Polish legislation and the practice of the tax authorities allow taxpayers to make additional savings depending on the way the settlements are performed. Depending on the scale and resources of the business conducted, additional funds can be obtained not only by structuring transactions in a given way, but also by additional analysis of the documentation already collected.

Below you may find some examples of the ways or methods of achieving VAT savings both this year and in future years.

1. Review of purchase invoices for the period December 2018 – November 2019

In the course of business, it may happen that input tax is not deducted from some invoices because of doubts about this possibility. There may be various reasons for this, such as an uncertainty regarding a certain category of expenditure, the documentation accompanying the purchases (e.g. proof of the provision of services, whether the tax point arose), or the inability to find sufficient time to analyze the issue giving rise to the doubt.

In this case, it is advisable to prepare a summary of the doubtful costs, including the amounts resulting from the "doubtful invoices". The result of this exercise should initiate a process finalized with a decision whether the input VAT should be deducted from invoices received in previous years. This will also be an excellent exercise to effectively deduct input VAT in the future.

2. The right to recover overpaid VAT

With the end of this year, it will no longer be possible to recover overpaid tax for 2018. It is therefore worth reviewing sales invoices from a number of perspectives, in particular the possibility of reducing the amount of tax resulting from corrective invoices (in minus) or from the application of an unduly and excessively high VAT rate in the case of sales performed to consumers.

Successfully claiming interest on incorrectly overstated amounts of tax is one of the mechanisms of obtaining additional amounts of overpaid tax. An example of such an opportunity is the situation where the tax authorities' practice has not erroneously allowed to issue VAT invoices without VAT to an entity based outside of Poland.

3. International transactions

The tax rules, which are, among other things, the result of the implementation of EU regulations, make it possible to optimize the settlement of transactions, which is an opportunity to maintain an adequate level of liquidity.

Some companies are unable to take full advantage of the reduced rate because they do not have the necessary documentation. We recommend not only reviewing the relevant documentation collection processes, but also reviewing the source documentation itself (including transport documentation). This will help to take advantage of the opportunity to reduce the obligations arose this year and to ensure minimizing the administrative burden in next years. In addition, businesses sourcing goods from outside the EU can benefit from optimizing their import settlements by taking advantage of a number of mechanisms and exemptions resulting directly from the legislation.

4. Indirect discounts

In some sales models, savings can be made by granting indirect rebates. Such rebates are common, for example, in the retail industry, where a producer sells goods to a wholesaler. The wholesaler in turn sells the goods to a retailer. The retailer sells the goods in the course of its business and receives additional remuneration when it exceeds a certain volume of sales of the producer's goods. This allows the retailer in certain cases to receive additional remuneration without an obligation to issue an invoice.

5. Domestic supply 0 percent if goods are used to supply services

For companies that make supplies to foreign entities, there are a number of options for indicating a VAT treatment of these supplies. As a general rule, domestic supplies are taxed at the standard rate. However, the legislation expressly allows the supply to be locally taxed at the 0 percent rate, provided that the goods are subsequently used for the supply of services.

6. Continuous supplies of goods

In principle, each supply of goods should be accounted for separately, i.e. the tax is charged on the day on which the right to dispose of the goods as owner is transferred.

However, businesses that supply large quantities of goods, particularly to regular customers, may consider an accounting mechanism that allows the volume of goods supplied to be treated as a continuous supply. This will allow the date of chargeability for the entire volume to be set at a single date (e.g. a particular month). As a result, it will be possible to reduce the burden of establishing chargeability for each supply. It will also facilitate the use of the correct exchange rate and increase the efficiency of the invoicing process.

We will be discussing these and other similar methods in more detail during our webinar "VAT at year end and beginning – where to look for savings?" on 7 December (webinar will be conducted in Polish).