VAT in Poland – rates and rules

VAT in Poland it is an indirect tax that is levied on goods and services. The standard rate of VAT in Poland is 23%. There are 3 more rates: the preferential rate 0% and 2 reduced rates 5% and 8%. On 31.12. 2022 ended the period during which VAT was reduced (as an element of so-called anti-inflation shield). From 1.01. 2023 VAT 0% rate will be maintained only for food.

Who is VAT taxpayer in Poland? What is the subject of VAT taxation? Find the answers below.

Table of Contents

• VAT in Poland – what is it?
• VAT in Poland – who is a taxpayer?
• VAT in Poland – subject-based exemption
• VAT in Poland – subject of taxation
• VAT in Poland – object-based exemption
• VAT in Poland – tax base
• VAT in Poland – tax rates
• Summary

VAT in Poland – what is it?

The abbreviation VAT stands for Value-Added Tax. The essence of VAT can be described by four combined features: universality, multi-stage nature, neutrality for the taxpayer and proportionality. These characteristics differentiate VAT from other turnover taxes in Poland.

VAT is a tax that concerns both sellers and buyers. Its value is added to the net value of a purchase-sale transaction.

The regulation of VAT settlement in Poland means that its value is “moved” to the consumer. The entrepreneur, when settling the tax, pays its value depending on the net value of sales. He also has the right to deduct Value-Added Tax if a given expense is related to the taxed activity. VAT in Poland should be neutral for the entrepreneur, as he is not the final consumer of goods or services.

VAT in Poland – who is a taxpayer?

VAT taxpayers in Poland include:

• legal persons,
• Organizational units without legal personality,
• Individuals who carry out independent business activities regardless of the purpose or results of such activities,
• Individuals who are recipients of services provided by entities with a foreign seat or who engage in intra-community purchase of goods.

The following entities are not VAT taxpayers:

• public administration bodies,
• public administration bodies within the framework of tasks for which they were established. There is an exception concerning activities performed based on civil law contracts.

VAT in Poland – subject-based exemption

Entrepreneurs in Poland may be exempt from VAT based on the turnover limit. According to the VAT Act, the sale made by taxpayers is exempt from tax, if its total value did not exceed 200,000 PLN in the previous tax year. As the provision indicates, the exemption does not apply to the taxpayer, but to the sale made by him.

The limit of sales does not include the amount of tax and:

• intra-community supply of goods and mail-order sales from the country and on its territory
• sale of goods and services, exempt from VAT based on taxable goods and services
• sale of goods that qualify as fixed assets, intangible assets and legal rights subject to depreciation.

VAT in Poland – subject of taxation

According to the regulations, the following services are subject to VAT taxation:

• Paid delivery of goods and paid provision of services within the country,
• Export of goods,
• Import of goods to the country,
• Intra-community acquisition of goods with remuneration earned within the country,
• Intra-community delivery of goods.

The provisions of the VAT Act do not apply to:

• Transactions of the sale of a business or an organized part of a business,
• Transactions that cannot be the subject of a legally effective agreement,

VAT in Poland – object-based exemption

Not all taxable transactions carried out in Poland result in a VAT tax obligation. The tax structure includes exceptions known as exemptions. The aim of using exemptions is to protect consumers, who are not registered taxpayers, from price increases.

Article 43, paragraph 1 of the VAT Act includes a list of object-based exemptions. This is not an enumerative catalogue as other provisions list exemptions for import and intra-community purchase of goods.

Exemptions apply to entities providing services such as:

• operations involved in medical care, focused on prevention, preservation, rescue, restoration and improvement of health,
• private education at preschool, primary, secondary, and higher levels
• foreign language teaching,
• financial services, including: management of investment funds; insurance; providing guarantees and other transaction securities; granting loans and credit with financial instruments as the subject.

VAT in Poland – tax base

According to the VAT Act, the tax base represents everything that constitutes payment that the goods or service provider received or will receive from the buyer, customer or third party. It includes grants, subventions and other similar supplements that have a direct impact on the price of goods or services provided by the taxpayer. This regulation generally defines the tax base for VAT in Poland – by taxing payments.

 The tax base also includes:

• taxes, duties, fees and other similar obligations,
• additional costs such as commissions, packaging, transportation and insurance costs, collected by the provider of goods or services from the buyer or customer.

With regard to grants, subsidies and other supplements, it should be remembered that only those received are included in the base. But, this applies only to those grants, subsidies and similar benefits that have a direct impact on the price of goods or services provided by the taxpayer.

The tax base for VAT in Poland does not include amounts related to price reductions.

VAT in Poland – tax rates

The following VAT rates are distinguished:

• 23% – the basic rate,
• 8% – the reduced rate, applicable to goods listed in Annex 3 to the VAT Act,
• 5% – the reduced rate, applicable to goods listed in Annex 10 to the VAT Act,
• 0% – the preferential rate.

The period during which VAT was reduced as part of the so-called anti-inflation shield ended on 31st of December 2022. In 2023, only the reduction of VAT on food is maintained. This means that the 0% rate will still be applicable.

The right to apply the 0% rate in relation to the free supply of goods and the free provision of services focused on assistance to victims of war in Ukraine has been extended until the 30th of June 2023.

Summary

VAT in Poland applies to all types of sales of goods and services. It is a source of revenue for the state budget. Exemptions from VAT tax on transactions apply only in certain legally defined situations. By introducing changes in regulations, the legislature ensures VAT and counteracts tax fraud.

You do not know how to find yourself in the VAT regulations?  Do you want to find out if you qualify for an exemption? Contact us! Our experts will answer your questions, provide support