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  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 6/1/2013

Poland: VAT essentials 

Essential information regarding VAT/GST as it applies in Poland.


Scope and Rates

What supplies are liable to VAT?


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.

What is the standard rate of VAT?


The standard VAT rate is 23 percent. The standard rate applies to all goods and services for which lower rates are not defined.


Are there any reduced rates, zero rates, or exemptions?


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 office services
  • Cultural services*
  • Lease of residential dwellings
  • Services of healthcare*
  • Social services*.

*As a rule performed by certain entities specified in VAT Act


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Registration

Who is required to register for Polish VAT?


Polish Entities


If during the past calendar year your business has made taxable supplies within the meaning of the Polish VAT law in Poland exceeding PLN 150,000 (excluding tax) you will be required to register and account for Polish VAT. The same applies if you start your business activity in the current year and the PLN 150,000 threshold (in proportion to the duration of the taxable supplies) is exceeded during the year. If you trade below the registration threshold you may choose to register for VAT voluntarily. In case of certain activities e.g. performing advisory services, suplies 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 your 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, your business is required to register and account for VAT in Poland.


Are there penalties for not registering or late registration?


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 15.36M (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.


Is voluntary VAT registration possible for an overseas company?


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 no legal basis for such a practice; nonetheless, we are aware of few instances where tax authorities actually denied the registration not supported by taxable supplies.


Are there any simplifications that could avoid the need for an overseas company to register for VAT Tax?


If your business makes supplies of goods or services in Poland, then you are required to register and account for Polish VAT. However, the registration for Polish VAT is not required when making certain supplies (if the reverse-charge applies).


Triangulation


If your business is an intermediate supplier to a Polish buyer of goods which you purchase from a business in an EU Member State other than your own and are delivered from there to Poland, VAT due can be accounted for by the Polish buyer. Your business is in this case also not obliged to register for Polish VAT. Bear in mind that these provisions are subject to particular requirements and so you should check carefully whether you comply with them.


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 taken from the warehouse to the production line by the purchaser may 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 you should check carefully whether you comply with them.


Reverse charge


Starting from 1 April 2013 VAT on domestic supplies of goods performed by the companies non-established in Poland (which do not have either a seat or a fixed place of business in Poland and are not registered for VAT purposes in Poland) to companies established in Poland must be settled by those Polish companies (purchasers). This means that the foreign entity without VAT registration in Poland when performing the domestic supplies of goods for Polish companies should not charge VAT on the invoices. VAT should be settled by the purchasers on the reverse charge basis.


In the case of the provision of services, the reverse charge mechanism is applicable in cases where the services are performed by companies non-established in Poland (which do not have either a seat or a fixed place of business in Poland) for a purchaser registered for VAT purposes in Poland, irrespective of the fact whether the foreign service provider is registered for VAT purposes in Poland. The above rule does not apply to services related to particular real estate where the supplier is registered for Polish VAT purposes.


Does an overseas company need to appoint a fiscal representative?


Yes, but only if it has neither its seat nor a fixed establishment in other EU Member State. KPMG in Poland provides fiscal representative services where approval is provided by the Partner and Management Board.

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VAT grouping

Is VAT grouping possible?


No.


Can an overseas company be included in a VAT Tax group?


Not applicable.

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Returns

How frequently are VAT returns submitted?


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 your annual VAT taxable turnover is less than EUR 1.200,000 you may apply to submit quarterly returns as a small taxpayer (the small taxpayers may opt into a cash settlement option whereby they may pay VAT quarterly).


Are there any other returns that need to be submitted?


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% 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 a monthly basis by the 15th day of the month following the month in which the tax point arose.


The declaration may be submitted on a quarterly basis, by 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 cases where 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 by 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 2013 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 if a threshold of PLN 42.000.000 is exceeded in the case of acquisitions and PLN 76.000.000 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.


The penalty for non submission of Intrastat return amounts to PLN 3.000 for each settlement period. A penatly is imposed after receiving 3 notifications.

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VAT recovery

Can I recover VAT Tax if I am not registered


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 by 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 a specific certificate of VAT residence issued by the tax administration of the applicant’s country.


The tax authorities have 4 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.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


Yes.


Are there any items that businesses cannot recover VAT on?


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% 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).

If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT/GST reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


Since 1 January 2013 in order to convert the amounts expressed on invoices in foreign currency into PLN, not only the exchange rate announced by the Polish National Bank (on the last working day preceding the tax point date) may be used, but also the exchange rate published by the European Central Bank on the last day preceding the tax point date. For currencies other than Euro, the exchange rate of that currency towards Euro should be used.

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


If you sell 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 you or your customer) to that Member State, then you do not need to charge VAT and may zero rate the supply as an intra-EU dispatch. You must obtain your customer's VAT number and quote it on your invoice. You 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 you sell goods to a customer who is not registered for VAT in another EU Member State, you will have to charge Polish VAT. If your sales exceed a certain threshold for that Member State you may have to register in the Member State under what is known as the Distant Sale Scheme.


If you export goods to a customer (business or private) outside of the EU, then you may zero rate this supply provided that you hold 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 to 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.

How are goods dealt with on importation?


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.


How are services which are brought in from abroad treated for VAT purposes?


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 you are able to recover all of your VAT, the reverse charge has no cost effect and is a VAT compliance matter only. However, if you are 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 (in case of services tied to immovable property the foreign entity should also not be registered for VAT in Poland).

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Invoices

Is a business required to issue tax 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


What do businesses have to show on a tax invoice?


Polish VAT regulations require the following elements to appear on the VAT invoice:


  • Date of issue of invoice (day, month, year)
  • Supplier's and purchaser's names and addresses
  • Supplier's and Purchaser's VAT identification number (NIP)
  • Sequential number, within one or more series, uniquely identifying the invoice
  • Date of sale which means the date when transaction (sale of goods) has taken place – obligatory only in case the date of sale is different from the date of the invoice issuance. If the date of sale is the same as the date of invoice issuance, only date of issue is required. 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
  • The amount of discounts granted (if such are not included in net unit price)
  • 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
  • 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.


Can I issue invoices electronically?


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.


Is it possible to operate self-billing?


Yes, although certain specific requirements need to be fulfilled.


Can a business issue VAT invoices denominated in a foreign currency?


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

Is there a relief from VAT for the sale of a business as a going concern?


Yes. If you sell your business as a going concern then VAT is not due.

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Options to Tax

Are there any options to tax transactions?


Polish VAT law provides for an option to tax the supply of buildings, building structures and their parts provided certain conditions are met.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


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

Am I able to claim relief for bad debts?


Yes. Polish VAT regulations provide for such a possibility, if certain conditions are met.

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Anti-Avoidance

Is there a general anti-avoidance provision under VAT Tax law?


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

What is the penalty and interest regime like?


Where the tax authorities discover an error, a penalty interest (currently 10.5 percent, annually) is charged on the amount of the 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

Tax audits


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.


Advance rulings and decisions from the tax authority


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 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

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


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

Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


Besides the standard 23% VAT rate there are reduced rates of 8%, 5%, and 0% 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.


What are the other local indirect taxes beside VAT/GST/Service tax?


Excise tax, gambling games tax.

 

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