The reporting obligation will apply exclusively to cross-border tax schemes, i.e. arrangements involving more than one tax jurisdiction. So-called “domestic” schemes, meaning arrangements concerning Poland only and having no effects in other countries, will no longer be subject to reporting. In this respect, the Polish regulations will be clearly aligned with the standard arising from the DAC6 Directive and will focus exclusively on the reporting of cross-border arrangements.

Changes to the definitions of key concepts

The amendment comprehensively restructures the MDR terminology, aligning it with the concepts established by the DAC6 Directive. The definitions of tax scheme, arrangement, promoter, relevant taxpayer, hallmarks and the main benefit test are amended and clarified. The new definitions are intended to be more uniform and consistent with EU regulations.

Removal of other specific hallmarks

Following the amendments, the catalogue of hallmarks will be limited to those arising directly from EU standards (the DAC6 Directive). Other specific hallmarks that were not based on the DAC6 Directive have been removed from the Polish regulations. As a result, reporting obligations will be significantly reduced. Taxpayers who have so far reported arrangements involving, for example, dividend payments or payments of interest or royalties to foreign entities will, as a rule, no longer be required to report them solely on this basis. An MDR reporting obligation will arise only if a given arrangement meets the criteria resulting from the catalogue of DAC6-compliant hallmarks (general hallmarks with the main benefit test incorporated into the definition of the “new” general hallmark, or specific hallmarks). In practice, this means a significant narrowing of the reporting scope and the elimination of the obligation to report many arrangements that are purely business-related.

Combining the roles of promoter and service provider

The amendment simplifies the structure of MDR participants by eliminating the separate category of “service provider” (wspomagający). Entities performing “supporting activities” (a new concept introduced by the amendment) may be classified as promoters if their involvement is relevant to the development or implementation of an arrangement.

Changes to the performance of obligations by entities required to report tax schemes

The rules governing cooperation between promoters and relevant taxpayers in fulfilling reporting obligations will be regulated in detail. Documentation and information obligations will also be strengthened, particularly with regard to providing the Tax Scheme Number (NSP) or information that no such number has been assigned. The legislator has also clarified situations in which the reporting obligation may rest simultaneously on several entities, including by removing the requirement to identify the other participants as a condition for being released from the reporting obligation.

Changes concerning professional secrecy

The amendment takes into account the case law of the Court of Justice of the European Union (CJEU) and expressly strengthens the protection of professional secrecy for certain professions. As a result, attorneys-at-law, advocates, tax advisors and patent attorneys will not be required to report tax schemes where doing so would breach their professional secrecy obligations. Their role in the reporting process will be limited to informing the client of the obligation to report the tax scheme.

Changes concerning MDR-3 (signing and deadlines)

Information on the implementation of a tax scheme (MDR-3) will be submitted once a year, on a separate form for each reportable scheme. In addition, MDR-3 may be signed by an attorney-in-fact, which will significantly simplify the reporting process in large organizations.

Abolition of the obligation to maintain an internal MDR procedure

Entities will no longer be required to formally implement and maintain internal MDR procedures. Despite the removal of the formal requirement to maintain such a procedure, the obligation to properly identify and report tax schemes will remain fully applicable.

Exclusion of MDR from individual tax rulings

Following the amendments, MDR provisions will be expressly excluded from the scope of individual tax rulings. Taxpayers will therefore no longer be able to obtain formal confirmation of their reporting obligations through this procedure. In practice, this will require taxpayers to independently assess whether a given arrangement constitutes a tax scheme and what reporting obligations apply to its participants.

Changes concerning the assignment of the Tax Scheme Number (NSP)

The amendment clarifies the rules governing the assignment of a Tax Scheme Number (NSP) by the Head of the National Revenue Administration. The NSP will be assigned within 14 days of receipt of correct information concerning a tax scheme, and its assignment will mean that the relevant arrangement is recognized as a tax scheme. With individual tax rulings no longer available for MDR matters, the significance of the NSP will increase considerably. In practice, it may constitute the only formal point of reference when assessing whether a given arrangement constitutes a tax scheme. The amendment also provides for the possibility of refusing to assign an NSP and invalidating an NSP in certain circumstances.

No changes to penalties for breaches of MDR provisions

The amendment does not fundamentally change the system of sanctions for breaches of MDR obligations. Significant penalties may still be imposed, confirming the legislator’s continued restrictive approach to enforcing reporting obligations. It is worth noting, however, that the amended provisions will expressly cover liability for late submission of MDR-3 information, which constitutes an important clarification compared with the previous regulations. Previously, the sanction applied only to a complete failure to report and did not cover delays in submitting the required information.

Other changes

The amendment also introduces a number of supplementary and housekeeping changes. In particular, the obligation to submit MDR-2 information will be abolished. At the same time, value added tax (VAT) and excise duty will be excluded from the scope of the MDR provisions. These changes are systemic in nature: they streamline the regulations and eliminate elements extending beyond the DAC6 standard.

How should you prepare for the changes?

The planned amendment to the MDR provisions undoubtedly simplifies reporting obligations and brings them closer to the standard established by the DAC6 Directive. However, it should not be viewed solely as a deregulation measure leading to a significant reduction in taxpayers’ obligations.

Once the new regulations enter into force, existing internal procedures and practices may require substantial revision. In many cases, they may prove overly extensive in light of the new, narrower scope of MDR. At the same time, it will still be necessary to properly identify arrangements subject to reporting, albeit exclusively with respect to cross-border tax schemes. The inability to obtain individual tax rulings and the absence of lists of exclusions (so-called “white lists”) further increase the importance of conducting an independent assessment in this area.

From an organizational perspective, we therefore recommend taking at least the following preparatory steps:

Review and update MDR procedures – despite the abolition of the formal obligation to maintain them, keeping appropriate internal regulations remains advisable. They allow for a clear allocation of responsibilities and duties within an organization and constitute an important element in mitigating risk, particularly given the continued high penalties for breaches of MDR provisions.

Update the knowledge of tax teams / teams responsible for MDR within the organization – particularly with regard to the new definitions, hallmarks and reporting rules.

Verify historical obligations – the new provisions will apply prospectively, meaning that existing MDR obligations remain in force.

If you would like to assess the impact of the amendment on your organization’s MDR obligations or adapt your existing solutions to the new regulations, we invite you to contact our team of experts.