Country and tax compliance updates | issue 2 – Europe
Poland to introduce Split Payments, Greece to introduce new VAT rates...
IAPR and MyData
In August 2019, the Greek Independent Authority for Public Revenue (IAPR) launched a public consultation on MyData. This means that final requirements have not (yet) been formulated and may still change as a result of the feedback given by the various consulted parties. The Public Policy and Compliance working group EESPA (the European E-invoicing Service Provider Association) of which Tungsten Network is a member was one of the consulted parties.
It is our current understanding that the IAPR proposal as it stands does not mandate the use of electronic invoicing – it is not a clearance model as we have seen in Italy, Turkey and most Latin American countries. The current myData proposal is rather a reporting model as seen in, for example, Hungary, Taiwan and South Korea, with the addition of online bookkeeping. It also provides tax payers with the ability to choose timing of the transmission of the relevant transaction data (real-time or periodic).
As stated, requirements have not yet been formalised by IAPR. As MyData does not seem to seek compulsory electronic invoicing and government clearance we believe that the impact on Tungsten Network users may be relatively limited, but things may change and we will keep you posted.
The Greek government had decided to abolish the reduced vat rates for 27 Northeast Aegean and Dodecanese islands effective from 1 January 2018. All except for five islands are required to use the new vat rates of 5%, 6% and 24%
The five islands affected – Leros, Lesvos, Kos, Samos and Chios – have received two extensions of six months (extended until 31 December 2019) to use the reduced VAT rate of 30%.
Hungary is planning to pilot introduce SAF-T reporting in January 2020, looking at potential full coverage in 2021.
From 1 November 2019 the new Split Payment mechanism will be mandatory for 150 product and service groups in line with the Polish Classification of Products and Services (PKWiU) in 2008. Poland has announced it will commence imposing penalties for non-compliance with Split Payment from January 2020.
Please visit the EU link to understand the type of goods and services covered in the split payment mechanism.
How does it work?
When a taxable person in Poland acquires goods or services from another taxable person in Poland, a proportion of the payment that is VAT will be deposited separately to a blocked bank account of the seller. The amount deposited in this account will earn interest for the vendor and may be used to satisfy their VAT obligations. The net amount for the transaction will be received by the seller.
Foreign entities subject to VAT in Poland that meet the threshold are required to create a bank account in the country. The details of the Split Payment are required to be shown on the invoice.
The new legislation means that from November 2019, entities that sell products that fall under the Split Payment mechanism must include a statement on VAT invoices that the invoice is subject to the Spilt Payment (‘mechanizm podzielonej płatności’).
Cut off scenarios
Goods and services that are currently subject to mandatory reverse charge requirements (as per Attachments 11 and 14 of the Polish VAT Law) will become part of the split payment mechanism from 1 November 2019. This means that the timing of transactions will determine which invoicing regime applies (reverse charge or split payment).
Tungsten is currently planning the best way for allowing customers to include the required spit payment indication statements. We are also considering to which extent we should support suppliers with the various cut off scenarios.
Like Hungary, Romania is planning to introduce a pilot to prepare for the introduction of the Standard Audit File for Tax (SAF-T) for large taxpayers in January 2020. Romania’s tax authority, Agenția Națională de Administrare Fiscală (ANAF), is seeking to introduce full SAF-T VAT reporting by the end of 2020.
Have you got questions on Compliance or Tungsten’s Roadmap? Get in contact with our Country and Tax Compliance team at [email protected]