The benefits of VAT Groups in Poland

Thu 17 Feb 2022

From 1 January 2022, VAT taxpayers will be able to create a VAT Group in Poland. The act implementing this “Polish Deal” introduced the separate institution of a VAT Group, previously unknown in the Polish tax system, enabling consolidated VAT accounting within a capital group.

What are the benefits of establishing a VAT Group in Poland?
The creation of a VAT Group means that the supply of goods and provision of services between entities belonging to that Group does not constitute activities subject to VAT. As a consequence, there is no need for VAT invoices for these intragroup transactions (e.g. it is enough to issue an accounting note), and there is consequently no split payment accounting for such invoices. Moreover, the VAT Group is a particularly advantageous solution for entities with intragroup supplies that are unable to deduct input VAT in full. Establishing a VAT Group can also favorably impacts the financial liquidity of its entities.
 
What are the conditions for establishing a VAT Group?
Taxpayers with financial, economic, and organisational ties can create a VAT Group:

1. established in the territory of Poland; or
2. not established in the territory of Poland, but conduct business activities via a subsidiary located in Poland.

 
The conditions for the existence of financial, economic, and organisational relations between the members of the VAT Group, which are described in detail in the Polish VAT Act, will have to be met continuously for the period in which this Group has the status of a taxpayer.  An entity can only be a member of one VAT group, and each member of the VAT group will be jointly and severally liable for the group’s VAT.
 
How to create a VAT Group?
For the VAT Group to be established, a written agreement on the creation of a VAT Group must be concluded, which will include, among other things, the following information:

• the name of the VAT Group;
• identification data of taxpayers forming the VAT Group;
• designation of a representative of the VAT Group to file the group’s VAT return,  appointed from amongst its members ;

identification data of shareholders (stockholders) and the amount of their share in the share capital of taxpayers forming the VAT Group, holding over 50% of shares (stocks) in the

• share capital of these taxpayers or more than 50% of the voting rights in the controlling, constituting or managing bodies, or more than 50% of the right to share in profit, of each of the other taxpayers that are members of that group.  There are similar requirements for non-corporates who wish to form VAT groups; and
• an indication of the period for which the VAT Group was established, not shorter than 3 years.

 
What kind of support will be needed?

• Preparation and analysis of whether the creation of the VAT Group will be profitable in your business model; and
• assistance in the preparation of the agreement for the establishment of the VAT Group and in the registration of the VAT Group;

A review of VAT procedures within the group to ensure that intragroup and external transactions are correctly dealt with.