VAT is a tax on goods and services that operates in Poland. This tax is also known in a number of countries as value-added tax (VAT). Value Added Tax is used everywhere in Poland, replacing the traditional Polish acronym PTU – Podatek od Towarów i Usług.
VAT is an indirect tax that is included in the price of a product or service. Tax is paid by the consumer or buyer. The entrepreneur, receiving payment for the sold item or service, transfers the received tax to the treasury, thus settling with the Polish financial authorities.
The analog of the Polish VAT tax in other countries are:
- VAT / GST in many English speaking countries;
- VAT in Russian-speaking countries;
- MPE in Ukraine;
- DPH (Daň z přidané hodnoty) in the Czech Republic or MwST (Mehrwertsteuer) in German-speaking countries.
All legislative nuances concerning the functioning of value-added tax are regulated in Poland by the Law on Tax on Goods and Services.
Who pays VAT tax?
The tax in Poland is paid by persons who, in accordance with the law, have the status of a person-payer of this tax. In particular, they are:
- All legal entities registered in Poland as Sp. z o.o. (LLC / LLC);
- Service providers as individual entrepreneurs (działalność gospodarcza);
In Poland, in settlements between firms, it is most often customary to indicate the cost of services not including VAT – the net price, not the gross price. The gross amount that we usually find on the issued invoice consists of the net amount (kwota netto) – the cost of the goods (or service) itself and the amount of value-added tax (kwota VAT).
You also need to pay attention to 2 popular terms in Polish accounting:
- VAT należny (output VAT);
- VAT naliczony (input VAT).
VAT należny is a VAT tax that we add to the services and goods we sell.
VAT naliczony is a VAT tax that we have paid as a consumer when purchasing services or goods. VAT naliczony reduces the amount of VAT tax that we are obliged to pay to the treasury.
Remember that VAT must be paid by the 25th of each month for the previous billing month.
Applicable VAT rates in Poland
The basic, standard VAT rate in Poland is usually 23%. At the same time, as in other countries, there are also a number of exemptions for goods and services in Poland, which are subject to a reduced or preferential VAT rate.
Here are some examples of a preferential VAT rate:
- 8% – used in particular for repair and installation work, work related to the construction of housing;
- 8% – used for some services in the field of public catering;
- 5% – for agricultural products and livestock;
- 5% for books and specialized magazines;
- 0% – for the export of goods to other EU member states.
VAT exemption in Poland
In certain situations, taxpayers may be exempted from paying VAT tax. In this case, the invoices must be marked as “zw.” (“zwolniony”).
In accordance with the current provisions on VAT, entrepreneurs are exempt from tax:
- Legal entities (e.g. sp.z o.o.),
- Individuals (providing services as a private entrepreneur – działalność gospodarcza),
- whose annual turnover did not exceed 200.000 PLN (approx. 45.000 €).
Who cannot take advantage of the reduced VAT rate
There are a number of services and goods, offering and selling which automatically deprive us of the opportunity to be exempted from paying value-added tax.
In particular, those entrepreneurs who:
- provide legal services
- provide consulting services (unless it is consulting on a number of agricultural issues)
- provide jewelry services
- sell new vehicles
- sell goods made of precious metals,
- as well as a number of others.
If you are not sure how it will be correct to register you as a VAT taxpayer and whether you can benefit from VAT exemption, and whether the split payment system will concern you, we recommend using accounting services.