POLAND - Mandatory disclosure rules
On 1 January 2019, the provisions concerning the mandatory transmission of information on tax schemes (Mandatory Disclosure Rules - MDR) to the Head of the National Revenue Administration came into force in Poland.
Their introduction resulted, among other reasons, from the transposition of Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU regarding the mandatory automatic exchange of information in the field of taxation with respect to cross-border arrangements subject to notification (the Directive).
However, the MDR regulations that have just been introduced in Poland go well beyond the scope of the Directive and also provide for the obligation to report domestic, and not only cross-border, schemes.
Justifying the introduction of these provisions, the Polish government stated that the Polish tax administration needed quick access to relevant information on taxpayers' activities in the area of potentially aggressive tax planning. Such information is necessary to identify the tax law risks posed by tax schemes and to take appropriate action.
Who must report?
Reporting is an obligation for three categories of entities:
- Users - i.e. the entity to which an agreement is made available or implemented, or which has taken action to implement such an agreement;
- Promotor - an entity that develops, offers, makes available, implements or manages the implementation of an agreement. As potential promoters, the Act directly identifies tax advisers, legal advisers, attorneys, and also employees of financial institutions advising clients. Regardless of this, the promoter can also be any person who develops, offers or makes available a tax scheme;
- Assistant - in particular, a statutory auditor, notary, person providing bookkeeping services, accountant or financial director, bank or other financial institution and their employees. However, it may be any person who, in the course of his professional or business activity, undertakes, directly or indirectly through other persons, to assist in the development, marketing, organisation, making available for implementation or supervision of the implementation of the agreement.
What is a tax scheme?
Basic terms used to define a tax scheme
- ‘Agreement’ - an activity or a set of related activities, including planned activities or a set of planned activities, in which at least one party is a taxpayer or which have or may have an impact on the creation or failure to create a tax obligation and tax benefit.
- ‘Tax benefit’ - failure to create, delay or reduce the tax liability, creation or overstatement of a tax loss, creation of an overpayment or right to a refund, increase in the amount of the excess of input tax over output tax, failure to create an obligation or delay in the creation of an obligation to prepare and communicate tax information.
Definition of a tax scheme
A tax scheme should be understood as an arrangement which:
- Meets the criteria of main benefit and has a general identifying feature;
- Has a special identifying feature;
- Has another special recognition feature.
It is sufficient that one of the above conditions is met for the agreement to be classified as a tax scheme.
Types of tax schemes:
- Tax scheme
- Standardised tax scheme - a tax scheme that can be implemented for more than one beneficiary.
- Cross-border tax scheme - must meet the criteria of the main benefit, has any distinguishing feature and has a special distinguishing feature.
Polish regulations contain an extended catalogue of 24 identifiers. Only 11 of them require the occurrence of the so-called potential tax benefit. In the case of other features, there is no need for such an advantage to occur.
What information should be reported?
The Head of the Polish tax administration (Head of the CAS) should be provided with information containing the company's data, tax identification number (NIP), name, surname, date and place of birth. Additional attachments will include a description of the tax scheme, applied tax law regulations and the expected amount of tax benefit.
This information is transmitted electronically by means of special logical structures made available by the Ministry of Finance. Upon application, the scheme will be given an individual NSP reference number.
Reporting only after crossing the threshold
In the case of schemes other than cross-border tax schemes, there will be no reporting obligation if the criteria of the so-called Qualified Beneficiary, which is considered to be an entity, is not met:
- Revenues or costs or the value of assets exceed the equivalent of EUR 10 million in the preceding or current financial year, or which is related, within the meaning of the (amended) transfer pricing regulations, to an entity that meets the above criteria, or;
- The agreement being made available or implemented concerns assets or rights with a market value exceeding the equivalent of EUR 2,500,000.
Penalties and sanctions
In the case of failure to comply with the obligations to provide information about tax schemes, the entities in question are subject to a penalty of up to PLN 2 million, and in the case of a tax fraud confirmed by a final court ruling, of up to PLN 10 million.