Mandatory disclosure rules – MDR-3 form

This article will answer the following questions:

• Which entities are obliged to report the use of reportable arrangements by filing MDR-3?
• When is MDR-3 required?
• What information should be provided in MDR-3?

If the activities of a given entity result in the obligation to report arrangements by submitting the MDR-1 form, then – in accordance with the relevant law – in some situations, promoters, users and supporters are required to fill in and submit additional forms to competent authorities. In our previous articles, we have already discussed in detail the processes of submitting the MDR-1 and MDR-2 forms – now it is time to have a closer look at how to proceed with the MDR-3 form.

Who is required to report the use of reportable arrangements by filing MDR-3?

The obligation to file the MDR-3 form rests with the users. 

The users are required to submit MDR-3 if in a given reporting period they performed any activities that were part of the reportable arrangement or obtained a tax benefit resulting from the arrangement.

According to some statistics published by the Ministry of Finance, from the moment the Mandatory Disclosure Rules (MDR) became effective until 30 September 2023, taxpayers submitted a total of 43,650 MDR-3 forms (both original forms and supplements). 

When to submit MDR-3?

The user is obliged to submit the MDR-3 form before the deadline for filing a tax return for the reporting period in which any activities that are part of the reportable arrangement were performed or in which they obtained a tax benefit resulting from this arrangement.

Consequently, if the use of the reportable arrangement allowed them to obtain a tax benefit, e.g. in corporate income tax, the user submits MDR-3 before the deadline for filing CIT-8 for the previous tax year – i.e. by the end of the third month of the following year. However, if the reportable arrangement resulted in obtaining a tax benefit in personal income tax (e.g. where 50% tax-deductible expenses for authors were claimed), the deadline for submitting MDR-3 will be the last day of January of the following year.

In its explanations to MDR, the Ministry of Finance stated that if a reportable arrangement results in obtaining a benefit in more than one tax (with these taxes being settled in different reporting periods – e.g. CIT being reported annually and VAT monthly), there is no need to submit the MDR-3 form twice and it is sufficient that the MDR-3 form is submitted in the reporting period relevant for the tax to which the arrangement mainly applies. 

What information should be provided in MDR-3?

The user is required to report the following data through MDR-3:

• The number of the reportable arrangement (Polish: NSP), and
• The amount of tax benefit resulting from the reportable arrangement – if the user did obtain such benefit in a given reporting period.

Where the reportable arrangement does not have an NSP, the user should indicate in the MDR-3 form the information about the reportable arrangement that is indicated in the MDR-1 form. 

Who can sign the MDR-3 form? 

Under Art. 86j § 4 of the Tax Ordinance Act, the MDR-3 form may be signed by:

• a natural person – where the taxpayer is a natural person,
• a person authorised by a foreign entrepreneur to represent them at the branch – where the taxpayer is a foreign entrepreneur having a branch operating in the territory of Poland,
• a person authorised for representation – in the case of other taxpayers.

Additionally, the provision in question directly prohibits proxies from signing the MDR-3 form. 

It should be remembered that proxies are allowed to sign MDR-1 forms but this is forbidden in the case of MDR-3 forms (which must be signed in compliance with the representation of the submitting entity).