As a result of Brexit, UK businesses are obliged to appoint a Polish entity as their VAT representative if they do not have a fixed establishment in any EU Member State. This requirement applies to all foreign entities established outside the EU that do not have a fixed establishment in an EU Member State. But, EU Member States are free to decide whether they want to force foreign entities to appoint a VAT representative.
Currently, the Polish tax authorities have identified UK entities registered for VAT in Poland and the authorities have ask them to explain their status and to present their VAT representation agreement, if required. UK entities that want to register for VAT must submit such a written VAT representation agreement as part of the registration process. Tax declarations submitted by UK entities that fail to appoint a VAT representative will be ineffective because only VAT representatives can submit VAT returns.
UK entities can decide to appoint a Polish affiliate as their VAT representative. But, it should be noted, not every entity qualifies as a VAT representative, as certain requirements must be met. In particular, the Polish representative must be entitled to perform tax advisory services or bookkeeping services. Moreover, to qualify, the Polish representative cannot have any tax debts.
The Ministry of Finance has announced that it is working on amendments that would waive for UK and Norwegian companies the obligation to appoint a VAT representative. If this amendment comes into force, UK entities will be in a privileged position compared to entities from other countries outside the EU. Moreover, this would apply retroactively from 1 January 2021.
Emilia Wolnowska
emilia.wolnowska@bdo.pl