Poland VAT

VAT is a tax levied on most business-to-business (B2B) and business-to-consumer (B2C) transactions in all EU member States and a growing number of other non-EU countries. For cross-border trade to function properly, it is vital that enterprises maintain compliance with their VAT registration data and fulfill their VAT obligations accurately and timely.

 

In 1993, Poland replaced the old Soviet-style sales tax with a value-added tax (VAT) system. A number of amendments were made to the VAT regulations to bring Poland's turnover tax solution into line with the common European VAT system. Locally, it is known as Podatek od towarow i uslug.

 

Poland updated its VAT system after fully joining the EU in 2004. These include the implementation of all EU VAT Directive rules on VAT registration, returns, compliance, internal statistics and related requirements. The 2004 Polish VAT Act contains most of the VAT rules. This is supported by various directives and the Revenue Regulation Act 1997. The Ministry of Finance administers the VAT system.

 

Foreign companies providing taxable goods and services in Poland may be required to register for VAT as non-resident traders and comply with all accounting and payment requirements.

 

VAT Registration

Who needs to register for Polish VAT?

Poland provides a variety of circumstances under which foreign companies should register for VAT. It follows many other EU member states:

• Importing goods to Poland from outside the EU - note that in many cases (e.g. transshipment supplies) requirements are simplified
• Buying and selling goods in Poland
• The provision of goods to individuals via the Internet is subject to the VAT registration threshold
• Store goods in the warehouse as consignment stock for customers
• Runs live events and performances and pays admission at the door
• If a company is a non-VAT trader but receives services in Poland under reverse charge rules.
• Self-sufficiency in goods.

 

Foreign companies from inside or outside the EU can register for VAT in Poland without having to form a Polish company or set up a permanent establishment; This is called a non-resident VAT transaction. Poland has no VAT threshold for non-resident traders, except for distance sales to Poland, and must obtain a VAT number before taxable supply can begin. There is limited flexibility in the refund of Polish VAT incurred prior to application for registration.

 

VAT registration for non-EU traders in Poland requires a financial representative. There are strict rules about the circumstances in which registration is required. Common situations that require Polish VAT registration include:

• Import goods into Poland and export goods from Poland
• Sell goods in Poland
• Sell goods from Poland to other EU countries
• Remote sales, such as Internet sales, to individuals residing in Poland.

 

VAT rate

Taxable supply is the provision of goods or services to which VAT rates (including zero) apply. VAT registered sellers of goods and services in Poland must charge the appropriate VAT rate and pay the tax to the Polish tax authority through the VAT declaration system.

 

Poland follows EU VAT compliance as set out in the VAT Directive. But it still sets its own VAT rate, the only condition being that it exceeds 15%.

 

VAT rates are 23% (standard rate), 8%, 5%, 0% and exemption.

The standard VAT rate of 23% usually applies to the supply of all goods and services except those covered by special VAT provisions that provide other rates or treatment.

The 8 per cent reduction covers supplies of medicines and passenger transport services as well as goods for social housing schemes (up to 150 square metres).

Supplies covered by the 5 per cent reduction include books and periodicals, unprocessed foods and basic foods.

Zero-duty activities include things like exporting goods to countries outside the EU.

VAT free supplies include certain financial, insurance and educational services, among others.

 

During the period from 1 February 2022 to 31 December 2022 - in order to offset the effects of Polish inflation - the tax rate on basic foodstuffs, but on excluded services classified under Food and beverage services according to the Polish classification of Goods and services, has been reduced to 0%. The reduced VAT rate is expected to apply until 30 June 2023.

 

 

Rate	Type	Good or Services
23%	Standard	All other taxable goods and services
8%	Reduced	Mustard, sweet pepper (spice) and some processed spices (e.g. pepper, thyme); some unprocessed spices (e.g. cumin, saffron, turmeric); specialised magazines
5%	Reduced	Tropical and citrus fruit, some edible nuts, citrus fruit or melon peels — will be covered by 5% at stake like all fruits; soups, broths, homogenised and dietetic food; food for babies and small children, as well as teats, nappies and car seats; hygienic articles (sanitary napkins, hygienic tampons, diapers); books, brochures, leaflets and similar materials, printed, even in single sheets; regional or local magazines only, for the rest of ex 4902 group 8% applies; children’s, picture, drawing or colouring books; maps and hydrographic maps or similar maps of all kinds, including atlases, wall maps, topographic plans and globes, printed; other printed articles, including printed pictures and photographs – only regional or local magazines (any electronic version of the goods mentioned above)
0%	Zero	Intra-community and international passenger transport (excluding inland waterway and road transport); services supplied during international transport

 

VAT compliance

Non-resident traders providing taxable supplies in Poland are required to comply with the local VAT rules and rates.  In terms of accounting and recording, this covers:

• Preparing invoices with the disclosure details outlined in the Polish VAT Act.
• Electronic invoices with proper signature, authenticity and agreement by the recipient.
• Maintenance of accounts and records, which must be held for at least 8 years.
• Correct invoicing of customers for goods or services in accordance with the Polish time of supply VAT rules.
• Processing of credit notes and other corrections.
• Use of approved foreign currency rates.

VAT return

Any company registered with the Polish tax authorities as a non-resident VAT trader must report taxable transactions.Since 1 October 2020, this is via Polish SAF-T transaction reporting rather than a summary VAT return.

 

How often are Polish VAT returns required?

In Poland returns may be filed electronically or manually.

The default tax period for VAT in Poland is one calendar month.However, the VAT reporting period, quarterly or monthly, can be selected by a business when registering using the VAT-R form. If a business chooses to file quarterly returns it may still be required to make monthly VAT pre-payments depending on turnover.      Only businesses with a turnover of less than PLN5,068,000 may make quarterly payments.Businesses supplying “sensitive” goods such as steel, fuel and rough gold must make monthly returns and payments.

 

What Polish VAT can be deducted?

In addition to declaring sales or output VAT in the Polish return, companies can offset this by the corresponding input or purchase VAT.There are some exceptions, including:

• Accommodation and restaurant services
• Cars where the vehicle is not used exclusively for business purposes (under certain circumstances 50% of the input VAT may be deducted)

 

What are the deadlines for filing Polish VAT returns?

Polish monthly or quarterly VAT returns are due on the 25th of the month following the period end. Any Polish VAT due must be paid at the same time.

In the case where a business has opted to file quarterly returns but is required to make monthly prepayments, VAT due for the quarter should be paid as below:

• Obligatory prepayment in first two months of the quarter of an amount equivalent to one third of the total VAT paid in the previous quarter
• VAT due in the third month is calculated using the VAT return for that quarter

 

Polish VAT penalties

If there are misdeclarations or late fillings of Poland VAT returns, foreign companies may be subject to penalties.Penalties generally take the form of interest charged on the amounts of unpaid VAT. The interest rates are currently set at twice the Polish National Bank rate plus 2%. The rate charged must be a minimum of 8%.

The tax assessment period is five years from the end of the year in which a business was liable for VAT.

VAT Recovery in Poland

A taxable person may claim input tax, paid on goods and services supplied to it for business purposes, if the tax is related to the taxable supplies made by the person.          A taxable person recovers input tax by subtracting it from the output tax levied on supplies produced.

 

Input tax is not refundable if it is incurred directly in connection with the production of exempt supplies.If a Polish taxable person makes both exempt and taxable supplies, the taxable person may not deduct all input tax. This is known as a “partial exemption.”

 

Input tax on taxable supplies is fully recoverable but input tax on exempt supplies is not. Each category must account for input tax that is not directly due to taxable suppliers or VAT-exempt supplies.

 

VAT Refund from EU Countries

If you are an authorized party from a member state of the European Union, you may be eligible to receive a VAT refund.

 

A VAT refund will be granted in relation to goods and services purchased in Poland’s territory, or in relation to goods that have been subjected to importation into Poland’s territory. If such goods have been used in connection with activities entitling the holder to deduct from the amount of tax due in Poland, the amount of tax levied in the country in which the value added tax is settled, which is not Poland.

 

Tax refund requests must be sent in Polish to the Head of the Second Tax Office for Warszawa-Śródmiecie through electronic communication and tax administration of the Member State of establishment. The Tax Office will promptly confirm receipt of the application by electronic means.

 

An invoice or customs document should be attached to the application if:

• The Invoice is equal to or exceeds EUR 1000 in the invoice or customs document.
• The fuel invoice equals or exceeds EUR 250 in PLN.

 

Unless specified otherwise, the amounts expressed in euro (EUR) will be converted at the average exchange rate of the euro, as published by the National Bank of Poland, on the last business day preceding the date of invoice or customs document issuance.

 

The application must be submitted no later than September 30th of the year following the fiscal year to which the application relates to be considered.

 

Minimum refund limits

The requested VAT refund cannot be less than the PLN equivalent of:

• EUR 400 for periods less than one fiscal year, but not less than three months.
• EUR 50 for periods greater than one fiscal year, but not less than three months, the fee is 50 EUR.

 

VAT refunds for foreign entities

According to the Polish Minister of Finance’s Decree dated April 23, 2004, foreign entrepreneurs from EU countries may apply for a VAT refund in Poland, if they are not registered for VAT. Non-EU entities may also apply for a refund, but a reciprocal mechanism for Polish companies is required.

 

You may be eligible for a refund of foreign VAT, if you meet the following criteria:

• EU country in which you made the purchase does not recognize you as having a registered office, a permanent place of business, a permanent residence, or a habitual residence.
• As an active VAT payer, you neither sell exclusively exempt from VAT nor take advantage of the exemption from subjective VAT, even though you sell exclusively exempt from VAT.
• If you conduct exclusively VAT-exempt activities, either because of specific activities or because of a low value of turnover not exceeding PLN 200.000 per year, you will not be eligible for a refund.

 

Invoice Requirements

Polish value-added tax law requires invoices to be in duplicate, with one copy forwarded to the customer.

Polish VAT invoice must be issued by the 15th day of the following month after the taxable supply. The invoice shall be issued no earlier than 30 days before the supply of goods or the completion of services. Invoices can be in any currency, but VAT must be in PLN.

Invoices must be kept for five years. Like all EU member States, Poland now allows the use of electronic invoices under certain conditions.

 

Full VAT invoice

The below information is required in each Full invoice:

• Date of issue.
• Unique sequential number identifying the invoice.
• Customer’s VAT identification number (if the customer is liable for the tax on the transaction).
• Supplier’s full name & address.
• Customer’s full name & address.
• Description of quantity & type of goods supplied or type & extent of services rendered.
• Date of transaction or payment (if different from invoice date).
• VAT rate applied.
• VAT amount payable.
• Breakdown of VAT amount payable by VAT rate or exemption.
• Unit price of goods or services – exclusive of tax, discounts, or rebates (unless included in the unit price).

 

Simplified Invoice

Simplified invoices can be issued if the gross amount does not exceed PLN 450 or EUR 100.

The below information is required in each simplified invoice:

• Date of issue.
• Supplier’s VAT identification number.
• Type of goods or services supplied.
• VAT amount payable – or the information needed to calculate it.
• Specific, unambiguous reference to the initial invoice and the details that are being amended. (On a credit note, debit note, or another document treated as an invoice).