Value Added Tax (VAT) in Poland

Act of 11 March 2004 on Value Added Tax (Journal of Laws 2004 No. 54, item 535; Journal of Laws 2024, item 361 – consolidated text).

The Polish Value Added Tax Act of 11 March, 2004 (the VAT Act) is based on EU legislation, and in particular, on the provisions of Directive 2006/112/EC on the common system of value added tax (the VAT Directive).

The main VAT rates applicable in Poland are as follows:

Standard VAT rate: 23%

Reduced VAT rate: 8% – applies, among others, to construction covered by the social housing program, services related to culture, sports, and recreation

Reduced VAT rate: 5% – applies to supplies of certain food products, such as bread, dairy products, meats, and selected publications

Taxpayers selling goods to taxpayers registered for VAT in EU states may apply the 0% VAT rate as part of the intra-community supply of goods.

The 0% VAT rate also applies to exports of goods defined as the export of goods from Poland outside of the European Union in performance of taxable activities.

In order for the 0% rate to be applied in exports, the taxpayer must have appropriate customs forms stating that the goods have exited the territory of the European Union.

In the event of purchasing goods transferred from an EU Member State to Poland, the Polish taxpayer must ensure self-assessment of VAT.

This means that the taxpayer should disclose both the output VAT resulting from the taxable activity and the input VAT (due to the fact that this activity constitutes a ‘purchase’ for the purpose of its business). Consequently, as a rule, intra-community acquisitions of goods is a VAT-neutral activity for the Polish taxpayer (the amount of output VAT equals the amount of input VAT).

Import of goods subject to VAT in Poland means bringing goods from outside the European Union into Poland. In such cases, the import output VAT is typically paid to the customs office that clears the imported goods. Furthermore, a taxpayer that has paid VAT to the customs office may deduct this tax on the basis of the customs document received. In select cases, it is possible to avoid paying VAT to the customs office and settle the import of goods in a VAT return (postponed accounting system) similarly to the situation that occurs in the case of intra-community acquisition of goods. However, the implementation of this solution applies solely to entities using the simplified customs procedure.

The VAT exemption applies, among other things, to imports of goods subject to inward processing, goods subject to temporary clearance with full customs duty exemption.

In the case of cross-border services, a VAT obligation in Poland may arise if the place of taxation of a transaction in accordance with the VAT Act, is Poland.

In this respect, the Polish VAT Act complies with the VAT Directive – for services provided between taxpayers (on a B2B basis) with their registered office/place of residence/permanent place of business in different countries, the primary place of taxation is the country of the registered office/place of residence/permanent place of business of the entity purchasing the service. The opposite applies to services provided by a taxpayer to a non-taxpayer entity (B2C basis).

As a result, under the fundamental principle, VAT will be payable in Poland on service transactions between taxpayers from different countries only if the service recipient has its registered office/place of residence/permanent place of business in Poland. However, in the case of services provided by a Polish taxpayer to a non-taxpayer entity, VAT will be payable in Poland if the service provider has its registered office/place of residence/permanent place of business in Poland.

There are several exceptions to the above rules – for instance, the place of taxation of real property-related services is, in each case, the place (country) where the property to which the service is related is located.

The VAT Act contains a list of activities that may be exempt from VAT (Article 43(1)).

Typical VAT-exempt activities may include:

• medical services aimed at the prevention, preservation, saving, restoration and improvement of health – if provided by a doctor, dentist, nurse, midwife or psychologist;
• private teaching services at preschool, primary, secondary and higher education levels – if provided by a teacher;
• foreign language teaching services;
• financial services, including: investment fund management; insurance services; the provision of guarantees, warranties and other transaction securities; the granting of loans and credits involving financial instruments.

The Polish VAT Act also provides for an exemption from VAT for the supply of certain real estate. However, under certain conditions, taxpayers may opt to charge VAT on such supplies.

In addition, taxpayers in Poland may benefit from a small business exemption from VAT if their revenue (sales value) in the previous year did not exceed PLN 200,000.

Taxpayers operating under the VAT system in Poland may reduce the amount of output VAT by the amount of input VAT incurred on the purchase of goods and services, provided that such purchases are related to activities subject to VAT (i.e. taxable supplies).

In cases where the input VAT relates both to purchases associated with deductible (taxable) transactions and with non-deductible (VAT-exempt) transactions, the taxpayer is entitled to a partial deduction of input VAT.

In certain cases, the right to deduct input VAT is subject to specific limitations. For example, in the case of the acquisition of a passenger car that is not used exclusively for business purposes, it is only permitted to deduct 50% of the input VAT paid at the time of purchase.

The VAT Act also prohibits the deduction of input VAT in connection with the purchase of hotel accommodation services.

As a rule, where the amount of input VAT exceeds the amount of output VAT, the excess is refunded within 60 days from the date of submission of the relevant VAT return. The VAT refund period may be reduced to 25 days, provided that additional statutory conditions are met.

So-called cashless taxpayers, i.e. those who receive the vast majority of payments in non-cash form, may benefit from an accelerated VAT refund within 15 days. Taxpayers who predominantly issue structured invoices using the National e-Invoicing System (KSeF) may be eligible for a VAT refund within 40 days.

The rules for VAT refunds in Poland provide for different deadlines depending on the taxpayer's activity. For example, if in a given settlement period, the taxpayer has not performed any taxable supplies or supplies subject to VAT outside the territory of Poland, the taxpayer may apply for a VAT refund within 180 days from the date of submission of the VAT return.

As a rule, the VAT refund is made to the bank account indicated by the taxpayer.

Entities that wish to conduct activities subject to VAT in Poland must file a registration form before the date of the first taxable transaction. Taxpayers who intend to conduct intra-community transactions must be EU VAT registered.

Entrepreneurs whose annual sales do not exceed 200,000.00 PLN are exempt from VAT. However, they may voluntarily register for VAT and charge VAT on their business activities.

In order to register for VAT purposes in Poland, entities without a registered office, permanent place of residence or place of business in the European Union must appoint a tax representative. Tax representatives are responsible for the tax liabilities of the taxpayers they represent.

Refusal to register an entity as a VAT taxpayer may occur if, as a result of verification, it turns out that the data provided in the registration application is false, the entity does not exist, or if it is not possible to establish contact with the entity or its representative despite attempts made, or if these persons do not respond to requests of the head of the tax office.

According to Article 96(9) of the Polish VAT Act, the head of the tax office may remove a taxpayer from the VAT register without prior notice if:

• the taxpayer does not exist
• despite documented attempts, it is impossible to contact the taxpayer or their authorised representative
• the data provided in the registration application is found to be false
• the taxpayer or their representative fails to respond to requests from the tax authority
• information held by the authority indicates that the taxpayer engages in activities aimed at using banks or credit unions (SKOK) for purposes related to tax fraud
• a court has issued a ban on conducting business activity in accordance with separate legal provisions

A taxpayer will also be removed from the VAT register if they:

• have suspended their business activity for at least six consecutive months in accordance with the provisions on business suspension
• have failed to submit VAT returns for three consecutive months or for one quarter, despite being required to do so
• have submitted VAT returns for six consecutive months or two consecutive quarters, showing no sales, purchases of goods or services, or imports of goods with deductible VAT
• have issued invoices or corrective invoices for transactions that did not actually take place
• while conducting business, knew or had reasonable grounds to suspect that suppliers or purchasers involved, directly or indirectly, in the supply of the same goods or services were engaged in dishonest VAT settlements with the aim of obtaining a financial benefit

Taxpayers file monthly VAT returns by the 25th of the month following the month in which the tax obligation arose, or quarterly, by the 25th of the month following the quarter in which the tax obligation arose. As a rule, VAT is paid to the tax office by the date specified for filing the relevant VAT return.

Along with the tax return, taxpayers are required to send the tax offices a JPK file containing a record of all sales and purchases of goods and services.

Taxpayers conducting intra-community transactions and providing services (for which the place of provision is determined in accordance with general principles) to EU taxpayers are required to file monthly recapitulative statements. Furthermore, taxpayers are also required to file statistical information (INTRASTAT) on intra-community commodity transactions.

In the case of transactions between related parties, tax authorities may determine the taxable amount in accordance with the open market value if it turns out that the existing relationships affected the determination of the consideration for the supply of goods or services and one of the parties to the transaction is an entity that does not have the right to deduct VAT.

The right to determine the tax base in accordance with the market value is given to the tax authority if there are family, capital or employment ties between the counterparties.