Entities obliged to report tax schemes (MDR) in Poland

From this article, you will learn:

• How do MDR regulations define a promoter, beneficiary, and supporter?
• How the obligation to maintain legally protected professional secrecy affects the reporting of tax schemes by the promoter and supporter?
• When the user is obliged to submit the MDR-1 form?

Sanctions for failure to report tax schemes can be really high, and the provisions of the Tax Ordinance Regulation regulating the obligations arising from the DAC6 directive indicate as many as three entities that may be responsible for providing the Head of the National Tax Administration (KAS) with information on tax schemes. Several factors determine who exactly should carry out this task. Which factors exactly?

Who is obliged to report tax schemes?

The Tax Ordinance distinguishes three types of entities (regardless of whether the entity is a natural person, a legal person or an organizational unit without legal personality) that are obliged to report tax schemes: promoter, beneficiary, and supporter.

The reporting obligation of a given category of entity often depends on whether an entity from another category has previously fulfilled this obligation.

Identifying and reporting MDR tax schemes: who are tax promoters and what are their responsibilities?

A promoter is an entity that develops, offers, makes available or implements a tax scheme or manages the implementation of a tax scheme. This category in particular includes a tax advisor, a lawyer, a legal advisor, an employee of a bank or other financial institution advising clients.

Importantly, the promoter may be an entity that does not have its place of residence, registered office or management board in the territory of the country.

It should be remembered that Polish regulations recognize as a promoter not only entities providing legal or tax advisory services, but also, for example, a company providing advice to other companies from its group or making decisions regarding other entities in a given group.

The basic obligation of the promoter is to provide the Head of the National Tax Administration with information about the tax scheme. Then, if the promoter receives the Tax Scheme Number, he or she is obliged to transfer the Tax Scheme Number to the entity that uses it (beneficiary). 

If the tax scheme does not yet have a Tax Scheme Number, the promoter must inform the beneficiary of this in writing and provide him with data regarding the arrangement of the tax scheme. 

An exception to this rule is a situation where the promoter's provision of information about a tax scheme other than the standardized tax scheme would violate the obligation to maintain legally protected professional secrecy and the promoter has not been released by the beneficiary of the obligation to maintain professional secrecy in this respect. 

If the promoter is not released by the beneficiary from the obligation to maintain legally protected professional secrecy, the promoter will not be obliged to submit the MDR-1 form under Polish regulations. In such a situation, the party obliged to submit the MDR-1 will be the beneficiary.

Who are the supporters and how should they fulfill the MDR information obligation?

Polish tax regulations define a "supporter" as an entity – in particular a statutory auditor, a notary, a person providing accounting services, an accountant, a financial director and a bank or other financial institution (as well as their employee) – who, while maintaining the diligence generally required in making activities and taking into account the professional nature of the activity, area of specialization and the subject of the activities performed, undertakes to provide – directly or through other persons – assistance, support or advice regarding the development, marketing, organizing, making available for implementation or supervising the implementation of the arrangement.

As a rule, the supporter is not obliged to obtain detailed information about the arrangement and the tax consequences of this arrangement for the beneficiary. Therefore, if an event gives rise to an obligation to inform about a tax scheme, the information obligation of the assisting entity will only apply to the information it has obtained so far.

The law imposes an obligation on the supporter to exercise the care required when performing activities, taking into account their professional nature, and such diligence covers all types of activities related to the arrangements.

The supporter is obliged to report tax schemes if he or she has not been informed about the Tax Scheme Number or the lack of the Tax Scheme Number by the promoter or beneficiary - unless the supporter is released from the obligation to maintain legally protected professional secrecy (and is covered by such an obligation by law). In such a situation, the supporter should immediately inform the promoter or beneficiary in writing that, in his or her opinion, the arrangement constitutes a tax scheme.

What is the difference between a promoter and a supporter when it comes to MDR reporting obligations?

Although it may seem that the promoter and the supporter perform similar functions, it should be remembered that the provisions on MDR tax schemes provide for different functions of these entities.

In accordance with the assumptions of the MDR regulation, the promoter has full knowledge of the key elements of the arrangement, while the facilitator only helps with the arrangement and has information about a certain part of the arrangement. 

There is one more difference – the regulations impose an obligation on the person providing assistance to exercise the diligence generally required in the activities performed, taking into account the professional nature of the activity. In the case of a promoter, the legislator does not require this.

Who is the beneficiary and what are his obligations?

The provisions on tax schemes specify that the beneficiary is the entity to which the arrangement is made available (or where it is implemented), or an entity that is being prepared to implement the arrangement or has taken steps to implement such an arrangement.

The beneficiary is obliged to report the tax scheme if the promoter has not done so before. Such a situation may occur if a given tax scheme does not have a promoter, if the promoter has not fulfilled his obligation, if the promoter has not informed the beneficiary about granting the Tax Scheme Number or if the beneficiary has not released the promoter from maintaining legally protected professional secrecy (i.e. if the promoter is covered by law obligation of secrecy).

Moreover, the beneficiary is obliged to submit secondary reporting within the deadline for submitting a tax return in connection with the tax that was covered by the tax scheme.

When should a taxpayer verify the qualified beneficiary criterion?

In some cases – if the qualifying beneficiary criterion is not met – the tax scheme will not be subject to reporting. The obligation to examine this criterion arises in the scope of schemes other than a cross-border tax scheme.

The qualified beneficiary criterion is considered met if:

• the beneficiary’s revenues or costs or the value of the entity's assets, within the meaning of accounting regulations, exceeded the equivalent of EUR 10,000,000 in the previous year or in the current financial year, or
• if the arrangement made available or implemented concerns items or rights with a market value exceeding the equivalent of EUR 2,500,000, or
• the beneficiary is, within the meaning of the transfer pricing regulations, an entity related to an entity that meets one of the above criteria.

In the case of entities that do not keep accounting books, revenues and costs are determined in accordance with the income tax acts in the relevant tax years, and the value of assets – in accordance with their market value in the relevant calendar years.