Tax schemes reporting (MDR)

On 1 January 2019, an obligation to notify tax authorities of tax arrangement schemes entered into force. Information about tax arrangement schemes made available or implemented after 1 January 2019 should be filed within 30 days of making them available or starting their implementation.

The provisions of the Tax Ordinance introducing MDR were aimed at implementing EU Council Directive 2016/1164 (DAC6 Directive). Poland was one of the first countries in Europe which introduced the recommendations of the DAC6 Directive into the legal order and significantly extended the definition of tax arrangements covered by reporting, including e.g. the necessity to report domestic tax arrangements.

MDR - what is the scope of reporting obligation?

MDR concerns tax-planning schemes understood as an activity or a series of related activities in which at least one party is a taxpayer, or which have or may have an impact on the occurrence or failure of a tax obligation meeting the criteria specified in the Act. At the same time, those activities must meet the criteria indicated in the amended provisions - different for cross-border schemes and for domestic schemes:

Domestic schemes will be subject to mandatory disclosure if the beneficiary of the scheme will be a qualified entity (revenues, costs or assets of the beneficiary or of its related party exceed €10 million, or the scheme concerns items or rights of market value exceeding €2.5 million). Domestic scheme must be reported if first activity concerning it had been made after November 1, 2018,
Cross-border schemes will be subject to mandatory disclosure, regardless of whether the beneficiary is a qualified entity. Also, there is a duty to report certain information about tax scheme, e.g. detailed description, applied tax las provisions and expected value of tax benefit. Cross-border scheme must be reported if first activity concerning it had been made after June 25, 2018.

Tax schemes reporting deadlines

On 1 July 2020, 30 June 2020 and 24 June 2020, the regulations of the three legal acts significantly modifying the obligations to report tax schemes (MDRs) came into force.

In accordance with the so-called Shield 4.0, the deadlines for providing information on tax schemes other than cross-border were suspended from 31 March 2020 until the 30th day following the date of cancellation of the state of epidemic hazard or the state of epidemic declared in relation to COVID-19.

Furthermore, the amendment of 28 May 2020 introduced an obligation to re-report cross-border schemes which were first implemented between 25 June 2018 and 30 June 2020.

The state of epidemic emergency has been revoked by a decree of the Minister of Health on 1 July 2023. As a result, the basic reporting deadlines for domestic tax schemes return on 1 August 2023. For companies, this means that all domestic tax schemes arising between 31 March 2020 and 31 July 2023 will have to be reported. At the same time, the deadline for submitting an MDR-1 will expire in 30 days from the date of resumption of the reporting deadlines. The MDR-3 submission may be required as early as the return date of reporting, depending on the type of tax scheme.

Who is obliged to report MDR tax schemes?

Beneficiary - is an entity to which the agreement is made available or for which the agreement is implemented.
Promoter - is an entity which develops an arrangement that may satisfy the conditions for being recognised as a tax scheme.
Supporter - is an entity which provides assistance, support or advice concerning the development, marketing, organisation, making available an arrangement to be implemented or supervising its implementation.

Sanctions

Failure to report or other non-compliance with the reporting of the tax schemes may result in the following sanctions:

up to PLN 20 million with respect to entities responsible for reporting,
up to PLN 2 million additionally for the Promoter for the lack of internal procedure.

Reporting MDR - how can we help?

Tax schemes identification.

Assistance in identifying transactions/events taking place after 25 June 2018 which may constitute a tax scheme.

Developing internal due diligence procedure.

The procedure will enable the ongoing identification of the tax arrangements to be reported as a tax scheme in terms of the MDR regulation (objective: to minimise the risk associated with the failure to report a scheme allowing the audit to prove that all reasonable measures have been taken to prevent violations).