Running a business in Poland often involves grappling with Value Added Tax (VAT) obligations. Registering for VAT status makes businesses active VAT payers, mandating the issuance of VAT invoices during sales transactions. These invoices must specify the VAT rates applicable to the goods or services sold, determining the VAT payable to the tax authorities. Let's explore the VAT rates in Poland!
Role of Statistical Classifications
Statistical classifications, like the Combined Nomenclature (CN) codes, hold immense significance in the world of VAT. These codes act as a roadmap, categorizing goods to accurately assign VAT rates. Only upon correctly identifying the CN code can the precise VAT rates for specific goods or services be ascertained.
VAT Rates in Poland (2024)
The rules and rates of taxation are defined by the VAT Act, especially in its Section VIII and attachments. The standard VAT rate in Poland stands at 23%. However, there are reduced VAT rates allowed by the law:
Rate | Description |
|---|---|
23% | Basic VAT rate |
8% | Applicable to selected goods and services listed in Annex 3 to the VAT Act, including gardening soil, books, newspapers, certain polygraphic industry products, construction, renovation, modernization, and energy efficiency improvements related to buildings under social housing programs |
5% | Applicable to goods listed in Annex 10, which includes most food products, baby pacifiers, certain computer memory devices |
7% | Applicable to certain types of farmers |
4% | Applicable to taxi services |
0% | Applicable to EU Intra-Community supplies (ICS), exports, items listed in Annex 8 to the VAT Act, and in specific cases as outlined in Article 83 (1). Additionally, it's used when goods or services are exempt from VAT |
Note
It's noteworthy that the 23% and 8% rates were increased over a decade ago from the initial 22% and 7%. The legislator has the authority to revert to the original, lower VAT rates.
The choice of VAT rate depends on the nature and type of sale. Entrepreneurs cannot independently decide on the rate; they must adhere to regulations. To simplify the process, specific rates of 8%, 5%, and 0% are assigned by legislators to certain goods and services where their application is feasible. The statistical classification plays a crucial role in this determination.
When to register a Polish company for VAT
If you have a company registered in Poland, you will usually not have to register it for VAT. In this case, you will be able to sell goods and services in Poland VAT-free (thus being more competitive than VAT-registered companies when selling to individual consumers), but you will also not be able to recover VAT on your expenses.
There are two main reasons why you must register your business for VAT:
- the company has reached an annual turnover of PLN 200,000 (about €46,000)
- the company carries out activities that are subject to VAT regardless of the turnover achieved (e.g. consultancy, car and auto parts trade, etc.). The registration obligation will arise immediately after company registration, if such activities are included in the company's articles of association.
When to register a foreign company for VAT in Poland
If your company registered abroad and sells goods located (stored) on Polish territory, you should register for VAT in Poland. This is often the case for e-shops that use e.g. Amazon FBA warehouses.
VAT registration may also be required for companies involved in international passenger transport, taking passengers in Poland (e.g. simplified VAP registration).
After registering for VAT in Poland, there is an obligation to report VAT to the Polish tax administration. VAT returns must be submitted by the 25th of the following month.
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