Tax schemes – what are the goals of the DAC6 directive and Polish regulations regarding MDR?

From this article, you will learn:

• What obligations MDR regulations impose on entities?
• Why taxpayers have to provide the Head of the National Tax Administration with information on tax schemes?
• How Polish regulations extend the obligations imposed by the DAC6 directive?

Mandatory Disclosure Rules (MDR) are regulations obliging taxpayers to report tax schemes to the Head of the National Tax Administration. As this concept covers a wide range of activities performed by taxpayers (and Polish regulations provide for a greater number of obligations than the international DAC6 directive), entrepreneurs should become well acquainted with their rules and regularly analyze both foreign and domestic transactions. So what is worth knowing about MDR and DAC6 in Poland?

What are the regulations regarding tax schemes (MDR regulations)?

The obligation to provide tax authorities with information on tax arrangements was introduced by EU Council Directive 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC6).

After the DAC6 directive was implemented into the Polish legal system, entities meeting the conditions specified therein were obliged to submit information on tax schemes to the Head of the National Tax Administration. Regulations regarding MDR are contained in Art. 86a-86o of the Tax Ordinance.

What is the purpose of the provisions introduced by the DAC6 Directive?

As the preamble to the DAC6 directive indicates, the provisions on tax schemes are intended to improve the functioning of internal markets by discouraging taxpayers from using cross-border aggressive tax planning arrangements.

Reporting tax schemes allows national tax authorities to detect irregularities or potential attempts to avoid taxation earlier.

Of course, the fact that the obligation to report MDR has been imposed on an entity does not mean that the taxpayer has committed actions contrary to the letter of the law. Providing information about tax schemes to the Head of the National Tax Administration may also concern situations that do not constitute a form of tax avoidance, but only tax optimisation permitted by law.

Since when are entities obliged to provide Polish tax authorities with information on tax schemes?

Polish MDR regulations, regulating the reporting of tax schemes, entered into force on January 1, 2019, but the reporting obligation also covers, in some cases, tax schemes implemented in the previous year. These are situations in which the taxpayer took the first action related to the implementation of the tax scheme:

• after 25 June 2018 - in the case of cross-border tax schemes,
• after 1 November 2018 - in the case of national tax schemes.

Polish regulations indicate that if, after the specified dates, an entity has taken the first actions related to a tax scheme, it is obliged to report this scheme - even though these actions took place before the provisions on MDR entered into force.

The DAC6 directive provides for the same date determining the obligation to report tax schemes as Polish regulations: reporting applies to cross-border schemes for which the first stage of implementation took place after 25 June 2018. European Union Member States are, in principle, obliged to apply the provisions of the DAC6 directive from 1 July 2020.

Differences between the provisions of the DAC6 Directive and Polish regulations - how did the Polish legislator expand taxpayers' obligations in the field of MDR?

The date of entry into force of the MDR regulation is not the only difference that we can notice when comparing Polish regulations to the provisions of the DAC6 Directive. Polish tax law provisions regarding reporting of tax schemes have a much broader scope than the provisions of the DAC6 directive. 

The provisions of the Tax Ordinance provide for the obligation to report not only cross-border schemes, but also domestic schemes (which is not required by the provisions of the DAC6 directive).  

In Poland, reporting therefore covers schemes relating not only to direct (income) taxes, as indicated in the directive, but also to all other taxes operating in Poland (such as VAT or real estate tax). The exception is customs duties and contributions paid by taxpayers to ZUS and PFRON. 

But that's not all - the Polish legislator has also introduced the obligation of follow-up reporting (MDR-3 form), and the tax law provisions themselves also contain - contrary to the regulations contained in the DAC6 directive - an extended catalog of distinguishing features. An extensive catalog of changes complicates running a business and makes many companies decide to finally use the help that can be offered by an experienced tax advisor who is well versed in Polish legal realities.