On July 1, 2020, new VAT rates entered into force – it was decided to depart from the old PKWiU 2008 classification in favor of the Combined Nomenclature (CN) for goods, and PKWiU 2015 for services. The so-called the new matrix of VAT rates was intended to simplify and organize the rates. The legislator’s assumption was that similar goods of the same category would not be taxed at different rates. Unfortunately, in addition to eliminating many problems, the new VAT matrix has become a source of further serious doubts among entrepreneurs. It seems that disputes with the tax authorities about how to tax a given good or service will continue, which was probably not the intention of the legislator.

The agricultural sector has major problems with applying the new VAT rates. Until now, products such as feed and fertilizers have benefited from the reduced rate of 8% VAT, meeting a number of conditions previously specified in the Regulation of the Minister of Finance on goods and services for which the VAT rate is lowered, and the conditions for applying reduced rates. These conditions included, for example:

– appropriate statistical classification of the goods;

– the status of the buyer (taxpayer of agricultural tax or income tax on income from special departments of agricultural production);

– the manner of use by the buyer (including submitting an appropriate statement).

As of 1.7.2020, all the above-mentioned conditions have been abolished. On the occasion of changing the rates, the Minister of Finance changed the previous executive regulation (Journal of Laws 2020, item 1158), which no longer specifies the groups of goods and services subject to reduced rates, because the reduced rates are already specified in the amended annexes to the VAT Act.

Currently, all fertilizers and plant protection products benefit from the reduced rate if they are ‘normally intended for use in agricultural production’. Also “fodder and feed for livestock and domestic animals” benefit from the reduced rate. The problem is that it is not clear what the test to what extent a given product is “normally intended for use in agricultural production” should look like. Another problem is assigning the VAT rate to soybean meal, which is not essentially feed, but is only a component for its production.

A solution to the problematic situation for many entrepreneurs may be an application for a Binding Rate Information (WIS), which determines the VAT rate for a given good or service on the basis of the description and documents provided by the applicant. Its advantage is much greater protection of the entrepreneur than that provided by an individual tax ruling (when issuing an individual ruling, the authority does not analyze the facts and does not assess documents, unlike the WIS). WIS have already been issued, for example, for fertilizer lime and for soybean meal.