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Slim VAT 3, and changes to WIS and partial deductions

On July 1, 2023, the regulations introduced by the Slim VAT 3 package came into effect. The package aims to simplify the regulations applicable to VAT settlements.

Binding Rate Information (WIS)

With the introduction of the Slim VAT 3 package, binding rate information (WIS) is issued only by the Director of Tax Information, who can amend and revoke previously issued WIS. The rules regarding the period for which a WIS will be issued have also been regulated. As of July 1, 2023, it is a period of five years, starting from the day following its delivery, assuming that no expiration, revocation or amendment occurs. Binding rate information may expire if the legal basis for the tax rate, statistical classification or the tax rate corresponding to the product or service becomes time-barred.

Another change introduced by Slim VAT 3 is the issuance of WIS free of charge, provided that it does not require further analysis and research. According to the regulations, if the issuance of WIS requires research, the taxpayer has seven days to provide the relevant documents. If the documents are not provided, the authorities have the right not to consider the application. However, this decision is still subject to appeal by the taxpayer.

It should also be mentioned that taxpayers applying for a WIS will have to submit the document on an updated template, which is available on the National Tax Information website.

However, the most important change with regard to WIS is the scope of subject validity: well, in the above period it is to apply to both the authority and the taxpayer. For the latter, an unfavourable WIS could prove troublesome and mean having to change the parameters of the benefit in order to “escape” this scope of validity.

Partial deductions

The Slim VAT 3 package also regulated the provisions on partial VAT deductions. Now, the taxpayer has the right to take an initial proportion himself, which he must then notify the head of the tax office. Recall that before the introduction of Slim VAT 3, the preliminary proportion was determined jointly by the head of the tax office and the taxpayer.

Changes have also occurred in the rounding of the VAT proportion. According to the new regulations, if the proportion does not exceed 98%, the taxpayer may round it up to 100% only for non-deductible amounts of input VAT not exceeding PLN 10,000 per year. Previously, the maximum amount in this situation was only PLN 500 per year.

What’s more, there is a new provision introducing the possibility to waive the annual adjustment of VAT that has been charged in case the difference between the initial proportion and the proportion established does not exceed 2 percentage points.

In a situation where the proportion established for the completed tax year is less than the preliminary proportion, the taxpayer will be able to opt out of the adjustment if the amount of non-deductible input tax resulting from the difference between the established proportions does not exceed PLN 10,000.