Value Added Tax (VAT) Guidelines: Poland

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published on 23 March 2022

 

 

This country summary is part of the comprehensive Focus on VAT Fellows: International Value Added Tax (VAT) Guidelines »



1. VAT Scope, VAT Rates and VAT Exemptions

Generally, the following supplies would be taxable in Poland: 
  • All forms of supplies of goods and services which will be provided by an enterprise as part of its business for a consideration earned in Poland
  • the export of goods
  • the import of goods in Poland from a third country (non-EU Member State) with customs clearance in Poland
  • intra-Community acquisition of goods in Poland or intra-Community supply of goods.
 
Certain actions carried out for no consideration are deemed to be supplies: For example, the giving of business gifts, European Union (EU) dispatches within the same legal entity (such as a corporation) and the private use of business assets.
 
Certain transactions are not subject to Polish VAT, such as cash payments, the assumption of a debt as a form of payment and genuine compensation payments (damages). The standard VAT rate is 22 percent, but in the period from 1 January 2011 until certain financial parameters are not met, the standard VAT rate is 23 percent. The reduced VAT rate is 7 percent (in the period from 1 January 2011 until certain financial parameters are not met) the reduced rate is 8 percent) and 5 percent. Temporarily, i.e. until the end of July 2022, the reduced VAT rates apply to supplies of food products, natural gas (0 percent), supplies of electricity and heat (5 percent) and diesel oils (8 percent).
 
There are some rules for VAT exemptions as well. It will be distinguished between VAT exemptions with input VAT recovery (so-called zero rated supplies) and VAT exemption without an input VAT deduction (exempt supplies):
  • Zero rated supplies are, for example exports or intra-Community supplies of goods from Poland to a third country or another EU Member State or supply, import, repair and maintenance of ships and aircraft under certain conditions.
  • VAT exempt supplies without input VAT deduction, for example, are supply of undeveloped land other than building land, supply of housing or parts thereof under certain conditions or supply of gold for the National Bank of Poland.
 
If a business sells goods to a customer who is registered for VAT in another EU Member State and the sale invol­ves the removal of those goods from Poland (either by the supplier or the customer) to that EU Member State, then the business does not need to charge VAT and may zero rate the supply as an intra-Community shipment.
 
If a business sells goods to a customer who is not registered for VAT in another EU Member State and the sales involves the removal of those goods from Poland by the supplier, the supplier will have to charge Polish VAT. If the supplier’s sales exceed a certain threshold applicable in such EU Member State or if a business waives the application of the threshold the business may have to register in the Member State under what is known as the Distance Selling Scheme. There is also an option to settle VAT in one country – the country of identification/ establishment, under One Stop Shop(OSS) scheme.
 
If a business exports goods to a customer (business or private) outside of the EU and the supplier arrange for the goods to be transported the supplier does not need to charge VAT. As a rule, supplies of services provided to an entrepreneur for business purposes (so-called B2B services) are made where the recipient of the service is established.
 
As a further rule, the place of supply of services to customers/supplier who do not receive such services for their business (so-called B2C services) is where the business providing the services is established. Apart from these principal rules, there are special rules for certain types of services. The place of supply of services by an intermediary in the case of B2C services is the place where the underlying transaction is supplied. If the customer is resident outside the EU the place of supply of certain B2C services is where the customer is resident or domiciled. 
 
Reverse charge was abolished on 1 November 2019 and has been replaced with split payment mechanism. Re­ver­se charge in domestic transactions can be used only in the case of supplies of goods or services made by foreign entities not registered for VAT in Poland to Polish VAT-registered taxable persons established or having a fixed establishment in Poland.
 
To curb VAT extortions Poland has introduced further mechanism that has replaced the previous reverse charge mechanism. Split payment mechanism consists in splitting the payment by the purchaser in such a way that he pays the net amount into supplier’s account, and VAT – into a special dedicated VAT account. The condition for applying the split payment mechanism is making sales to taxpayers (B2B transactions). As far as other supplies are concerned, the purchaser may apply split payment but does not have to.

 

2. VAT registration and simplifications

If an entrepreneur performs taxable supplies in Poland, it will be required to notify the Polish Tax Authorities of the date of commencement of taxable activities; the business will grant a local tax registration/identification number (numer identyfikacji podatkowej – NIP).
 
If an entrepreneur makes intra-Community supplies in Poland, it will be required to notify the Polish Tax Autho­rities of the date of commencement of such activities, you also be granted a Polish VAT identification number (tax identification number – NIP PL).
 
The registration rules which apply to Polish entities also apply to non-Polish entities providing taxable supplies in Poland. Fiscal representation is obligatory only for foreign taxable persons who are not residents of EU Member States providing taxable supplies in Poland.
 
If an entrepreneur is not registered for VAT in Poland, but sells and delivers goods to customers in Poland who are not VAT registered (distance sales), where the value of those sales exceeds a threshold of EUR 10,000 in the preceding or in the current year the entrepreneur is required to register for the OSS procedure or to register and to account for VAT in Poland. The threshold of EUR 10,000 refers to all sales to all EU countries.

There are some simplification rules to avoid a registration for VAT purposes in Poland:
  • Reverse Charge: For several supplies of goods or services rendered by foreign enterprises the reverse charge mechanism is applicable in Poland. In that case the recipient of the supply (not the supplier) is liable to VAT. The condition is that the purchaser is a Polish taxpayer with a registered office or fixed establishment in Poland.
  • Intra-Community triangulation
  • Consignment stock: There are generally no simplifications allowed to apply by the Polish tax authorities to avoid a VAT registration. In case of call-off-stocks a simplification could be assumed under specific conditions.
  • Commissioning: Simplification and the avoidance of a VAT registration is possible.
 
For an oversee company it is obligatory to appoint a fiscal representative in Poland.

Rödl & Partner in Poland also provides VAT compliance services for foreign companies which are obliged to register for VAT in Poland.

   

3. Declaration requirements and penalty regime

Entrepreneurs liable to Polish VAT are required to submit Standard Audit File for TAX (SAF-T) on a monthly or quarterly basis (quarterly VAT reporting is possible under certain conditions) during the year. SAF-T combines data from the VAT register and the VAT return. There are no annual VAT returns in Poland. Monthly and quar­terly SAF-T must be filed electronically.
 
Failure to furnish a SAF-T in time may result in a penalty. The penalty amount can be different. If the amount of the due VAT tax is paid late, there is default interest to be paid. The general interest rate is at the moment 8 percent p.a. Under some circumstances the reduced rate of 4 percent can be used. There is also a higher rate of 12 percent. Basi­cally, SAF-Ts have to be submitted monthly. Small entrepreneurs can submit SAF-Ts quarterly. VAT payer must also file nil SAF-Ts.
 
If an entrepreneur supplies goods which are shipped from Poland to VAT registered businesses in other EU Member States, it is required to correctly complete ESL forms (recapitulative statements) electronically. The ESL must generally be submitted electronically monthly.
 
Non-compliance with the obligation to properly file ESLs may result in a penalty. The penalty amount can be different. VAT registered entrepreneurs with a value of dispatches or deliveries to or from EU Member States, which exceeds a certain threshold, must submit returns each month. Intrastat reports are to be filed electro­nically.
 
There are in principle no penalties for failing to register for VAT in time. It is generally also possible to register for VAT with retrospective effect.
 
However, failure to register an entity for VAT purposes, despite such an obligation, involves both the obligation to pay tax arrears together with default interest (currently, generally 8 percent p.a., also 4 percent and 12 percent in some circum­stances) and the possible penal fiscal responsibility for the depletion of liabilities against state budget. Such a failure is punishable with a fine, or restriction of freedom, or imprisonment.
 
Penalties could be avoided as an exception and via application if the individual circumstances lead to that.

 

4. VAT recovery

If your business is registered for VAT purposes in Poland it is possible to declare and deduct Polish input VAT within the VAT return on the regular tax procedure under further preconditions. It is also possible to recover Polish input VAT if the enterprise does not have its domicile, registered office, place of management or perma­nent (fixed) establishment in Poland. The foreign entrepreneur can be registered as a Polish VAT taxpayer. There are certain items that you cannot recover input VAT on.
  
Input VAT on certain employee expenses:
  • Domestic air travel: Yes, if the trip is undertaken in connection with the employer’s business.
  • International air travel: Not applicable. Expenses incurred on international flights do not incur Polish VAT.
  • Rail travel: Yes, if the trip is undertaken in connection with the employer’s business.
  • Taxi fares: Yes, if the trip is undertaken in connection with the employer’s business.
  • Car rental: In principle the input VAT is deductible in 50 percent, if the rented car is used for business purposes. 100 percent VAT refund is possible under certain conditions.
  • Fuel: If the car is used as a business car and privately, there is a possibility to deduct 50 percent of the input VAT on the operating cost as well as acquisition of the business car. 100 percent VAT refund is possible under certain conditions.
  • Car parking: In principle the input VAT is deductible in 50 percent. 100 percent VAT refund is possible under certain conditions. The parking expenses are recoverable, even if the expenses are incurred on a private passenger car, provided that the parking relates to the taxable business carried on by the employer.
  • Hotel: No, the amount of the non-refundable VAT is deductible for income tax purposes.
  • Restaurant services: The input VAT is not deductible. In case of catering services the input VAT can be deducted under certain conditions.

 

5. Invoicing

There are formal invoicing requirements to be fulfilled according to the Polish VAT Act. If invoices do not meet all of the necessary requirements or if some indications are not correct it is possible to amend these invoices via different ways, for example via cancellation and new issuing or amendment with an additional document and respective references to the original invoices.
 
An electronic submission of invoices (e.g. via email, computer fax) is generally possible. Specific conditions must be fulfilled by the recipient regarding the validity and the integrity of the issued/received invoice, for example, an internal control system, use of a qualified electronic signature or an electronic data interchange procedure (e.g. EDI). A qualified electronical signature or an EDI procedure is not mandatory.
 
A National E-Invoicing System (NeIS) and a structured E-Invoice are going to be introduced in 2023 in Poland in connection with further digitalization of the Polish tax and accounting system. The structured E-Invoice is going to be a third type of invoice. The use of the new system will be mandatory for both Polish and foreign compa­nies registered for VAT in Poland. In 2022, the new solution can be used on a voluntary basis.
 
A correcting invoice could be issued with the possibility to claim back already paid VAT from the tax authority. A correcting invoice must be issued by the seller in cases where the supply was cancelled/returned in full or part, in case of discounts. The correcting invoices which amend the original invoices must refer to the original.
 

6. Others

Enterprises will be allowed to establish VAT groups in Poland starting from 1 July 2022. 

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