Mandatory disclosure rules – MDR-1 form

This article will answer the following questions:

• Which business entities are obliged to follow MDR and submit MDR-1?
• Does Tax Ordinance Act specify a deadline for reporting arrangements?
• Which information should be disclosed in the MDR-1 form?

Who is obliged to submit MDR-1 forms?

For the obligation to file an MDR-1 form to arise, the arrangement must meet the definition of a reportable arrangement (and the qualified user criterion if an arrangement constitutes a reportable domestic arrangement). In such cases, the obligation to report arrangements using the MDR-1 form will lie with one of the three entities:

• the promoter,
• the user, or
• the supporter. 

According to the statistics published by the Ministry of Finance, from the moment the MDR regulations became effective until 31 March 2024, taxpayers submitted a total of 27 079 MDR-1 forms (original forms and supplements) – including 4 515 MDR-1 forms regarding reportable cross-border arrangements. 

Reporting deadlines: when to submit an MDR-1 form

An entity being obliged to provide information on reportable arrangements to the Head of the National Revenue Administration must submit an MDR-1 form within 30 days from:

1. the day following the reportable arrangement being made available,
2. the day following the preparation for the implementation of the reportable arrangement, or
3. the day of the first step related to the implementation of the reportable arrangement. 

The reporting deadline is contingent upon which of the above events occurs first.

We should remember that in the event of failure to meet the deadline, the entity subject to the reporting obligation should submit the MDR-1 form together with a voluntary disclosure, known as active repentance.

Which information to report in the MDR-1 form

Information or reportable arrangements must include:

• identification data of the entity providing the information and using the reportable arrangement (including, for example, information on the company or name and surname, tax identifier, place of residence, registered office or management board),
• legal basis for providing information on reportable arrangements and premises resulting in recognising a given arrangement as a reportable arrangement (including information on the hallmarks of a given arrangement and the role of the entity providing the information),
• indication of whether the information on the reportable arrangement concerns a standardised or cross-border arrangement,
• summary of the description of the arrangement constituting a reportable arrangement, name of the arrangement (if given) and description of the business activity to which the arrangement applies (without disclosing data subject to trade, industrial, professional or production process secrecy),
• exhaustive (to the knowledge of the entity providing the information) description of the arrangement constituting a reportable arrangement, together with an indication of the value of the subject matter of these activities, assumptions of the arrangement, activities performed as part of the arrangement and their chronology as well as existing links between related entities,
• indication of purposes the reportable arrangement was supposed to serve that are known to the entity providing the information,
• indication of the provisions of tax law that, to the knowledge of the entity providing the information, are applicable to the reportable arrangement,
• information on the estimated amount of the tax benefit or the approximate value of the deferred tax asset (if they occur and are known to the entity providing the information or can be estimated by it),
• indication of the actions taken that resulted in the provision of information on the reportable arrangement, together with an indication of the date on which the first step to implementing the arrangement was or will be made,
• indication of the stage at which, to the knowledge of the entity providing the information, the reportable arrangement is, in particular information on the dates of making the arrangement available or implementing it or on the date of performing the action carried out under the arrangement,
• indication of the data known to the entity providing the information identifying the entities participating in the arrangement,
• indication of the data known to the entity providing the information identifying other entities obliged to provide information on reportable arrangements (if such entities exist),
• address for electronic deliveries,
• indication of a Reportable Arrangement Number assigned by another EU member state regarding reportable cross-border arrangements (if applicable). 

The exhaustive list of information that must be provided in the MDR-1 form can be found in Art. 86f § 1 of the Tax Ordinance Act. 

What to remember when preparing an MDR-1 report

You should bear in mind that information about reportable arrangements does not have to include all the data specified in the MDR-related regulations if the promoter, beneficiary or supporter does not have the indicated data at the time of submitting the information.

According to the information provided in the clarifications on MDR, where there are no data or information, we should state the reason for leaving the box blank in the relevant section of the form, e.g. adding a note: “the submitting party fails to possess relevant data or information” or “lack of data or information”.

We should also remember the online MDR-1 form can only be used for providing information on a single reportable arrangement. Thus, if a given business entity is obliged to report two arrangements, it should submit two separate MDR-1 forms.