Scope and Rates
Value-added tax (VAT) is due on any supply of goods or services for consideration in Poland by a taxable person within the frame of the business carried on by said person.
The term supply of goods is not restricted to the provision of goods and services by way of sale but can equally apply to other forms of transaction including the leasing or hire of goods, donations, assignment, or surrender of a right or commission agreement.
The term supply of services is defined as any transaction which does not constitute a supply of goods. Supply of services is also obligation to refrain from doing something or to tolerate a certain situation.
Additionally, certain actions carried out for no consideration are also deemed to be supplies for consideration.
The supply of goods for consideration covers all free of charge transfers of goods forming part of taxpayer’s business assets (in exception of samples and small value gifts), where the VAT on those goods was wholly or partly deductible.
The activities considered as supply of services for consideration include:
- the use of goods forming part of the assets of a business for purposes other than those related to the taxpayer’s business activity, if the taxpayer was entitled to deduct in whole or in part the input VAT
- the supply of services carried out free of charge by a taxable person for his private use or his employees and all other provision of services without consideration performed for purposes other than those related to business activity of the taxpayer.
The standard VAT rate is 23 percent. The standard rate applies to all goods and services for which lower rates are not defined.
Yes.
There is a reduced rate of 8 percent for certain goods and services, including among others:
- supply of houses and apartments and construction services related thereto classified as social building
- catering and restaurant services excluding the supply of alcoholic and/or non-alcoholic beverages
- pharmaceuticals and medical equipment
- processed food i.e. sugar, soups, sauces
- passenger transport
- newspapers and magazines (unless more than 67 percent of content is advertisements)
- communal services
- certain agricultural related services.
In addition there is a reduced rate of 5 percent for certain goods and services, including among others:
- milk and dairy products
- raw meat
- poultry
- fish.
The list of zero rate supplies includes among others:
- export of goods,
- intra-Community supply of goods
- international transport services
- supplies with respect to aircrafts and sea vessels.
The Polish tax provisions provide specific exemptions from VAT for certain goods and services including among others:
- financial services
- services relating to education*, housing and public post
- cultural services*
- lease of residential dwellings
- services of healthcare*
- social services*.
*As a rule performed by certain entities specified in VAT Act
Excise tax, gambling games tax.
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Registration
Polish Entities
If during the past calendar year a business has made taxable supplies within the meaning of the Polish VAT law in Poland exceeding PLN 150K (excluding tax) it will be required to register and account for Polish VAT. The same applies if it starts a business activity in the current year and the PLN 150K threshold (in proportion to the duration of the taxable supplies) is exceeded during the year. If a company trades below the registration threshold it may choose to register for VAT voluntarily. In case of certain activities e.g. performing advisory services, supplies of excise goods, above threshold is not applicable at all.
Non-Polish Entities
Non-Polish entities that carry out taxable supplies in Poland are obliged to register for VAT regardless of their taxable turnover.
However, non-Polish entities are not obliged to register if they affect only certain activities, such as for example:
- supplies of goods for which the VAT is settled by the customer (reverse charge)
- supplies of services for which the VAT is settled by the customer (reverse charge).
If a business is not registered for VAT in Poland but sells and delivers goods from another EU Member State to customers in Poland who are not VAT registered (distance sales), where the value of those sales exceeds a threshold of PLN 160K, it is required to register and account for VAT in Poland.
There are no specific penalties for late registration. However, if late registration leads to underpayment of VAT, the Polish tax authorities may impose a penalty up to approx. PLN 14.4M (depending on the value of underpayment). In addition, where a business fails to register on time, it must account for VAT on all taxable transactions during the period it was required to be registered.
This issue is unclear. When submitting the VAT registration form, the tax authorities require information about taxable supplies which are to be made in Poland therefore, they may refuse to register a company which would not affect any taxable activities in Poland. There is not legal background for such a practice; nonetheless, we are aware of few instances where tax authorities actually denied the registration not supported by taxable supplies.
If a business makes supplies of goods or services in Poland, then it is required to register and account for Polish VAT. However, the registration for Polish VAT is not required when making certain supplies (if reverse-charge applies).
Triangulation
If a business is an intermediate supplier to a Polish buyer of goods which are purchased from a business in an EU Member State other than its own and are delivered from there to Poland, VAT due can be accounted for by the Polish buyer. The company is in this case also not obliged to register for Polish VAT. Bear in mind that these provisions are subject to particular requirements.
Call-Off Stock
Foreign companies which deliver goods to a warehouse of Polish purchaser and which supply these goods at the moment when the goods are pulled from the warehouse to the production line by the purchaser will not be obliged to register for VAT in Poland. The obligation to settle VAT with respect to intra-EU acquisitions is shifted on the Polish buyer of the goods. These provisions are also subject to particular requirements and so companies should check carefully whether they comply with them.
Reverse charge Services
Starting from 1 April 2011 VAT on domestic supplies of goods and services performed by the companies non-established in Poland (which do not have either a seat or a fixed place of business in Poland) to companies established in Poland must be settled by those Polish companies (purchasers). This means that the foreign entity when performing the domestic supplies of goods or services for Polish companies should not charge VAT on the invoices. VAT should be settled by the purchasers on the reverse charge basis.
The above rule does not apply to the services related to the particular real estate in the case the supplier is registered for Polish VAT purposes.
Yes, but only if it has neither its seat nor a fixed establishment in other EU Member State.
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VAT grouping
No.
N/A.
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Returns
The Polish VAT law provides the possibility to submit VAT returns monthly or quarterly - to be chosen by the taxpayer (VAT is payable monthly, despite the chosen option).
The deadline for submission of monthly VAT returns elapses by the 25th day of the following month.
The deadline for submission of quarterly VAT returns elapses by the 25th day of the month following the quarter for which the VAT return is submitted.
Moreover, if a company’s annual VAT taxable turnover is less than EUR 1,200,000 it may apply to submit quarterly returns as a small taxpayer (the small taxpayers may opt in to cash settlement option – they may pay VAT quarterly).
European Sales/Purchases List
The registered persons making intra-EU acquisitions or supplies, as well as the provision of services (other than exempt or subject to 0 percent VAT rate) for which the purchaser is entitled to account for VAT according to art. 28b of the VAT Act are obliged to submit EU Sales/Purchases Lists.
EU Sales/Purchases List must be submitted to the tax office on the monthly basis until the 15th day of the month following the month in which the tax point arose.
The declaration may be submitted on the quarterly basis, until the 15th day of the month following the quarter in which the tax point arose provided that:
- the total value of the intra-EU supply of goods does not exceed in the particular quarter and none of the 4 previous quarters the amount of PLN 250,000;
- the total amount of the intra-EU acquisition of goods, without the tax, does not exceed in the particular quarter the amount of PLN 50,000.
In case only services are supplied, the taxable persons may choose to submit the EU Sales Lists on a quarterly basis without any threshold limits.
EU Sales/Purchases List submitted electronically must be submitted to the tax office on the monthly basis until the 25th day of the month following the month in which the tax point arose.
Intrastat returns
VAT registered businesses with a value of dispatches or arrivals to or from other EU Member States, which exceed a certain threshold (the basic level for the year 2012 is PLN 1,100,000 both for acquisitions and dispatches) per calendar year must complete supplementary returns each month. More detailed Intrastat returns are required after exceeding threshold of PLN 36,000,000 in case of acquisitions and PLN 72,000,000 for dispatches.
Intrastat returns must be submitted to the customs authorities on a monthly basis. The deadline for submitting Intrastat returns is the 10th day of the month following the reported month.
Penalty for non submission of Intrastat return amounts to PLN 3,000 for each settlement period. Penalty is imposed after receiving 3 notifications.
The exchange rate to be used for VAT purposes is the one listed in the tables released by the European System of Central Banks or by any bank’s selling rate established in the country.
In case the taxable basis is expressed in foreign currency, the calculation to PLN should be made according to the average exchange rate announced by the National Bank of Poland on the last business day prior to the day the tax point occurs.
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VAT recovery
Yes.
Entities established in another EU Member State may recover VAT based on the VAT refund procedure for foreign entities (EU Directive 2008/9).
The refund of input VAT is made only if in accordance with the Polish tax regulations, a Polish registered VAT payer would be entitled to offset input VAT in a similar case.
In order to recover VAT incurred on the local purchases of goods and services, the foreign entity has to submit an application to the Polish tax authorities via electronic communication through tax authorities in its state (the foreign entities are no longer obliged to file a VAT refund claim in a Member State where they incurred VAT). The application should be submitted at the latest until September 30 of the calendar year following the refund period. In most cases the said application should be submitted together with the supporting documentation including invoices or customs duty documents and specific certificate of VAT residence issued by the tax administration of the applicant’s country.
The tax authorities have four months to process the claim. In case of any queries, the above mentioned term may be extended. Moreover, if the refund is not granted within deadline the VAT provisions provide the right for penalty interest.
Yes.
Yes. There are certain items that VAT cannot be recovered on. For example:
- hotel and restaurant services
- fuel for passenger car
- VAT incurred on passenger cars’ hire, is recoverable only up to 60 percent but not more than PLN 6,000 of total
- VAT charged by mistake (if for example the transaction was exempt or not subject to VAT).
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International Supplies of Goods and Services
Goods
If a company sells goods to a customer who is registered for VAT in another EU Member State and the sale involves the removal of those goods from Poland (either by the seller or its customer) to that Member State, then it does not need to charge VAT and may zero rate the supply as an intra-EU dispatch. It must obtain its customer's VAT number and quote it on its invoice. It should also obtain evidence of the goods' removal from Poland which shall include:
- transport documents (such as CMR) issued by the hauler responsible for the dispatch of goods outside Poland
- copy of the VAT invoice
- specification of the goods dispatched.
Additional documentation (such as business correspondence, documents regarding insurance, documentation regarding payment for goods) may also be used as such evidence, if necessary.
If a company sells goods to a customer who is not registered for VAT in another EU Member State, it will have to charge Polish VAT. If the sales exceed a certain threshold for that Member State it may have to register in the Member State under what is known as the Distant Sale Scheme.
If a company exports goods to a customer (business or private) outside of the EU, then it may zero rate this supply provided that it holds a customs document (generally IE599 electronic document) confirming that the goods left the EU territory.
Services
Since 2010, the general rule introduced to Polish VAT law, as a result of implementation of the EU VAT Package, states that the services supplied to a taxpayer (B2B services) should be subject to VAT in the country of the service recipient, while the services supplied to a non-taxpayer (B2C services) should be subject to VAT in the country of the service supplier.
There are a number of exceptions from this rule including among others:
- The place of supply of services connected with immovable property, including the services of experts and estate agents, the provision of accommodation in the hotel sector or in sectors with a similar function, such as holiday camps or sites developed for use as camping sites, the granting of rights to use immovable property and services for the preparation and coordination of construction work, such as the services of architects and of firms providing on-site supervision, shall be the place where the immovable property is located.
- The place of supply of passenger transport shall be the place where the transport takes place, proportionate to the distances covered.
- The place of supply of services consisting of transport of goods, which are provided to a taxable person who is established in Poland or, in the absence of a place of business establishment, has his permanent address or usually resides in Poland, is outside the European Union if the transport takes place wholly in third countries.
- The place of supply of services consisting of transport of goods, which are provided to a taxable person who is established in a third country or, in the absence of a place of business establishment, has his permanent address or usually resides outside the European Union, is in Poland if the transport takes place wholly within Polish territory.
- The place of supply of restaurant and catering services shall be the place where the services are physically carried out.
- The place of short-term hiring of a means of transport shall be the place where the means of transport is actually put at the disposal of the customer.
VAT on imports is payable generally within 10 days from the receipt of information regarding the value of customs duties. Import VAT is calculated as a percentage of the customs value of the goods increased by customs duty and excise tax (if applicable).
VAT incurred on imports is recoverable upon receipt of the importation document.
Companies which clear goods under the simplified tax procedure regime with a monthly settlement are able to settle VAT for the month in which the tax liability arises on a reverse charge basis. Such entities are obliged to present to Customs Office documents proving settlement of VAT due on imported goods within 4 months after tax liability arises. These provisions are also subject to particular requirements and so the taxpayer should check carefully whether he complies with them.
If the services acquired from an entity seated outside Poland are subject to VAT in Poland, as a rule the purchaser is responsible for VAT settlement.
Polish customer will be required to apply the reverse charge. This is intended to take away any VAT advantage of buying those services from outside Poland. Under the reverse charge mechanism, the recipient issues an internal invoice (a specific transfer document) and charges VAT using the rates in force in its own country. If it is able to recover all of its VAT, the reverse charge has no cost effect and is a VAT compliance matter only. However, if it is at least partly exempt there is likely to be a VAT cost.
The reverse charge applies to any kinds of services supplied by a foreign entity which is not registered for VAT in Poland.
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Invoices
In case of supplies to individuals there is no obligation to issue invoices, unless an individual requests the invoice. Generally, such sales are documented on the cash register.
In other cases the taxpayers are obliged to issue invoices when performing transactions subject to VAT. In some cases there is also obligation to issue internal invoices, in order to document some technical activities involving calculation of VAT (e.g. in case of reverse-charge, intra-EU acquisition, free of charge supplies, etc.).
Polish VAT regulations require the following elements to appear on the VAT invoice:
- heading in the Polish wording “Faktura VAT” (translation VAT invoice)
- supplier's and purchaser's names and addresses
- supplier's and Purchaser's VAT identification number (NIP)
- sequential number uniquely identifying the invoice
- date of issue of invoice (day, month, year) and date of sale (when it differs from the date of issue), in case of continuous sale only month and year of performing sale can be indicated
- description (type) of goods supplied or services rendered
- size (volume) and quantity of goods supplied or scope of services rendered
- net unit price of the good or the service
- net value of goods or services supplied
- VAT rates
- total net value of goods or services with a breakdown into values attributable to particular VAT rates, exemption or out of scope of Polish VAT
- total amount of VAT with a breakdown into values attributable to particular VAT rates
- total due amount together with VAT due amount.
- recalculation of the amount of VAT in the foreign currency into PLN.
In addition, in some cases (e.g. tax exemption, transactions subject to reverse-charge, intra-EU transactions, new means of transportation supply) additional elements may be required.
Yes, provided the authenticity of origin and integrity of content of invoices can be guaranteed and recipient of invoice accepts to receive electronic invoices. Also, e-invoices are subject to particular storage requirements.
Yes, although certain specific requirements need to be fulfilled.
The invoices may be issued in foreign currency. However, the Polish invoicing regulations require that the amount of VAT is also provided on the invoice in PLN.
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Transfers of Business
Yes. If a company sells its business as a going concern then VAT is not due.
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Options to Tax
Polish VAT law provides for an option to tax supply of buildings, building structures and their parts provided certain conditions are met.
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Head Office and Branch transactions
Transactions between Polish head office and its Polish branches in general are not subject to VAT.
Transactions between a head office and its branch located in another country in general should not be subject to VAT although there are exceptions (such as, intra-EU supply or acquisition of goods). This area of the VAT legislation is very unclear and further advice should be sought.
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Bad Debt
Yes. Polish VAT regulations provide for such a possibility, if certain conditions are met.
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Anti-Avoidance
Yes. When defining the nature of an activity, not only the literal declarations of will of the parties, but much more common intention of the parties and the purpose of the activity are taken into consideration by the tax authorities. If under the cover of an activity another activity was concluded, the tax consequences are derived from that covered activity.
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Penalty Regime
Where the tax authorities discover an error, a penalty interest (currently 14.5 percent, annually) is charged on the amount of underpaid VAT liability or overstated refund of VAT. This penalty is charged from the date the tax should have been paid, or a refund was unduly granted.
Moreover, the individuals responsible for the tax settlements of the company may be held responsible for the activities of the company on the basis of the Penal Fiscal Code.
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Tax authorities
How often do tax audits take place?
There are no rules regarding how often the tax audits should be performed. It depends on the audit plans of the tax authorities for a given year or on specific situation of the taxpayers. The tax audit is initiated by the tax authorities ex officio and the taxpayers may not request that such audit is commenced.
Additionally, there are rules concerning the maximum time limit of all audits (not only tax audits) in a given year. These limits depend on the size of an entrepreneur:
- 12 working days – for micro entrepreneurs
- 18 working days – for small entrepreneurs
- 24 working days – for medium entrepreneurs
- 48 working days – for other entrepreneurs.
Above limits are not applicable in case of tax audit performed e.g. due to requested VAT refund.
Are there audits done electronically in your country (e-audit)? If so, what system is in use?
The tax authorities may use electronic tools in order to perform a tax audit. Such method of auditing is increasingly popular. However, still the majority of tax audits is performed in a traditional manner.
When e-audit is performed the taxpayers may be requested to provide the data on an electronic carrier, e.g. CD or DVD, and inform what kind of accounting system is used by the taxpayer. Such audits are usually performed remotely. The tax authorities use specific IT system which is able to determine whether any discrepancies in the provided data occur. After e-audit is completed the provided data is wiped out from the authorities’ computers and the provided carrier with data is returned to the taxpayer.
Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?
It is possible to apply for a binding ruling concerning either the events that have already occurred or the future events. However, it is obligatory to submit a statement that at the time the application for a binding ruling is submitted the events described in the application are not subject to ongoing tax proceedings, tax audit, or that it has not been settled in the decision of the tax authorities. Additionally, the Minister of Finance may issue general interpretations of the tax law.
Are rulings and decisions issued by the tax authorities publicly available in your country?
There is a publically available database of the issued rulings and the tax authorities are obliged to publish new rulings, after the information identifying the taxpayer is removed. However, the binding rulings protect only the taxpayers who specifically obtained them, therefore the database is for information purposes only. In case of unclear tax consequences of a specific transaction it is advisable to apply for a binding ruling.
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Miscellaneous
There are some specific Polish rules in scope of VAT, e.g.:
- obligation to obtain confirmation that the purchaser received the correcting invoice decreasing the amount of VAT prior to decreasing the amount of output VAT by the supplier or
- obligation to issue internal invoices in cases such as intra-EU acquisitions or import of services, free of charge supplies, and reverse-charge settlements.
Besides the standard 23 percent VAT rate there are reduced rates of 8 percent, 5 percent, and 0 percent applicable for specific products or transactions. Additionally, some transactions are VAT exempt, e.g. donations of food by the producer of the donated products to the charity organizations.
Any specific relief may be granted on the basis of provisions of the Tax Ordinance, in case of an important taxpayer’s interest or a public interest. The decisions concerning the relief are discretionary decisions of the tax authorities.