Entrepreneurs should analyse the last 3 years in terms of MDRs

From 1 July, the epidemic state will disappear (as envisaged by the draft regulation of the Minister of Health), which will result in the reporting of domestic tax schemes (MDR). Does this mean that traders have not had to do this throughout the epidemic state?

J.Ch. – As a result of the entry into force of the Act of 2 March 2020 on special solutions related to the prevention, prevention and combating of COVID-19, other infectious diseases and emergencies caused by them (i.e. the so-called Covid Law), the deadlines for reporting schemes other than cross-border schemes, i.e. so-called domestic schemes, did not start, and those started were suspended from 31 March 2020 until the 30th day following the cancellation of the epidemic emergency and the epidemic state declared in connection with COVID-19. Consequently, in the period from 31 March 2020 until the 30th day following the cancellation of the epidemic emergency in Poland (which is likely to be at the end of July), there was in fact no obligation on entrepreneurs to report so-called national schemes on an ongoing basis.

It should be emphasised that the provisions of the Covidium Act also applied to the so-called cross-border schemes from 31 March 2020 to 1 January 2021, which means that for the remaining period of the epidemic and epidemic emergency, entrepreneurs were under an obligation to report the so-called cross-border schemes.

And if they wanted to report these schemes, despite the exemption, could they do so?

J.CH. – Yes, notwithstanding the aforementioned provisions of the Covidium Act, throughout the duration of the pandemic state and during the period of the epidemic emergency, traders were able to report tax schemes on an ongoing basis, which is directly provided for by the provisions of this Act, i.e. Article 31y(2).

Let us assume that the entrepreneur took advantage of the relief and did not report schemes throughout the epidemic state. What should he do now?

D.Ch. – In such a case, it is worth conducting an internal review, preferably with the support of tax advisers specialising in these issues – all the more so as these are very complicated regulations, which is confirmed at least by the administrative courts (e.g. the judgment of the WSA in Warsaw of 23 April 2020, ref. no. III SA/Wa 2395/19, in which the court indicated: “(…) effective from 1 January 2019, the provisions on mandatory disclosure of tax schemes raise numerous interpretative doubts. The doubts raised in the literature about the provisions introduced cannot be overlooked. Promoters or beneficiaries in practice do not know whether and how to implement the reporting obligations. The clarifications, which were intended to provide answers to key questions, have resulted in further areas of uncertainty.”

What exactly should be done as part of such an audit?

D.Ch. – As part of it, all the activities made and planned by the entrepreneur in the period from 31 March 2020 should be analysed in terms of whether they meet the prerequisites to be considered a reportable tax scheme. Given that the deadlines for reporting so-called domestic schemes have been suspended for more than three years, more than three years of the trader’s activities should be analysed.

If, after the analysis, an entrepreneur finds that he has been subject to schemes, does he have to report them in a single document sent to the treasury, or does each scheme have to be reported separately?

D.CH. – If several tax schemes are identified, they must be reported in separate documents each time. Moreover, if a tax scheme is identified and an MDR-1 report is filed, as a general rule, the entity in question will be required to file an MDR-3 when the scheme is implemented, or the benefits of the scheme are realised, separately for each year.

The entire interview can be read here: Przedsiębiorcy powinni przeanalizować ostatnie 3 lata pod kątem MDR-ów [WYWIAD] – Forum Polskiej Gospodarki (fpg24.pl)