VAT in Poland

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Taxable entities

Any person supplying taxable goods or services in the course of business on a regular basis is considered a taxable person. The term ‘business’ refers to all independently performed activities by producers, traders and suppliers of services.

In addition, any private individual who receives an intra-EU supply of a new means of transport or a person who sells immovable property on a sufficiently regular basis is also deemed a taxable person.
 
A taxable person is considered to be established in Poland if he has established his main place of business in Poland or has a fixed establishment in Poland.
 
A taxable person whose main place of business is outside Poland has a fixed establishment in Poland if that person has sufficient technical and human resources in Poland to be able to make taxable deliveries of goods and/or services on a regular basis.

Taxable activities

Operations fall within the scope of VAT in Poland if the following criteria are met:
 
  • They represent a supply of goods or services in return for a consideration;
  • The deemed place of supply is in Poland;
  • They are performed by taxable persons;
  • They result from economic activities.
The import of goods, intra-EU acquisitions of goods and operations deemed as intra-EU acquisitions of goods are also within the scope of VAT. The place of supply for goods and services is determined based on the same territoriality rules as those included in  the EU Directive 112/2006/EC as amended.

Input and output tax
 
Input and output VAT in Poland must be settled on an invoice basis, regardless of whether payment has been made on those invoices or not, unless the taxable person is under the cash-accounting scheme. However, if the invoice remains unpaid for at least 150 days special rules apply – creditor is entitled and debtor is obliged to make appropriate corrects.

Exempt supplies
 
The rules follow the Directives closely. Thus, exemption with the right to deduct input VAT on the related purchases (‘zero-rating’) applies to:
 
  • The supply of goods shipped or transported outside the European Union;
  • Public transport and related services;
  • Intra-EU supplies of goods;
  • International transport of passengers;
  • Goods placed in free zones and free warehouses;
  • The supply of goods to a bonded warehouse, a VAT warehouse and related services;
  • The supply of goods placed under suspensive customs régimes;
  • The supply of services in connection with goods placed under customs suspensive régimes;
  • The supply of goods and services to diplomatic missions, international organisations and NATO forces.
Exemption without the right to deduct input VAT on the related purchases (‘true exemption’) applies to e.g.:
  • A range of activities including banking, finance and insurance;
  • Medical, welfare and educational activities, if performed by licensed entities;
  • Rental and leasing operations involving immovable property, as well as the supply of old buildings for residential purposes;
  • The supply of land except building land.
However, an option to tax may be exercised under certain conditions in respect of the last category of supplies by submitting a written notification to the relevant tax office.

Standard, reduced and zero rates

The standard rate of VAT in Poland is 23%. All supplies are chargeable at this rate unless they are exempt or chargeable at one of the reduced rates.
 
8% reduced rate
This applies, inter alia, to:
 
  • Certain agricultural products and services;
  • Books, newspapers and periodicals;
  • Accommodation in hotels or premises with a similar function;
  • Restaurant services;
  • Cinema tickets, admission fees at museums, historical monuments, zoos and botanical gardens, fairs and exhibitions (cultural services);
  • Certain medicines and medical equipment;
  • Passenger  transport.
5% reduced rate
The reduced VAT rate of 5% applies, inter alia, to:
  • Certain foodstuffs;
  • Certain books and periodicals.
Special schemes
Special schemes apply to:
  • Small businesses;
  • Flat-rate farmers;
  • Travel agents;
  • Suppliers of second-hand goods, works of art, collectors’ items;
  • Antiques;
  • Investment gold;
  • Tax refunds for tourists;
  • Cash accounting;
  • Supplies of certain electronic devices (e.g. smartphones, laptops, tablets, game consoles);
  • Foreign entities supplying electronic services to private customers (persons other than taxable persons) within the European Union (extended from 1 January 2015 to supplies of radio and television broadcasting services and telecommunication services).
Small enterprises
 
The sale carried out by taxpayers for which the total sales value did not exceed in the preceding tax year the amount of PLN 200.000 (exclusive of VAT) shall be exempt from VAT. Businesses with a turnover below this threshold may register voluntarily. Nevertheless, there are some business activities, which entrepreneurs conducting them shall register for VAT purposes from the fist taxable moment i.e. legal and advisory services.

VAT Returns and payment in Poland
 
As a general rule, the return period is monthly. Taxable persons with a turnover below the PLN equivalent of EUR 1.200.000 (set at PLN 5.157.000 for 2017) may file quarterly returns.
 
VAT returns in Poland should be submitted to the tax authorities by the 25th day of the month following each subsequent month. As a general rule, surplus output VAT resulting from VAT return should also be paid to the tax office by the 25th day of the month following each subsequent month. In addition, from 1 January 2017 small and medium-size enterprises will be obliged to adjust their VAT records to structure of SAF – T (Standard Audit File for Tax) and report certain information’s (on monthly basis) to the competent tax authority. Micro enterprises (e.g. self-employed businessmen whose business is subject to VAT) will have the same obligation starting from 1 January 2018. Such obligation for big firms has been in force since 1 July 2016.
 
Taxable persons having an excess of inputs over outputs for a return period, may apply for a refund of the excess or carry forward the balance against VAT liabilities reported in subsequent returns.

The amendments in VAT provisions in force since 2018
 
Split payment mechanism
 
According to the VAT Act, a payment for a purchase invoice stating the amount of VAT tax may be made with the split payment mechanism, where the payment of the entire VAT resulting from the invoice or of some part of it is made to a special bank account (VAT account), and the payment of the amount reflecting the net sales is made to the bank account of the seller party or is settled otherwise.
 
The amended act provides for a voluntary choice of the method of payment by the buyer.
 
The basic advantages resulting from the introduction of the split payment mechanism is the limitation of tax risk related to VAT. In particular:
  • the payment with the split payment mechanism eliminates the risk of application of provisions on joint and several liability and VAT sanctions;
  • In the case of a tax debt resulting from a return, where 95% of purchase invoices are paid with the split payment mechanism, no increased rate  (150 %) of default interest will be applied;
  • the refund of the surplus of input tax due shall be done to the VAT account within 25 days after the date of such a request and declaration (the standard time is 60 days).
The above mentioned regulations are to enter into force on 1 July 2018.

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