Value Added Tax (VAT) in Poland has largely the same conditions for its application, as in other countries. Some features of the conditions, rates, and procedure for VAT taxation in Poland are given below.

Value Added Tax (VAT) as an indirect tax is paid by all individuals and legal entities in the country when purchasing goods or services. If an organization or an entrepreneur becomes a VAT payer, they are obliged to accrue and pay VAT on sales, and the right to deduct input VAT on purchases.

The main conditions for VAT taxation in Poland are given on government websites biznes.gov.pl and podatki.gov.pl.

Services and goods subject to VAT:*

1) sale of goods and services in Poland,

2) export of goods,

3) import of goods (import of goods into the territory of the country),

4) purchase of goods within the EU for a fee in the territory of Poland,

5) deliveries of goods within the EU.

* Taking into account the attribution of these types of activities to taxable activities for VAT.

A VAT payer is an organization or entrepreneur that has registered as a VAT payer, keeps records of VAT sales and purchases, pays VAT, issues invoices and submits tax returns.

VAT exemption is granted at the application of the taxpayer in case of sale of goods and services up to PLN 200,000 in the previous tax year (excluding tax).

In the case of beginning of activities subject to VAT during the year, the value of sales (excluding tax) in that year also cannot exceed PLN 200,000 in proportion to the period of activity.

Such exemption from VAT is not granted if there is a sale of such goods as, for example, precious metals, jewelry, a number of goods subject to excise duty and others, or services are provided in the field of consulting, factoring and others.

VAT exemption on sales up to this established limit can be waived and VAT paid voluntarily.

VAT exemption under the provisions of the VAT law applies regardless of sales volumes if the following services are provided or the listed goods are sold, for example, medical services, educational services, supply of goods used only for the purposes of tax-free activities, and others listed in Art. 43 of the VAT Law.

A “small” VAT payer is an entrepreneur whose sales income together with the amount of tax did not exceed the amount corresponding to the equivalent of 1.2 million euros in the previous tax year or 45,000 euros in the case of an entrepreneur managing a brokerage company (investment fund). The euro is converted at the average exchange rate announced by the National Bank of Poland on the first working day of October of the previous year, rounded up to PLN 1,000.

A "small" taxpayer has the right to choose:

• cash accounting and payment of VAT,
• quarterly VAT calculation instead of monthly.

In case of exceeding the limits and losing the status of a "small" taxpayer, there is a transition to a regular status with the submission of tax returns monthly, the absence of a cash accounting.

The cash method of accounting and paying VAT, available to "small" VAT taxpayers, is that VAT on invoices issued in a given billing period can only be paid upon receipt of payment on these invoices, but no later than 180 days from date of delivery or provision of service thereon. There are a number of restrictions on activities where the cash method is not applied, for example, in the case of the distance sale of goods within the EU, the supply of goods to a non-taxable person, and others.

For other VAT taxpayers, the accrual VAT payment method applies.

Tax rates in 2022. The basic VAT rate in Poland is 23% and applies to most sales. Reduced VAT rates are also applied – 0%, 5% and 8% depending on the type of activities, the sale of certain goods and the provision of services.

The rate of 8% is applied to goods related to agricultural production, health care and services related to culture, sports, recreation, passenger transport, construction, reconstruction, modernization, thermal modernization and others.

A tax rate of 5% applies to staple foods (fruits, vegetables, bread, dairy products), books and others.

Zero rate applies:

• when exporting goods (with confirmation of the export of goods outside the EU),
• to deliver goods to free zones or customs warehouses,
• for international transport services,
• to services consisting in the repair, processing, processing or processing of goods,
• for the supply and import of ships used for navigation on the high seas and carrying passengers for a fee,
• for the supply and import of air transport facilities and spare parts for them,
• for the supply of goods or services to representative offices of international organizations.

Special cases for determining the VAT rate apply:

• for entrepreneurs providing passenger taxi services with the possibility of taxing services in the form of a flat rate of 4% or at a standard rate of 8%,
• for farmers with a tax refund at a flat rate of 7%.

Currently, VAT rates have been temporarily reduced:

• food products currently subject to 5% VAT – up to 0%,
• for motor fuels, ie. diesel fuel, motor gasoline, liquefied petroleum gas – from a rate of 23% to a rate of 8%,
• for fertilizers, plant protection products, garden soil and other products supporting agricultural production – from 8% to 0%,
• for natural gas – up to 0% rate,
• for electricity and heat – up to a rate of 5%.

Group of companies for VAT. Starting July 1, 2022, related companies will be able to settle jointly financially, economically and organizationally as one taxpayer, i.e. the supply of goods and provision of services:

• carried out by a member of one VAT group to another member of the same VAT group is not subject to taxation;
• carried out by a member of a VAT group to an entity that is not included in this VAT group is considered to be carried out by this VAT group;
• to a participant of a VAT group by an entity that is not included in this VAT group is considered to be carried out for this VAT group.

Period of activity of the VAT group cannot be less than 3 years.

VAT reporting. VAT taxpayers submit electronic tax returns (JPK_VAT) with a registration part (records of purchases and sales) on a monthly or quarterly basis.

Corrective VAT calculations must be made when the status of a VAT payer changes, that is, with the withdrawal from active VAT payers or exemption from VAT:

• if fixed assets and intangible assets were accepted for a tax deduction of more than PLN 15,000, the adjustment period is 5 years, counting from the year in which they were accepted for business use (exceptions are real estate and rights to perpetual use of land, for which adjustment period is 10 years),
• for fixed assets and intangible assets with a value of less than PLN 15,000, the adjustment period is 12 months,
• in the case of goods, stocks and materials, the taxpayer is liable to make the correction, irrespective of their value and the time elapsed since their acquisition. An adjustment is made to the VAT return for the period in which the status of the VAT payer has changed.