Supreme Administrative Court Questions Compliance of Polish VAT Act with EU Law
MDDP, a leading consultancy firm, has recently achieved a significant legal milestone by persuading the Supreme Administrative Court to refer a crucial question regarding Polish VAT regulations to the Court of Justice of the European Union (CJEU) for a preliminary ruling. This development is poised to potentially reshape the VAT landscape in Poland, benefiting taxpayers across the nation.
The Core Issue: VAT Invoice Prerequisites
In a case where MDDP represented one of their clients, the Supreme Administrative Court raised concerns about the compliance of the Polish VAT Act with EU law. Specifically, the issue revolves around whether the Polish legislator’s requirement for taxpayers to possess a VAT invoice as a prerequisite for the right to deduct VAT aligns with EU regulations. According to EU law, while possession of an invoice is necessary for exercising the right to deduct VAT, the right itself arises independently of having the invoice.
Implications for Taxpayers
This question strikes at the very foundation of the VAT system. Currently, under Polish law, if a taxpayer receives an invoice in the month following the tax obligation, they can only deduct VAT in the period when they received the invoice. If the CJEU finds these provisions inconsistent with EU law, it could lead to a significant change: taxpayers might be allowed to deduct VAT in the month the tax obligation arose, provided they have the invoice by the deadline for filing the tax return for that period (i.e., by the 25th day of the following month).
Such a change would simplify tax compliance and provide considerable benefits to taxpayers, streamlining their operations and reducing administrative burdens.
A Historic Moment for Polish VAT Law
What’s particularly noteworthy is that this referral could mark the first-ever Polish VAT case before the General Court of the EU, following recent reforms of the CJEU. This historic step underscores the evolving nature of VAT regulation and the importance of aligning national laws with overarching EU directives.
Conclusion
MDDP’s successful advocacy in this matter highlights the firm’s commitment to advancing legal clarity and fairness for taxpayers. The forthcoming decision by the CJEU has the potential to bring about a more consistent and taxpayer-friendly VAT system in Poland, aligning it more closely with EU regulations. As the case progresses, it will be closely watched by legal experts and taxpayers alike, anticipating a ruling that could simplify and improve VAT compliance across the country.
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