Penteris Head of Tax Piotr Prokocki tells us about key clarifications on operating lease reporting under MDR (DAC6) and their implications for businesses.

General Tax Ruling on Operating Lease Reporting under MDR (DAC6)

On 24 December, Poland’s Ministry of Finance issued a general tax ruling (ref. DD8.8203.1.2021) to clarify the reporting requirements for tax schemes related to operating lease agreements under the Mandatory Disclosure Regime (MDR), implementing the EU Directive DAC6. This document provides leasing companies, financial institutions, and their clients with clearer guidelines on when such agreements might qualify as reportable tax schemes.

Need for Clarification in Reporting Operating Lease Agreements

Since the implementation of the MDR, which transposes the EU Directive DAC6, leasing companies and financial institutions have often classified nearly all operating lease agreements as reportable tax schemes. This cautious approach primarily stemmed from the ambiguous wording of the regulations and has led to:

1. Treating standardised lease agreements as automatically triggering the hallmark for tax schemes.
2. Reporting without understanding the lessee’s specific motivations for choosing the lease structure.
3. Assuming that agreements might meet the “main benefit” test due to potential tax implications.

This overly conservative interpretation has resulted in unnecessary reporting and administrative complexity.

When Is an Operating Lease a Reportable Tax Scheme?

The interpretation clarifies that not all operating lease agreements are subject to MDR reporting obligations. To qualify as a tax scheme, the following conditions must be met:

• Main Benefit Test: The primary purpose of the lease must be to secure a tax advantage rather than addressing economic or operational needs.
• Unconventional Provisions: Agreements containing unique or tailored terms designed for tax optimisation may trigger reporting requirements.
• Related Parties: If the lessee and lessor are related entities, the likelihood of the agreement qualifying as a tax scheme increases.

How to Minimise Reporting Obligations

The Ministry’s guidance makes it clear that standard operating lease agreements generally do not require reporting under the Mandatory Disclosure Regime (MDR). Reporting obligations arise only if:

• The lessor is aware that the primary purpose of the agreement is to secure a tax benefit.
• The agreement includes custom provisions explicitly designed for tax optimisation.

Leasing providers are not obligated to actively investigate their clients’ motives. Agreements with standard terms, such as typical fees and durations, are unlikely to meet the criteria for tax scheme reporting.

Key Takeaways

The Ministry of Finance’s general tax ruling introduces much-needed clarity, reducing the automatic reporting of standard operating lease agreements under the MDR, which implements the EU Directive DAC6. Businesses entering into typical leases should no longer face unnecessary notifications from leasing companies regarding tax scheme reporting obligations.

How We Can Help

We have extensive experience in conducting MDR reviews and reporting obligations under the MDR provisions, implementing the EU Directive DAC6. Penteris services include assisting with the analysis of lease agreements, assessing whether they meet the criteria for tax schemes, and providing guidance on how to report such schemes.

With our expertise, the Penteris team can help you understand the requirements related to MDR and develop optimal solutions that minimise the risk of incorrect reporting. We encourage you to contact us to discuss how we can support your company in ensuring compliance with MDR and DAC6 regulations.

Piotr Prokocki, Penteris Head of Tax