Banks and other financial institution may opt for B2B VAT on certain activities
Poland is to take up the EU VAT Directive option to allow businesses to charge VAT on certain B2B financial service transactions. This will come into effect from 1 January 2022. The change would offer cash-saving opportunities for some businesses which are otherwise restricted from deduct input VAT on their financial services.
Under the Directive B2C transactions for banking and insurance must always be exempt from VAT. However, EU VAT exemption on financial services is under review this year with a proposal to remove it on certain activities.
VAT on Polish Financial Services
Poland proposes to allow the option on the following services (note, insurance is excluded):
- Fund management
- Cash deposit services
- Loans and credit services
- Financial instrument services
A taxable person who makes use of the proposed option will be required to tax all the financial services listed in the Act which are provided to VAT taxable persons. Thus, taxpayers may not waive the exemption for selected services only. According to the draft amendment, a taxpayer who waives the exemption will be bound by its choice for a period of two years. After this period, the taxpayer could apply the exemption again in transactions with other taxpayers.