies, limited joint stock partnerships and simple joint stock companies. Dematerialisation of all company shares, being a process of converting their paper form into electronic format, is a new thing. Such dematerialised shares shall be recorded in the Company’s Shareholder Register kept only by authorised entities supervised by the Polish Financial Supervision Authority, i.e. brokerage houses, banks or the National Depository for Securities. Since 1 January 2020, the aforementioned companies shall also have their websites for communicating with shareholders and posting other announcements required under the law and their articles of association. These websites must be provided in the register of entrepreneurs of the National Court Register. These changes are supposed to transpose Directive (EU) 2017/828 of the European Parliament and of the Council to Polish legislation and prevent fraud, in particular through eradicating money laundering.

9. ”White List” of VAT taxpayers

If you make a payment to a contractor being an active VAT taxpayer for goods or services whose value under the Contract is higher than PLN 15,000 to a bank account different than the one indicated in the new list of VAT taxpayers on the bank transfer date, this cost cannot be included in your tax deductible costs and you will be jointly and severally liable as the purchaser of goods/services for the seller’s tax arrears.

10. Obligatory “split payment”

The obligatory split payment shall apply if all of the following conditions are met:

• tax liability, supply of goods or performance of services and the invoice date occur after 31 October 2019;
• the gross value of the transaction is higher than PLN 15,000 or its equivalent;
• at least one item of the invoice is listed in Appendix 15 of the amended VAT Act;
• both the seller and the purchaser are taxpayers (B2B transaction, irrespective of whether the purchaser is an active or exempt VAT taxpayer).

11. ”Microaccount”

As of 1 January 2020, any CIT, PIT and VAT payments shall be made to an individual tax account.

Payments to an individual tax account shall be classified as follows:

• tax arrears;
• earliest tax liabilities due;
• tax liabilities according to tax identifier (e.g. VAT-7).

12. JPK_VDEK, i.e. obligation to submit SAF-T on a monthly basis instead of VAT return

The re-defined SAF-T file shall be a document in electronic format, comprising a VAT return (it will replace VAT-7, VAT-7K and VAT-27 returns) and the VAT register. Appendices: VAT-ZZ, VAT-ZD and VAT-ZT shall no longer be used. The new SAF-T structure introduces about 30 new entries describing invoices in detail and shall be in force from 1 April for large taxpayers and from 1 July for all taxpayers.