To 25 November 2020 taxpayers will have to prepare for the revised requirements imposed by the Ministry of Finance, which will involve the provision of new, not yet required data. What's that got to do with transfer pricing? In spite of appearances, quite important.
The new VAT JPK file is an electronic document that will include two elements: VAT records (i.e. information on purchases and sales for the period in question) and the VAT return; second item only concerns declaration VAT-7 and VAT-7K. Until its submission are from 1 October 2020 all entrepreneurs registered as active VAT payers (i.e.
large, medium, small and micro entrepreneurs).
The date of dispatch does not change – as with the ‘old’ VAT JPK, this will 25 the day of the month following the month in question for the monthly declarations; in the case of quarterly declarations, only the part of the declaration will be sent to the 25 the day of the month following the quarter in question, and the monthly part of the month to 25 the day of the month following that for which it is lodged.
New GTU markings for TP
We already know who and when will be required to submit a new VAT JPK, but what about the new data mentioned in the introduction above?
The registration section will have to contain certain indications which are mentioned in the Regulation of the Minister of Finance, Investment and Development of 15 October 2019 on the detailed scope of the data contained in the tax returns and in the records on the tax on goods and services (Journal of Laws of 2019, item 1988, hereinafter referred to as the Regulation).
The indications will apply to groups of goods and services (GTU markings), types of transactions, sales evidence and purchase evidence.
The question of these markings alone may raise questions and doubts for the taxpayer (P. Paweł Dymlang wrote in the article “Terms of markings” in the new VAT JPK files. point (e) and documents and transactions in JPK_V7M/JPK_V7K” published in 22 RB Newsletter).
At this point, however, let's focus on identifying the type of transactions that first It doesn't seem that embarrassing. We are talking about the TP marking, which is rightly associated with transfer prices.
It concerns the existing links between the buyer and the supplier of the goods or services in question under Article 32(2)(1) Act dated 11 March 2004 on tax on goods and services (i.e. Journal of Laws of 2020, item 106 as amended, hereinafter referred to as: VAT Act).
According to the above mentioned provision of the VAT Act, by means of links between entities, the following shall be understood:
links within the meaning of Article 23m(1)(5) Act dated 26 July 1991 on income tax on individuals (i.e. Journal of Laws of 2020, item 1426, as amended) and Article 11a(1)(5) Act dated 15 February 1992 on corporate income tax (i.e. Journal of Laws of 2020, item 1406, as amended) (hereinafter referred to as: the PIT Act and the CIT Act or combined income tax laws),
the employment relationship,
resulting from the adoption.
According to the Income Tax Act, the following shall be understood through related entities:
- entities one the entity has a significant influence on at least one another entity, or
- entities that are significantly affected by the same other entity or spouse, relative or related to second the degree of natural person having a significant influence on at least one the entity, or
- a company having no legal personality and its partners, or
- the taxpayer and his foreign establishment.
This definition raises the question: what is having a significant impact? This issue is also governed by the PIT Act and the CIT Act (as appropriate). Under Article 23m(2) and Article 11a(2). As defined in these provisions, the following shall be understood by exerting significant influence:
possession directly or indirectly at least 25% shares in capital, or at least 25% voting rights in control bodies, acting as or managing bodies, or at least 25% shares or rights of participation in profits or assets or their exspects, including units and investment certificates, or
the actual ability of a natural person to influence key business decisions by a legal person or an organisational entity without legal personality, or
being married or having a relationship or affinity for second grade.
First of all, it is important to emphasise that the obligation to use the ‘TP’ sign already determines the mere existence of a link between the entities involved in the transaction; in this case it is not important to draw up the transfer pricing tax documentation because not every transaction between related parties requires such documentation. This is due not only to the fixed quota thresholds, the excess of which obliges to draw up tax records, but also to the numerous exemptions submitted under Article 11n CIT Act and Article 23z PIT Act.
According to the website podatki.gov.pl an important moment for assessing the existence of links between counterparties is the moment of delivery of goods or the performance of the service, possibly the receipt of an advance or prepayment, if an advance invoice has been issued.
Penalties in case of mislabelling or lack of marking in the registration part of the new VAT JPK?
First of all, there is a penalty of 500 PLN, resulting from Article 109(3h) VAT Act as amended by 1 October 2020 However, before it is imposed, the Chief of the Tax Office will call on the taxpayer to correct the errors identified. According to Article 109(3g) VAT Act as amended by 1 October 2020 Within 14 the days from the date on which the notice is served, the taxable person may choose:
- send to the Chief of the Tax Office the records corrected for errors indicated in the call,
- either
- provide explanations showing that the records do not contain the errors referred to in the call.
According to the above mentioned Article 109(3h) VAT Act as amended by 1 October 2020, penalty 500 PLN shall be imposed by the Chief of the Tax Office by decision if the taxable person:
- it will not send a record corrected for the errors indicated in the call or will not provide an explanation, or it will do so after the deadline,
- in the submitted explanations, it shall not show that the records do not contain the errors referred to in the call.
However, the penalties are not over. Additional may be imposed in accordance with the provisions Act dated 10 September 1999 Tax Penal Code (i.e. Journal of Laws of 2020, item 19, as amended, hereinafter referred to as: 1 October 2020 It's exactly about adding Article 61a, of section 1 reads:
If, contrary to the obligation to send a book to the competent tax authority or to send it to the competent tax authority, it is liable to a fine to 240 daily rates.
In turn, according to Article 61a section 2 If a minor offence is committed, the person who committed the above offence shall be liable to a fine for fiscal misdemeanour. The penalty specified in section 2 the taxable person who sends the defective book or after the deadline will also be liable.
Additional penalties also arise from Article 56 section 4 KKS. According to this provision, he fines fiscal misdemeanour a taxable person who, despite the disclosure of the subject matter or the taxable base, does not submit a declaration or a declaration or a declaration to the tax authority or payer within the time limit, or does not submit it by electronic means, or submit it contrary to the model of the electronic document.
Taking into account the penalties described above threatening the taxpayer for misuse or lack of markings in the VAT registration section of the VAT JPK how much help it will be to indicate errors by the Chiefs of the Tax Offices, this will only be known in the future), it will be necessary for taxpayers to prepare themselves carefully for new obligations related to the transmission of the VAT JPK file. Not only on the ‘TP’ mark discussed above.
Author: Michał Zdanowski, tax consultant in Russell Bedford Poland. Graduated from the Faculty of Law and Administration of the University of Warsaw, Graduate of the Postgraduate Tax and Tax Law Studies of the University of Warsaw, Graduate of the Postgraduate Accounting and Finance Studies of the Warsaw School of Economics.
During his studies, he gained experience in law and tax law firms. Since September 2013 is associated with the law firm Russell Bedford Poland. It specialises in documenting transactions between related parties.