VAT, GST and Sales Tax in Poland

Summary

Name of the tax Value-added tax (VAT)
Local name Podatek od towarow i uslug
Date introduced 5-Jul-93
Trading bloc membership European Union (EU) Member State
Administered by Ministry of Finance (http://www.mf.gov.pl)
VAT rates
Standard 23%
Reduced 5% and 8%
Other Zero-rated and exempt
VAT number format 123-45-67-890, PL 1234567890
VAT return periods Monthly or quarterly
Thresholds
Registration PLN200,000
Recovery of VAT by non-established businesses Yes

Scope of the tax

VAT applies to the following transactions:

  • The supply of goods and rendering of services in Poland for consideration
  • Receipt of reverse-charge services by a taxable person in Poland
  • Export and import of goods
  • Intra-Community acquisition of goods for consideration in Poland
  • Intra-Community supply of goods

The following activities are outside the scope of VAT:

  • Transactions that cannot be subject to legal agreements (illegal transactions)
  • Sales of businesses (transfers of going concerns)
  • Employment contracts

Who is liable

A taxable person is a business entity or individual that carries on business activities, regardless of the purpose or result of the busi­ness activities. Business activities include all manufacturing, trad­ing and service-providing activities. Business activities also include continuous use of goods and intangible rights with the purpose of obtaining income.

The VAT registration threshold is PLN200,000. The limit may apply in one of the following two ways:

  • Retrospectively: the value of supplies of goods or services exceeded PLN200,000 in the preceding tax year.
  • Prospectively: at the start of business, the value of supplies of goods or services is expected to exceed PLN200,000. If the business begins after the start of the calendar year, the registra­tion limit applies proportionately to the remainder of the year.

If the value of supplies is not expected to exceed the registration threshold, a new business is exempt from VAT (with some excep­tions – please see below).

However, it may waive the exemption. The waiver in writing must be submitted to the appropriate VAT office. If the value of sales exceeds the registration threshold, the exemption is automatically no longer valid and the amount of turnover in excess of the threshold is subject to VAT.

The registration threshold is not applied to the importation of goods and services, to intra-Community acquisition of goods and the supply of goods on which the purchaser is liable to account for VAT. In addition, businesses in the following categories must register for VAT at the commencement of activity, regardless of the amount of turnover:

  • Businesses that supply products made from precious metals
  • Businesses that supply certain excise products
  • Businesses that supply new means of transport
  • Businesses that supply buildings or building land
  • Businesses that provide legal, consulting and professional ser­vices
  • Businesses that supply services connected with jewelry

The PLN200,000 registration threshold does not apply to foreign businesses.

Group registration. VAT group registration is not permitted under Polish VAT law. Legal entities that are closely connected must register for VAT individually.

Foreign businesses and tax representatives. A foreign business (that is, an entity that is not established in Poland and that does not have a place of business there) must register for VAT in Poland if it makes taxable supplies of goods or services in Poland.

However, in general, a foreign business is not required to register for VAT in Poland if it supplies exclusively the following services:

  • Services and goods for which the Polish purchaser is required to account for and pay tax under the reverse-charge mechanism (see Section E).
  • Certain services that are subject to a zero rate (for example, services supplied at Polish seaports with respect to interna­tional transport, services of air traffic control rendered for for­eign providers of air transportation and transport services related to the import of goods if the cost of transport is includ­ed in the tax base of goods; see Section D).

A non-EU business must appoint a Polish resident tax representa­tive before registering for VAT in Poland. The tax representative is jointly and severally responsible for the tax arrears of the for­eign business represented by it.

An EU business is not required to appoint a tax representative to register for VAT in Poland, but it may appoint a tax representative if it chooses to do so.

Registration procedures. Prior to performing the first taxable activity, a taxpayer should submit the VAT-R and the NIP-2 or NIP-8 registration forms (which may be submitted electronically under certain conditions). The deadline to issue a registration decision is two weeks, however, in most cases it takes less time. Additionally, prior to performing the first intra-Community acquisition or intra-Community supply taxpayers should obtain VAT-EU number (VAT-R registration is also used for this pur­pose). Moreover, in case of any changes in scope of the informa­tion provided within the VAT-R form, a taxpayer should update the tax office accordingly within seven days after the day the change has occurred.

Late-registration penalties. No specific penalty applies to late VAT registration in Poland. However, penalties are assessed if, as a result of late registration, a taxable person pays VAT late or submits VAT returns late. Penalties may include fines and criminal penalties.

Reverse charge. Reverse-charge mechanism is generally applica­ble to intra-Community acquisitions of goods or import of servic­es. Reverse charge is also applicable to:

  • Supplies of services by foreign entities not having seat or fixed establishment in Poland to the Polish taxpayers
  • Local supplies of goods by foreign entities not having seat or fixed establishment in Poland to the Polish taxpayers
  • Local supplies of certain fraud-sensitive goods (e.g., ferro-alloys, plastic waste, glass waste) and (as of 1 July 2015) certain elec­tronic equipment (e.g., mobile phones, notebooks if transaction exceeds net amount of PLN20,000)

Taxpayers are obliged to submit the recapitulative statement con­cerning local supplies of certain goods and services for which reverse-charge mechanism applies (i.e., those goods, that are enlisted in the Appendix 11 to the Polish VAT Act, such as ferro­alloys, plastic waste or glass waste, notebooks, and mobile phones).

From 1 January 2017, the reverse charge applicable to services applies to a number of construction services (e.g., construction of dwellings and fences, concreting, erection of steel structures), provided between taxpayers (where the purchaser is an active VAT taxpayer).

Digital economy. Poland implements EU provisions regarding Mini One-Stop Shop for supply of electronic, telecommunication and broadcasting services to non-taxpayers.

In case of electronic, telecommunication and broadcasting ser­vices supplied to VAT registered businesses, the place of supply is determined according to the general rule, i.e., based on the seat of the acquirer. When dealing with services supplied for non-taxpayers, the place of supply is determined by the customer’s seat, permanent place of residence or ordinary place of residence.

If a taxpayer decides to benefit from Mini One-Stop Shop sim­plification he should register through the Polish Ministry of Finance portal (using VIU-R form – for entities from EU or VIN-R form – for entities from outside EU).

Taxpayers that decide to use Mini One-Stop Shop simplification should submit VAT returns concerning electronic, telecommuni­cation and broadcasting services electronically not later than on 20th day of the month following the quarter (VAT payments should be arranged within this deadline as well). All the amounts enlisted in such return should be indicated in EUR.

Taxpayers should submit those VAT returns to II Urzad Skarbowy Warszawa-Srodmiescie (Jagiellonska 15, Warsaw, Poland).

Apart from the above, taxpayers that enjoy the Mini One-Stop Shop simplification should keep the register of all the transac­tions that fall within the scope of the Mini One-Stop Shop mechanism and – upon request – be presented to the tax authorities.

Deregistration. Deregistration may be conducted either based on the taxpayer’s application (filed on VAT-Z form) or officially by the head of the tax office (most usually in case no VAT returns are filed for more than six months, not appearing sales and pur­chases, issuing invoices that do not reflect actual actions).

VAT rates

The term “taxable supplies” refers to supplies of goods and ser­vices that are liable to a rate of VAT, including the zero rate.

The VAT rates are:

  • Standard rate: 23%
  • Reduced rates: 5% and 8%
  • Zero rate (0%)

The standard rate of VAT applies to all supplies of goods or ser­vices unless a specific measure provides for a reduced rate, the zero rate or an exemption.

Examples of goods and services taxed at 5%

  • Certain unprocessed basic foodstuffs
  • Certain agricultural and forestry products
  • Books and certain magazines

Examples of goods and services taxed at 8%

  • Musical instruments
  • Certain foodstuffs
  • Handicraft products
  • Books, newspapers and magazines
  • Maps
  • Hotel services
  • Certain entertainment services
  • Passenger transport
  • Travel services
  • Medical products
  • Supply of water
  • Certain services related to agriculture
  • Other services related to recreation – solely within the scope of admission
  • Supply, construction, repairs and reconstructions of buildings classified as “social housing”

Examples of goods and services taxable at 0%

  • Exports
  • Intra-Community supplies of goods
  • Supplies of certain sailing vessels
  • International transport and related services
  • Supplies of computer equipment to educational institutions

The term “exempt” refers to supplies of goods and services that are not liable to tax and that do not qualify for input tax deduction.

Examples of exempt supplies of goods and services

  • Financial services (with exceptions)
  • Supply of real estate (with option to tax)
  • Health care services
  • Social welfare services
  • Public postal services
  • Education
  • Lease of residential property
  • Cultural and sporting events (with exceptions)
  • Services connected with science
  • Dental engineering
  • Betting, gaming and lotteries

Option to tax for exempt supplies. Polish VAT Act provides option to tax for supply of real estate, which generally benefit from VAT exemption under certain conditions.

Time of supply

The time when VAT becomes due is called the “time of supply” or “tax point.” The basic time of supply for goods is when the goods are delivered. The basic time of supply for services is when the services are performed.

Special time of supply rules apply to several situations.

Prepayments. The receipt of prepayments is considered the tax point. The tax point is created only to the extent of the payment.

The tax point for exports of goods is created according to the general rules.

Imported goods. The tax point for imported goods arises when a customs debt is incurred. However, for goods imported under certain customs regimes, the tax point arises when the goods enter the customs regime. The following are the relevant customs regime:

  • Inward processing
  • Temporary customs clearance
  • Processing under customs supervision

Intra-Community acquisitions and supplies of goods. The tax point for the intra-Community acquisition of goods is the invoice date but not later than the 15th day of the month following the month in which the supply took place. If an invoice is issued before this date, the VAT is due at the time the invoice is issued.

The same tax point rules apply to intra-Community supplies of goods.

Reverse-charge services. Imported services are subject to a reverse charge, which is a form of self-assessment of VAT. If the reverse charge applies, the recipient of the service accounts for output tax (effectively on behalf of the supplier).

The reverse-charge VAT is deductible as input tax by the recipient of the service in accordance with the general rules (see Section F), in the same month (quarter) when the tax point arises or in one of the two following months (quarters).

Cash accounting. Poland operates a cash accounting scheme with a maximum threshold of EUR1.2 million.

Continuous supplies of services. The tax point concerning con­tinuous supplies of services (i.e., those services that are rendered for longer than a year) arises at the end of each year until these services are completed. If services are supplied for a period not exceeding a year – the tax point arises at the moment of services’ completion. Additionally, if parties of the transaction set clearing or payment periods regarding the continuously supplied services, the tax point arises at the end of each period.

Leased assets. The tax point concerning leased assets arises at the moment of issuance of the invoice documenting leasing ser­vices.

Recovery of VAT by taxable persons

A taxable person may recover input tax, which is charged on goods and services supplied to it for business purposes, if it relates to the person’s taxable supplies. A taxable person generally recovers input tax by deducting it from output tax, which is charged on supplies made.

Input tax includes VAT paid on the purchase of goods and ser­vices, VAT paid on imports of goods and on intra-Community acquisitions, VAT self-assessed for reverse-charge services received from outside Poland and VAT self-assessed for goods on which the purchaser is liable to account for VAT.

The amount of the VAT reclaimed must be detailed on a valid VAT invoice.

Nondeductible input tax. Input tax may not be recovered on pur­chases of goods and services that are not used for business purposes (for example, goods acquired for private use by the entrepreneur). In addition, input tax is not recoverable for some items of business expenditure.

Examples of items for which input tax is nondeductible

  • Restaurant meals
  • Personal expenses
  • Hotel accommodation

Examples of items for which input tax is deductible (if related to a taxable business use)

  • Advertising
  • Purchase, lease or hire of passenger cars as well as vans or trucks with high loading capacity
  • Fuel (gasoline, diesel oil, propane and butane) for the vehicles listed above
  • For passenger cars with low loading capacity (if passenger car is used for taxable activities only, under certain conditions 100% of input VAT is deductible, otherwise, i.e., if a passenger car is used for both taxable activities and private purposes – only 50%)
  • Travel
  • Conferences
  • Business gifts
  • Advisory services
  • Business use of home telephone and mobile phones

Partial deduction. Input tax is not recoverable if it is directly related to making exempt supplies. If a Polish taxable person makes both exempt supplies and taxable supplies, it may not deduct input tax in full. This situation is referred to as “partial exemption.”

Input tax directly relating to taxable supplies is recoverable in full, while input tax directly related to exempt supplies is not recover­able. Input tax that is not directly attributable to taxable supplies or to VAT-exempt supplies must be apportioned to each category.

The general pro rata method is based on the ratio of qualifying turnover compared with total turnover during the calendar year. The initial deduction (that is, the deduction made during a tax year) is done based on the pro rata percentage for the preceding year.

The recovery percentage is rounded up to the nearest whole num­ber. The calculation is adjusted using the actual figures for the year in the first period of the next calendar year.

Capital goods. Capital goods are items of capital expenditure that are used in a business for longer than a year. Input tax is deduct­ed in the tax period in which the goods are acquired. The amount of input tax recovered depends on the taxable person’s partial exemption status in the VAT year of acquisition. The amount of input tax recovered on the capital item must be adjusted over time depending on the use of the goods. In Poland, the capital goods adjustment applies to the following assets (for the number of years indicated):

  • Real estate: adjusted for a period of 10 years
  • Capital goods and intangible assets: adjusted for a period of five years

The adjustment does not apply to goods or services that are capital goods and intangible assets with a purchase value of less than PLN15,000.

The adjustment is applied each year following the year in which the capital goods or real estate is made available to a fraction of the total input tax (1/10 for real estate and 1/5 for other capital goods). The adjustment may result in either an increase or a decrease in deductible input VAT, depending on whether the ratio of taxable supplies made by the business has increased or decreased compared to the year in which the capital goods were acquired.

Refunds. In general, if a VAT return shows an excess of input VAT over output VAT, the surplus input tax is carried forward to offset output tax in the following month. Taxable persons may request a direct refund of the surplus within the following time limits:

  • 60 days after the date on which the VAT return is submitted
  • 180 days from the date on which the VAT return was submitted if the taxpayer did not perform any taxable activity in the rele­vant period

The refund periods may be shortened to 25 and 60 days, respec­tively, if the taxpayer submits an appropriate application and if the invoices and other documents regarding the input VAT shown in the VAT return are paid or if the collateral is submitted.

Refund in 25 days is possible provided that: payment of invoices occurred from a bank account of the taxpayer and submitted to confirm transfers in the tax office; the taxpayer is not in arrears with taxes more than PLN20,000 and timely settles taxes for at least two years; subject is registered for VAT at least 12 months and it has not been transferred from the previous VAT declara­tions amount higher than PLN3,000.

If necessary, the tax office may extend the refund period until tax proceedings are completed.

If a repayment is delayed, the tax office must add interest for the delay.

Preregistration costs. It is possible to deduct input VAT from expenses incurred prior to VAT registration under certain condi­tions. The Polish tax authorities allow such deductions, yet such procedure is not regulated within the Polish VAT Act.

Write-off of bad debts. Under certain conditions, a taxpayer may adjust a taxable amount and the tax due on goods or services sup­plied in case of receivables for which uncollectibility has been substantiated. The adjustment also concerns the taxable amount and tax amount attributable to a portion of receivables whose uncollectibility has been substantiated. Uncollectibility of receiv­ables is deemed as substantiated if receivables were not settled or disposed of in any form within 150 days following the lapse of their payment deadline stipulated in an agreement or invoice.

On the other hand, if the amount due on the invoice for goods or services supplied is not paid within 150 days from the lapse of payment deadline specified in an agreement or the invoice, a debtor shall adjust a deducted amount of the tax resulting from said invoice in settlement for the period in which the 150th day elapsed from the payment deadline specified in the agreement or the invoice (unless creditor is at that moment in the bankruptcy or liquidation proceedings).

Recovery of VAT by non-established businesses

Poland refunds VAT incurred by businesses that are neither estab­lished nor registered for VAT in Poland. A non-established busi­ness may claim VAT to the same extent as a Polish taxable person.

For businesses established in the EU, refunds are made under the terms of the EU Directive 2008/09. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. For the general VAT refund rules applicable to the EU 2008/09 and 13th Directive refund schemes, see the chapter on the EU.

To be eligible to claim a VAT refund in Poland, a non-established business must satisfy all the following conditions:

  • It must be registered for VAT in the country where it is estab­lished.
  • It must not make taxable supplies in Poland (with certain excep­tions, including supplies of services taxed under the reverse-charge mechanism).
  • It must be established in a country that refunds VAT to Polish businesses (the reciprocity principle).

Refund application. The deadline for submitting refund applica­tions is 30 September following the claim year. This deadline is strictly enforced. The forms must be completed in Polish. The claim period is a minimum of a calendar quarter and a maximum of one calendar year. The minimum claim amounts are EUR400 for accounting periods shorter than a year and EUR50 for an annual claim.

Refunds are made in Polish zloty (PLN) into a bank account main­tained by the claimant either in Poland or in the state where the claimant is resident or has a place of business. If a transfer is made abroad, the tax office does not cover the remittance costs.

Refund claims by non-EU businesses must be filed with the fol­lowing tax office in Warsaw:

II Urzad Skarbowy Warszawa Srodmiescie

Jagiellonska 15

Warsaw Poland

EU businesses must file the application form through their local tax office in their country of establishment.

To claim refunds, the following documents are required:

  • Official application form (this form is attached to the Ministry of Finance Decree)
  • Original VAT invoices and customs documents
  • Certificate of Registration as a Taxpayer issued by the VAT authorities in the country where the claimant is established, stating that the taxpayer is a taxable person for VAT purposes (this form is attached to the Ministry of Finance Decree)

Repayments and interest. Refunds are made within four to eight months after the claim filing date. The taxpayer is entitled to interest on the late refunds.

Invoicing

VAT invoices and credit notes. A Polish taxable person must gen­erally provide a VAT invoice for the following:

  • All taxable supplies made except for exempt transactions
  • Exports of goods
  • Intra-Community supplies
  • Supplies of goods outside the scope of Polish VAT (that is, the reverse-charge mechanism applies)
  • Supplies of services outside the scope of Polish VAT (that is, the reverse-charge mechanism applies)
  • Triangular transactions (see the chapter on the EU)
  • Distance sales (see the chapter on the EU)

VAT invoices are not required if a business exclusively supplies VAT-exempt goods or services. VAT invoices are not required for sales made to private individuals who do not carry on business activities, unless requested. Invoices must support claims for VAT refunds claimed by non-established businesses.

A credit note (called a “correcting invoice”) must be issued if any of the following circumstances arise after an invoice is issued:

  • A rebate or discount is granted.
  • The price is increased.
  • An error is detected in the price, rate or amount of tax charged or in any other element of the invoice.

In general, a credit note must be issued to the person to whom the original VAT invoice was issued.

Electronic invoicing. The VAT law permits electronic invoicing in line with EU Directive 2010/45/EU.

Proof of export and intra-Community supplies. Goods exported from Poland and intra-Community supplies of goods are subject to Polish VAT at the zero rate (see the chapter on the EU). To qualify for zero rating, the supplier must prove that the goods have left Poland. Suitable proof for exported goods includes the Single Administrative Document (SAD) or an electronic docu­ment generated by the customs authorities, which confirms that the goods have been removed from the EU (or its authorized copy). For an intra-Community supply, a range of commercial documentation must be used (usually transport documents and the specification).

Foreign-currency invoices. The VAT amount on the invoice must be shown in Polish zloty, regardless of the currency in which the amount due is expressed in the invoice. If a VAT invoice is issued in a foreign currency, the output value must be converted into Polish zloty, using the official exchange rate published by the National Bank of Poland (NBP) or European Central Bank (ECB) for the day preceding the invoice issuance date (for invoices issued correctly within the seven-day deadline). However, if an invoice was not issued on time in accordance with the Polish rules (that is, generally, within seven days after the supply), the taxpayer must apply the average rate calculated and published by the NBP or ECB on the last business day preceding the date on which the tax point arises.

B2C invoices. For details of the VAT rules on electronic services in the EU, please refer to the European Union chapter.

Apart from the above, a taxpayer is required to issue the invoice for documenting supply of goods or services to natural persons and non-entrepreneurs upon their request (there is no legal requirement to do so without such request).

VAT returns and payment

VAT returns. VAT returns are made on a monthly basis, submitted in electronic form. Taxpayers must submit VAT returns to the tax office by the 25th day of the month following the month in which the tax point arises. The deadline for making the relevant pay­ment is the same as for submitting the VAT return. VAT liabilities must be paid by bank transfer, and must be paid in Polish zloty.

Small taxpayers. “Small taxpayers” include VAT-taxable persons whose total value of supplies in the preceding VAT year did not exceed the Polish zloty equivalent of EUR1.2 million. The EUR1.2 million threshold also applies to commission sales. The threshold for brokerage houses is EUR45,000 of income from brokerage and other forms of remuneration. A business that meets the small taxpayer conditions may opt for a special VAT scheme, but this treatment is not compulsory.

Small taxpayers may choose to account for VAT using the “spe­cific tax point.” The specific tax point for a supply is the receipt of payment. The appropriate VAT office must be notified of the decision to choose this tax point.

Penalties

Several penalties are assessed in Poland for errors in VAT accounting, for late submission of VAT returns or for late pay­ment of VAT. The following are the penalties:

  • Late submission of VAT returns: for a VAT return that is sub­mitted late, the individual responsible for the delay may be fined if the tax court determines that he or she is at fault. The fine is imposed on the basis of the Fiscal Penal Code, which determines the penal liability of natural persons for fiscal crimes.
  • Sanction 30% of the understatement of tax liability, if it is shown in the tax return the amount of tax lower than the amount payable or overstatement of the amount of input VAT.
  • Sanction 20% of the understatement of tax liability (overstate­ment of the amount of input VAT), in the case of a taxpayer corrects their settlement after the completion of a tax audit or in the course of the audit procedure. No sanction shall be deter­mined when the taxpayer himself corrects the mistake and will pay the difference of tax to the opening of a tax audit or duty and the understatement of tax due/overstatement of input tax is made by a natural person who bears the responsibility for this act on the basis of Penalty Code.
  • Effective rate increased sanctions — 100% for the use of the so-called “empty” invoices.
  • Late payment of VAT: the interest rate applied to delayed pay­ments of VAT is 200% of the National Bank of Poland “Lombard rate.” In November 2015, the interest rate for delayed payments was 8% per year.

EU filings

Intrastat. A Polish taxpayer that trades in goods with businesses elsewhere in the EU must submit Intrastat forms if its turnover exceeds the following amounts:

  • Intra-Community acquisitions: PLN3 million
  • Intra-Community supplies: PLN1.5 million

If the taxpayer’s turnover does not exceed certain thresholds, it is not required to complete all items of the Intrastat report form (numbers 12, 15 and 20 may be excluded). The following are the thresholds:

  • Intra-Community acquisitions: PLN42 million
  • For intra-Community supplies: PLN76 million

Intrastat returns are filed with the Polish customs authorities on a monthly basis. They must be filed by the 10th of the month following the month in which the transactions occurred.

Intrastat returns must be submitted in electronic form. All amounts must be provided in zlotys.

A penalty may be imposed for late submissions or for missing or inaccurate declarations.

EU Sales Lists. Persons who are registered as EU VAT payers must file EU Sales Lists (ESLs) if they make intra-Community supplies and acquisitions or if they make supplies of services and the place of supply is considered to be the place of establishment of the customers.

No turnover thresholds apply to ESLs under the Polish VAT law.

ESLs must be filed monthly (or in some cases quarterly) with the tax office. ESLs submitted electronically must be filed by the 25th day of the month following the end of the month or quarter. If submitted by paper, ESLs must be filed by the 15th day of the month following the end of the month or quarter.

ESLs may be filed only in paper form. All amounts must be pro­vided in zlotys.

In Poland, ESLs must include the following information:

  • The name of the entity submitting the lists and the entity’s Polish VAT registration number
  • The EU VAT registration numbers of suppliers and customers, together with the appropriate country codes
  • The total of intra-Community acquisitions and intra-Community supplies made
  • Information about triangular transactions subject to the simpli­fication rule (see the chapter on the EU)
  • The total of services supplied that have a place of supply out­side Poland

An ESL is not required for any period in which the taxable person does not make any intra-community supplies.

Penalties may be imposed for late and missing ESLs.