The new VAT matrix and binding rate information (BRI)

• On 1 July 2020, a new VAT matrix came into force in Poland. The matrix unifies the VAT rates within specific groups of products, to which different VAT rates have been applied so far. For example, bread is now subject to a reduced rate of 5%, although rates within the group to which it belongs ranged from 5% to 23%. Moreover, VAT rates for some products have decreased while others have been increased.
  
  
• The classifications of goods and services have also been amended. The Polish Classification of Products and Services of 2008 has been replaced by the pan-European Combined Nomenclature (CN) for goods and the Polish Classification of Goods and Services 2015 (PKWiU) for services. This means that the codes used so far must be adjusted to the new classifications.
  
  
• Moreover, the amendments provided for introduction of a new instrument referred to as Binding Rate Information (BRI). BRI is a document by means of which the Head of the National Revenue Information Service establishes the VAT rate for goods or services being subject of the application. It includes a description of the commodity/service, information on the item’s classification under CN/PKWiU 2015 and the relevant VAT rate to be applied. The BRI grants companies tax and penal-fiscal protection in the event of challenging the correctness of the applied VAT rate in the course of a potential inspection or tax procedure.
  
  

Our dedicated team of experts will comprehensively support you in adjusting the applied codes to the new nomenclature, in force as of 1 July 2020. The first stage of transition will consist in carrying out a review of the VAT rates currently applied by the company, in line with PKWiU 2008. Next, based on the available conversion keys, the PKWiU 2008 codes will be replaced by the pan-European Combined Nomenclature (CN) for goods and the Polish Classification of Goods and Services 2015 (PKWiU) for services. The process will be supported by KPMG’s proprietary IT solutions.

Our dedicated team of experts will establish which VAT rate should be used for a given CN/PKWiU 2015 code. In practice, this constitutes the most important stage of work, during which the content of the Combined Nomenclature will be analysed, taking into account the explanatory notes thereto, judgments of the Court of Justice of the European Union and other documents affecting the correct assignment of CN codes (e.g. the existing Binding Tariff Information and Binding Rate Information).

Our extensive practice shows that establishing a VAT rate based on new CN codes may give rise to many doubts. Bearing in mind the security of your organization's tax settlements, we may assist you through drafting an application for the issuance of a Binding Rate Information. This way, you will be sure that the VAT rate and the related settlements are correct and that the potential risk of negative tax and penal-fiscal consequences in the event of challenging the correctness of the applied VAT rate in the course of a potential audit or tax proceedings will be significantly reduced.