What for?
An obligation of reporting tax schemes to the Head of the National Tax Administration, often called the MDR (Mandatory Disclosure Rules) obligation, was introduced on 1 January 2019. MDR regulations appeared in Polish legislation as a result of implementing the Directive on obligatory automatic exchange of information in the field of taxation (DAC6). Although it should be added that the Polish legislator has implemented European law more extensively in several areas, and the new obligations have been hedged about with sanctions that are stricter than in other Member States.
In general, a tax scheme is an arrangement, transaction or activity that may result in bypassing the tax law, and the obligation of reporting schemes is aimed at increasing the taxpayer transparency towards the administration. The MDR obligation may fall on both the entrepreneur (management bodies) and its employees (e.g., management or the members of accounting and finance teams), its business associates, as well as external advisers (e.g., legal advisers, tax and accounting advisers). Failure to observe the above is punishable by heavy fines, both administrative and under the Fiscal Penal Code.
For whom?
Domestic and foreign enterprises, their management bodies and other representatives or proxies responsible for undertaking actions that may constitute a tax scheme within the meaning of Polish MDR regulations. Depending on the scale of operations, certain entrepreneurs may be subject to additional obligations, such as having an implemented formal internal procedure in the field of handling tax schemes.
How?
We comprehensively explain the principles of MDR regulations and assist in determining company exposure to the associated obligations and risks. As needed, we create and help monitor and update internal tools and procedures related to MDR.
MDR audit
Through a brief audit, we verify if, and to what extent, a company is subject to the tax scheme reporting obligation or undertaking additional actions in this regard:
- analysis of current and planned business solutions in terms of being considered a tax scheme
- identifying the role of the enterprise and its representatives within a given tax scheme (promoter, facilitator, beneficiary)
- indicating reporting and other obligations
- in the case of enterprises or persons acting as a promoter – analysis of the need to implement more stringent MDR-related regulations and support in developing a so-called internal procedure. This is often the case with, e.g., centralization of tax and accounting functions within capital groups.
- in the case of other enterprises, also in the absence of a formal obligation for an internal procedure, consulting related to ensuring fundamental due diligence related to MDR and support in developing appropriate instructions.
Implementing an MDR instruction or internal procedure
Both under the conditions of more stringent regulations (internal procedure) and in other cases, it is expedient to implement them within an organization in a manner that ensures process correctness, continuity and verifiability. This particularly applies to an internal procedure that requires, among others, periodic verification, as well as appropriate documentation and training mechanisms.
In relation to implementing an internal procedure or lower-tier instruction we offer:
- personnel training, including the development of training materials and a full mechanisms of periodic/onboarding training
- review of reported tax schemes and support in practical procedure/instruction application
- establishing an MDR coordinator (a company employee or an external advisor)
- assistance in developing MDR reports required by tax authorities (MDR-1, MDR-2, MDR-3 and MDR-4)
- clarifying doubts, e.g., consulting in terms of tax scheme reporting regulations
