- The VAT group is a significant simplification of settlements between related entities and a significant financial benefit for enterprises.
- Its assumption is one collective JPK_VAT instead of separate JPK_VAT submitted by individual companies, no VAT and no intra-group invoices or flexible management of input tax.
- The solution has a lot of advantages. It’s a win-win for both business and administration.
VAT groups are already in nearly 20 EU countries, and other countries – including France and Poland – are taking steps to enable them to operate.
In Poland, VAT groups will become available to taxpayers from July 1, 2022. Thanks to this, for the first time since 1993, tax on goods and services will not be collected from entities which, despite their links, remain legally separate.
Win-win
The most important benefit of creating a VAT group is the neutrality of turnover between group members. Thanks to this, Poland will become an even more attractive place to invest for both foreign and domestic investors. This solution is a win-win for both business and administration.
How is it now
Currently, taxpayers related financially, economically and organizationally are accounted for separately. As a result, they have to issue VAT invoices, separately submit the JPK_VAT file, which includes the VAT declaration and records. The requirements for entities that are completely independent of each other also apply to their settlements. For example, it is obligatory to verify the contractor in the list of VAT taxpayers (the so-called white list) or to use the split payment mechanism – although both economically and economically, these entities are one.
The benefits of VAT groups
The situation will change from July 1, 2022, because from then on, related companies will be able to settle together as one taxpayer.
The most important benefit of creating a VAT group is the neutrality of turnover between group members. As the turnover within the group is not subject to VAT and is not documented with invoices, the need to use the split payment mechanism or to verify the contractor in the list of taxpayers ceases to apply. The taxpayer is the VAT group as a whole, so one collective JPK is also submitted, instead of separate JPK for each entity.
The advantage is also more effective cash flow in the group, thanks to the flexible management of input tax. For example, if a given entity was, before joining the group, a taxpayer who regularly had an excess of input tax over due tax, then it had to wait for a VAT refund – typically up to 60 days.
If this entity enters the group which as a whole shows a surplus of output tax over the input tax, then this tax previously reported as VAT to be refunded will be included “on an ongoing basis” in the group’s settlements. As a result, entities operating as a VAT group per balance more effectively “use” input VAT and none of the entities waits for VAT refund. This solution is also beneficial for entities that, before joining the group, were not entitled to deduct input tax due to the provision of services excluding this right (e.g. financial services exempt from VAT).
Who can create a group
Entities wishing to establish a VAT Group do not have to have the status of a Tax Capital Group on the basis of CIT.
However, they must be related at the same time financially, economically and organizationally.
In the case of financial relations, the 50% criterion was adopted. equity participation. The idea is for one of the taxpayers to directly own over 50 percent. shares or stocks in the share capital or over 50%. voting rights in controlling, constituting or managing bodies, or more than 50% the profit participation rights of each of the other taxpayers that are members of that group;
VAT groups will be able to establish domestic entities and Polish branches of foreign entities in Poland. This solution will be open to any legal form, including small and medium-sized business.
The period of operation of a VAT group cannot be shorter than 3 years. However, it will be possible to extend this period.
Source: gov.pl
