Based on the recently approved VAT law in Poland by Polish Senate called the Slim VAT 3, the Polish tax office will have the ability to lower the number of VAT sanctions, but it is uncertain whether it can refrain from imposing them. The decision on imposing sanctions will be made after examining the circumstances of the case and the type of irregularity.
This is a result of the C-935/19 case in which the Court of Justice of the European Union (CJEU) ruled that the 20% penalty imposed by Poland on a company for an error in its VAT reporting was disproportionate and violated EU law. The CJUE ruled that the penalty should be reduced to zero because the company had acted in good faith and had corrected the error as soon as it was discovered. The case was brought by Grupa Warzywna, a Polish fruit and vegetable company, which had been fined for failing to include VAT on an invoice for a property transaction. You can read more about this case on the official website of the European Court of Justice.
Experts however point to the lack of criteria for such a reduction, which gives officials a wide range of discretion. There is no certainty whether the Polish tax office must impose the sanction at least in a minimum value (the provision still states that “the head of the tax office or head of customs and tax office establishes an additional tax obligation”) or whether the tax office will be able to waive it altogether. Looking at the verdict to the above case where the CJUE decreased the sanction to zero the wording of the new law should rather be that the tax office can establish a sanction instead of “establishing” it.
The most positive information, however, is that additional VAT obligations will no longer be “rigidly” 30%, 20%, and 15% of the amount of tax understated but the tax office should assess and scale the taxpayer’s offense. Unfortunately, still taxpayers will not have the tools to challenge their decisions.
The new provisions enter into force on the day following the date of publication.
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