VAT in Poland: Rates, Registration, and Compliance Guidelines

VAT in Poland - Three Types of Rates

There are three types of VAT rates in Poland:

1. Standard VAT rate,

2. Reduced VAT rates,

3. Zero VAT rate.

How Much is VAT in Poland’s Regions?

Poland is one of the countries that do not have special VAT rates defined for specific regions, meaning that three types of VAT Poland rates apply throughout the country.

VAT Registration Threshold

Under VAT Poland law, the primary source of VAT-related information, together with Tax authorities and government comments and opinions, defines the VAT registration threshold for domestic and foreign taxable persons engaging in taxable activities in Poland.

Following the letter of the law, domestic businesses whose annual turnover is PLN 200,000 or above must register for VAT once this threshold is exceeded.

On the contrary, non-resident businesses have no registration VAT threshold in Poland, meaning they must register before operating there. 

As an EU Member State, Poland implemented EU unified rules related to the VAT registration threshold for intra-EU distance sales of goods, B2C supplies of services, and electronically supplied services. The threshold is set at EUR 10,000 for intra-EU distance sales of goods and B2C supplies of services, whereas there is no registration for electronically supplied services.

Types of Taxable Activities in Poland

Similarly to other EU countries, Polish VAT law identifies taxable persons as either legal entities or natural persons who perform an economic activity, that is taxable activity, independently, regardless of the purposes or results achieved.

The law further states a range of different activities that are considered to be taxable, such as the supply of goods and services in Poland for a fee, reception of the reverse-charge services by a taxable person in Poland, imports and exports of goods, and intra-EU acquisition and supply of goods.

VAT Registration Process

Considering the VAT registration threshold rules, it is clear that there are different registration requirements for domestic and foreign taxable persons in Poland. Similarly, there are differences in the VAT registration process for domestic and foreign taxable persons, such as businesses.

Poland VAT Registration for Domestic Businesses

Once the registration VAT threshold is exceeded, registration for VAT purposes is necessary. However, it is also possible to register for VAT voluntarily. Domestic businesses must submit a VAT-R application to the competent Tax Office to complete registration. The submission can be made in person at the tax office, by mail, or electronically. 

The Tax Office then emerges to validate the application and data provided and may request additional information or clarifications. There are no registration procedure fees, except if businesses want to receive a confirmation of registration, which costs PLN 170.

Poland VAT Registration for Foreign Businesses 

Foreign businesses must register for VAT in Poland before conducting their first taxable sale, at the latest. However, they can also initiate this procedure one month before the month in which they want to become VAT-registered businesses.

One important difference exists between foreign businesses located in another EU country and those based outside the EU. While non-EU businesses must appoint a tax representative for all VAT-related matters, having a tax intermediary isn’t mandatory for EU-established businesses

VAT Returns in Poland

All VAT-registered taxpayers, whether residents or non-residents, must submit a monthly or quarterly VAT return by the 25th of the month following the reporting period.

VAT returns must be sent to the Tax Authority electronically as the JPK_VAT, also known as SAF-T Standard Audit File Tax. There are two variations of the JPK_VAT return: the JPK_V7M form for taxable persons who submit monthly returns and the JPK_V7K form for quarter VAT returns.

Generally, monthly VAT returns must be submitted, whereas quarterly returns are allowed for small taxpayers.

Penalties for Failure to File Tax Return

Not respecting the obligation to submit VAT returns or submitting incorrect or late VAT returns will certainly result in businesses being subject to penalties and fines issued by the Tax Authority. Additionally, submitting the VAT return on paper when it is required to be done electronically will also result in potential penalties.

VAT Rules for Electronically Supplied Services 

Electronically Supplied Services (ESS) is the concept introduced by the EU VAT Directive as a part of EU-wide reform of the VAT legislation. Under the EU VAT rules, the ESS are services automatically supplied through the Internet or similar online networks. One more important component of the ESS is that the service provision does not rely on human intervention; if it does, it is a minimum human input. 

To avoid confusion, ESS has several other common names, such as digital services, digital products, and electronic services. Taxable persons providing ESS should pay attention not only to the EU-wide definition but also to national definitions since they may have slightly different VAT implications from one EU country to another.

Taxability Rules for ESS:

For the supply of ESS between two businesses, the so-called B2B supply of ESS, the general place of supply, applies. Regarding the B2C supply of the ESS, the destination principle defines which VAT rate is used. For non-EU suppliers, they must apply the VAT rate of the country where their consumers reside, e.g., VAT rate Poland.

Furthermore, EU-wide rules, also implemented in Polish national law, state that the place of supply rules for distance sales of goods and B2C ESS largely depends on the EUR 10,000 threshold. When the annual turnover related to the supply of ESS is below the set limit, suppliers can apply the VAT rates defined in their country of origin.

When this threshold is exceeded, the situation shifts. Then, suppliers must use the VAT rate of the country where the goods or services are delivered, that is, where their customer is located.

How much is VAT in Poland on ESS?

The Poland VAT rate for ESS is 23%.

E-Commerce Rules

July 1, 2021, marks a significant date in the EU VAT framework. On that date, new e-commerce rules came into effect, changing not only the EU VAT landscape but also how businesses operate on the single EU market and further defining what steps are necessary to be VAT compliant.

These EU-wide rules, implemented in each EU Member State, thus introduce a more harmonized and, for e-commerce businesses, more efficient system.

Fundamental changes this e-commerce package brought are the introduction of VAT obligation for distance sales of low-value goods imported into the EU whose total value is less than EUR 150 and deemed supplier rules. The previously mentioned EUR 10,000 threshold was also introduced as part of this reform.

Furthermore, the e-commerce reform at the EU level brought the expansion of the Mini One Stop Shop (MOSS) system, which was established in 2015, into the upgraded One Stop Shop (OSS) system. And this upgrade was not a cosmetic one. In addition to two already established schemes, Union and Non-Union, a third scheme was introduced, so that the OSS now has:

• Union Scheme,

• Non-Union Scheme,

• Import Scheme.

VAT EU Reporting

Two types of reports are required concerning the supplies made throughout the EU territory:

1. EC Sales List, 

2. Intrastat.

EC Sales List

The EC Sales List (ESL) is submitted alongside the regular VAT returns. It refers to the intra-EU sales that Polish VAT-registered businesses make. However, unlike other EU countries, where the ESL only refers to sales, in Poland, companies must include purchases made from other VAT-registered businesses established in one of the EU Member States.

Therefore, in Poland, the ESL is known as the EC Sales and Purchases List return, or ESPL.

Intrastat 

Intrastat reports must be submitted by the 10th day of the month following the reporting period. Polish Intrastat rules define basic and detailed thresholds for arrivals and dispatches. The basic threshold for arrivals is PLN 6.2 million, and for dispatches, it is PLN 2.8.

However, a more detailed Intrastat report is mandatory if arrivals exceed PLN 103 million and dispatches exceed PLN 150 million.

Digital Reporting

Local Businesses

Poland has no mandatory B2B, B2C, or B2G e-invoicing requirements. More specifically, there is a system in place for B2G e-invoices, but it can be used voluntarily for any transaction related to the government. Poland is in the process of adopting regulations and implementing systems for mandatory B2B e-invoicing.

However, a Standard Audit File for Tax (SAF-T) system has been established in Poland.

Standard Audit File for Tax (SAF-T)

SAF-T is an international standard for electronically transmitting relevant accounting data from businesses to competent government bodies, such as the Tax Authority. In Poland, all local companies must file VAT returns electronically using the SAF-T JPK VAT file.

Non-Resident Businesses

Non-resident businesses registered for VAT in Poland are subject to SAF-T rules like local businesses.