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Who is liable to VAT? Checking the status of a VAT payer

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​by ​​​​​​​​​​​​​​​Maria Wośkowiak

27 August​ 2024



TABLE OF CONTENT




Definition of VAT


VAT​ (Value Added Tax) is a form of taxation of the trade in goods and services that exists in many countries around the world, including Poland and other EU Member States. 

VAT is an indirect tax, which means that it is ultimately charged to the end consumer but is collected and deducted at various stages of the production and distribution of a product or service. In practice, VAT is added to the net value of the sale and purchase transaction.

VAT types and rates​


Businesses pay VAT on the net value of sales and are entitled to deduct VAT on expenses related to their taxable activities. Taxation rules and tax rates are set out in the VAT Act. The standard VAT rate in Poland is 23%, but there are also preferential rates. Therefore, the seller has the right to apply:

  1. Standard VAT rate – it is 23% and is most frequently used.
  2. Reduced rates – certain goods and services, such as food, hygiene products, medical supplies, books or hotel services, are taxed at lower rates. The reduced rates in Poland are 8% and 5%.
  3. Zero rate (0%) – for ICS and exports of goods. It applies to e.g. certain medical and educational services.
  4. VAT-exempt – for sales of goods or services that are exempt from VAT.



VAT rates in Poland


Who is liable to VAT?


A VAT payer is an individual, a legal entity or a non-corporate entity who/which pursues independent business activity, regardless of the purpose or result of such activity. In practice, this means that VAT payers are enterprises carrying out commercial, manufacturing, service or other forms of business activity.

VAT payers may be divided into two groups:

  1. Non-exempt taxable persons, i.e. those who pay the tax. They are registered for VAT purposes and are required to file tax returns, keep records of sales and purchases, issue invoices and pay VAT.
  2. Exempt taxable persons, i.e. those who are exempt from VAT because of their status (low sales of up to 200,000 zloty) or because of the transaction object (e.g. only sales exempt from VAT under Article 43(1) of the VAT Act).


VAT exemption based on VAT payer's status


VAT exemption based on the VAT payer’s status is available if revenues (sales) did not exceed the threshold of 200,000 zloty in the previous year. 

The sales threshold does not include the amount of the tax itself and the value of:

  • intra-Community supplies of goods and mail order sales from and in Poland,
  • sales of certain VAT-exempt goods and services, except for, among others, real property transactions,
  • sales of goods that are tangible assets and intangible assets subject to depreciation and amortisation.

VAT exemption based on the VAT payer’s status does not apply, among others:

  • to sales of goods listed in Annex 12 to the VAT Act (e.g. precious metals, jewellery); goods subject to excise duty, except for: electricity, tobacco products and passenger cars other than new ones, classified as depreciable tangible assets under income tax laws; land for construction; new means of transport; computers; electronic and optical products,
  • to legal consultancy services (except for agricultural advice services), jewellery services and debt collection services,
  • if there is no registered office in Poland.


VAT exemption based on transacted object


Exemption from VAT may also result from the type of activity carried out and is available only if the provided services are exempt from VAT. The exemption is available irrespective of turnover in the case of the provision of services or the sale of goods listed in Article 43(1) of the VAT Act, e.g.: 

  • medical care services for the prevention, preservation, saving, recovery and improvement of health – if you are a physician, a dentist, a nurse, a midwife or a psychologist,
  • private tuition services at pre-school, primary school, secondary school and university level – if you are a teacher,
  • language teaching services,
  • financial services, including: investment fund management; insurance services; services related to granting of sureties, guarantees and other transaction security measures; granting of loans and borrowings involving financial instruments.

Registration for VAT


Registration for VAT is mandatory for individuals, legal entities, non-corporate entities who/which pursue independent business activity as manufacturers, traders, service providers, natural resource extractors, farmers.

They are obliged to register for VAT if:

  • their sales in the previous year exceeded 200,000 zloty,
  • they sell goods or services listed in the VAT Act. 


How to account for VAT correctly?


VAT is generally accounted for on a monthly basis. Small VAT payers whose sales did not exceed 2 million euro in the previous year can account for the tax quarterly.

Depending on the chosen accounting period, VAT payers submit the following SAF-Ts:

  • JPK_V7 – if they account for VAT monthly,
  • JPK_V7K – if they account for VAT quarterly.

Filing and payment deadlines: 

  • in the case of monthly accounting – by the 25th of the following month, 
  • in the case of quarterly accounting – by the 25th of the month following each quarter.

If the VAT filing deadline is on Saturday, Sunday or a public holiday, the deadline is on the next working day.
The taxable person is charged interest for each day of delay in paying the VAT shown in the tax return.
 Currently, the basic interest rate is 8% p.a. If the interest amount does not exceed 8.70 zloty (three times the fee charged by Poczta Polska [Polish national postal service] for registered mail), the taxable person does not have to pay it.

No VAT returns have to be filed by enterprises which:

  • are exempt from VAT due to the volume of sales or which make only VAT-exempt sales (except when they are entitled to a tax refund, they are obliged to adjust the previously deducted tax or are obliged to make a tax adjustment resulting from a bad debt relief),
  • have suspended their business activity and do not carry out VATable transactions during the suspension period.

A taxable person exempt from VAT because of its status is obliged to submit a VAT return if the total value of intra-Community acquisitions of goods (ICA) in Poland exceeded 50,000 zloty in the previous tax year. Such a taxable person submits:

  • VAT-8 form – a tax return for taxable persons other than non-exempt taxable persons, registered as VAT EU payers, who make intra-Community acquisitions of goods, or
  • VAT-9M form – a tax return for taxable persons who are not obliged to submit VAT-7, VAT-7K, VAT-7D or VAT-8 forms, but who import services or purchase goods and services for which they are the taxable persons.

Once the ICA limit of 50,000 zloty is exceeded, the exempt taxable person is obliged to register for VAT EU and submit VAT-8 returns and VAT EU recapitulative statements. However, after registering for VAT EU, the taxable person does not become a non-exempt taxable person (it is entered in the database of enterprises carrying out intra-Community transactions).

Mixed sales


Mixed sales is when a taxable person makes sales subject to VAT, but also discloses transactions that are exempt from VAT or not subject to VAT at all.

If a taxable person makes such mixed sales, it should divide business expenses into:

  • purchases related to tax-exempt sales only – with no right to deduct VAT,
  • purchases related to taxable sales only – with the right to deduct VAT as usual,
  • purchases that can serve both types of sales – they cannot be clearly attributed to taxable or exempt transactions.

Where it is not possible to separate the value of taxable and non-taxable sales, a deductible proportion should be calculated. The proportion is calculated by dividing the value of taxable sales for the previous year by the taxable person's total sales. The result is a VAT proportion that should be applied to expenses associated with mixed sales.

Whitelist of VAT payers


Every enterprise is obliged to register and account for VAT. The Head of the National Revenue Administration (NRA) keeps a so-called Whitelist, i.e. a list of registered VAT payers, non-registered VAT payers, VAT payers deleted from and reinstated to the VAT register.




The Whitelist allows:

  • checking whether your business partner is a non-exempt taxable person,
  • checking why your business partner has been refused registration, deleted from or reinstated to the register,
  • confirming your contractor's bank account number to which you should pay for the supply.

The Head of NRA downloads all the necessary information for the Whitelist from the public registers. However, if this information is incorrect, the taxable person can apply to the Head of NRA to have it deleted or rectified.

One crucial piece of information which enterprises will find on the Whitelist is the company bank account numbers – the so-called clearing accounts. The account numbers are published only for taxable persons who:

  • are non-exempt taxable persons;
  • have been reinstated to the register as non-exempt taxable persons.



whitelist of VAT payers


Summary


VAT is one of the most important taxes from the business perspective. The regulations concerning this tax are among the most complicated and most frequently amended in Polish law. Proper VAT management requires keeping abreast of changes in national and EU legislation, observing the practices of revenue authorities and the case law of national courts and the CJEU. ​

Trust the experts​


At Rödl & Partner, we comprehensively support clients in VAT issues. Our tax advice covers day-to-day VAT accounting and support in domestic and cross-border transactions.​

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Aleksandra Majnusz

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