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Poland – excess of input tax over output tax

By February 19, 2020July 10th, 2021No Comments

Please be informed that at the beginning of this year, the Polish Supreme Administrative Court has upheld the unfavourable decision for the taxpayer, that in accordance with the Polish VAT Act regulations the 5 year of the limitation period also applies to the excess of input tax over output tax…

The excess of input tax over output tax can only be carried forward for 5 years.

Please be informed that at the beginning of this year, the Polish Supreme Administrative Court has upheld the unfavourable decision for the taxpayer, that in accordance with the Polish VAT Act regulations the 5 year of the limitation period also applies to the excess of input tax over output tax. It means that the surplus cannot be carried forward to subsequent periods indefinitely.

In the case the taxpayer reported for the first time the excess of input tax over  output tax in one of the VAT return periods in 2010 and carried it forward for almost 7 years. Then reported in 2017 the VAT refund and the Polish tax authorities questioned this practice. The tax authorities applied the 5-year limitation rule, like in other tax cases. It was stated that the right to the VAT refund expired at the end of 2015.

The taxpayer challenged the tax authorities’ decision to the administrative courts. Unfortunately, at the last instance of court proceedings, the Supreme Administrative Court ruled in a favour of the tax authorities.

The problem above is not new. In the past, the Polish tax authorities together with administrative courts settled in the similar cases. The judgement confirms the unfavourable jurisprudence of the Polish administrative courts.

According to the above, taxpayers applying for a VAT refund of the excess of input tax over output tax, after years of carrying it over to the subsequent settlement periods (when the 5 year period had already passed) may be faced with a refusal to refund it by the Polish tax authorities.

 

If you are interested and face a similar situation, please do not hesitate to contact:

Łukasz Woźniak, Senior Tax Consultant: lwozniak@asbgroup.eu

Anna Szafraniec, CEE VAT Compliance Manager: aszafraniec@asbgroup.eu