Poland VAT Rates, Compliance Requirements, and More

For any business operating in Poland, it's essential to have a good understanding of the Poland VAT rates and VAT compliance requirements. In our guide, we take a detailed look at the various Polish VAT rates, the registration processes, e-invoicing, and digital reporting requirements. Stay informed to ensure smooth business operations and avoid potential penalties.

Short summary

• Poland has a tiered VAT rate system with standard, reduced, and 0% rates applicable to different goods and services
• Businesses must comply with Polish VAT registration, e-invoicing, and digital reporting requirements in order to remain compliant
• From 2023, businesses will be able to form a VAT group for decreased administrative expenses & double taxation relief

Overview of Poland VAT rates

Polish VAT rates are designed to accommodate different types of goods and services. The standard VAT rate is 23%, while reduced rates of 8% and 5% apply to specific goods and services in the country. Additionally, a 0% VAT rate exists for certain qualifying transactions. It’s important to familiarize yourself with these rates to ensure proper VAT compliance for your business in Poland.

Knowing the duration of the Polish VAT reporting period is also essential. In Poland, the VAT reporting period is generally of a monthly duration. Keep in mind that it's possible to reduce output VAT when receivables from VATable sales become uncollectible, provided numerous conditions are met.

Standard VAT rate (23%)

The standard VAT rate of 23% in Poland is applicable to most goods and services that are not covered by reduced or zero rates. This tax rate is part of the tax scale for VAT rates in the country.

Businesses must be aware of the 23% standard VAT rate to ensure compliance with Polish tax laws, including the Polish VAT Act. This rate applies to a vast range of goods and services, so it’s crucial to understand which items fall under this category to avoid potential penalties and fines.

Reduced VAT rates (8% and 5%)

There are two reduced Polish VAT rates of 8% and 5% for a number of predefined goods and services. These rates are applicable to some foodstuffs, medical equipment, cultural events, and more.

Books and journals, unprocessed food, and basic food are all subject to a reduced VAT rate of 5%. The 8% reduced rate, on the other hand, applies to supplies of pharmaceutical products, passenger transport services, financial and postal services, and goods for the Social Housing Programme, among others.

The VAT rate for basic food products has been temporarily reduced to 0% from February 1, 2022, to December 31, 2023, to mitigate the consequences of inflation.

Zero VAT rate (0%)

A 0% VAT rate applies to intra-community and international passenger transport and other specified goods and services in Poland. This rate is mainly applicable to exports of goods to countries outside the European Union. It may also be used for other activities.

It's important for businesses engaged in international transactions to have a good grasp of the zero VAT rate to ensure proper adherence to Polish VAT regulations.

Polish VAT compliance requirements

To operate smoothly in Poland, businesses must comply with VAT registration, e-invoicing, and digital reporting requirements. These regulations are designed to ensure proper tax collection and adherence to Polish VAT laws.

Failure to comply with VAT registration and reporting requirements can lead to penalties, fines, and possible legal ramifications. It’s essential for businesses to be aware of these requirements and adhere to them to maintain good standing with the Polish tax authorities.

VAT registration process

Businesses in Poland must register for VAT and obtain a VAT number, which consists of 10 digits for companies and 11 digits for individuals. Registration for VAT usually takes about three weeks. The time duration may range from one day to over a month, based on the quality and correctness of documents provided.

Foreign companies, both from within and outside the European Union, may register for VAT in Poland without having to incorporate a Polish company or form a permanent establishment, which is referred to as non-resident VAT trading. For those engaged in distance selling in Poland, the VAT registration threshold is an annual turnover of €10,000. If your business is not established in any EU country, you will be required to appoint a fiscal representative to take care of all Polish VAT requirements on your behalf.

E-invoicing and digital reporting

Poland is introducing a universal e-invoicing system (KSeF) that will become mandatory for all taxpaying businesses from July 1, 2024. This system facilitates the transmission of invoices in an electronic format, streamlining the invoicing process for businesses.

In addition to the KSeF platform, the Standard Audit File for Tax (SAF-T) replaced VAT returns in Poland from October 1, 2020. This digital reporting system ensures accurate and timely VAT filings, helping businesses stay compliant with Polish tax regulations.

VAT on electronic services in Poland

The standard VAT rate of 23% is applicable to most goods and services in Poland, including electronic services. Businesses providing electronic services in the country must register for VAT if their annual turnover exceeds the threshold of €10,000. To make VAT compliance easier for businesses operating in multiple EU countries, Poland offers the OSS (One Stop Shop) system. This online system allows businesses to register for VAT in Poland without having to physically register with the Polish tax authorities, simplifying the process and reducing administrative burdens.

Marketplace and platform operator rules

Poland adheres to EU VAT rules for marketplace and platform operators, meaning that they are subject to VAT liability for transactions carried out by sellers through their platforms. This legislation aims to address tax compliance challenges posed by the rapid growth of digital marketplaces and the rise of cross-border ecommerce activities. With this reform, the Polish government seeks to ensure fair taxation and prevent potential tax evasion in the digital economy.

By holding these intermediaries accountable for VAT collection, countries like Poland aim to enhance tax enforcement and revenue collection while leveling the playing field for all businesses operating within its borders.

Penalties for late filings or misdeclarations

Late filing of SAF-T returns and payments in Poland can result in enforced penalties by the Polish Tax Authority. To avoid these penalties, businesses must ensure timely and accurate submissions of their VAT returns and payments.

The Polish tax authorities take compliance seriously to ensure fairness and accuracy in the country's tax system. If a taxpayer fails to submit their tax returns or make a payment on time, they may face financial repercussions, including late filing penalties.

Additionally, if there are inaccuracies or intentional misdeclarations in the submitted information, the taxpayer could be subject to additional fines, which are typically based on the severity of the error and the amount of tax underreported or overclaimed.

VAT refunds in Poland

In Poland, VAT refunds are available for businesses based both inside and outside the country, subject to certain conditions. For businesses based inside Poland, VAT refunds can be claimed when the input VAT (tax paid on purchases and expenses) exceeds the output VAT (tax collected on sales). The refund process involves submitting the relevant VAT return and supporting documentation to the tax authorities.

For businesses outside Poland, the VAT refund process is typically governed by the EU Directive on VAT refunds, allowing eligible businesses to reclaim VAT incurred on business-related expenses within the country.

Non-EU businesses may also be able to claim VAT refunds under specific reciprocity agreements or local regulations. However, it is essential for businesses, both domestic and foreign, to adhere to the country's VAT regulations and follow the necessary procedures to ensure a successful refund.

International services and VAT

International services are subject to Polish VAT only if supplied within Poland, based on the place of supply rules. This means that businesses providing international services must charge VAT according to the rules and rates applicable in the country where the service is supplied.

Understanding the VAT applicability on international services is essential for businesses engaged in cross-border transactions. Proper compliance with place of supply rules helps businesses avoid potential penalties and fines, while ensuring accurate VAT collection.

New VAT group option from 2023

From 2023, Poland will introduce a new option for taxpayers to form a VAT group in the tax system. This option enables related companies to form a group for VAT purposes and submit a single VAT return, facilitating the VAT return process for related entities.

Establishing a VAT group can help decrease administrative expenses and streamline the VAT return process. It also allows companies to share resources and capitalize on economies of scale. To form a VAT group, businesses must submit an application to the tax office, provide the required paperwork, and obtain approval from the tax office.

Conclusion

VAT compliance is an important part of doing business in a country, and Poland is no different. As Poland’s tax landscape continues to evolve, businesses must keep up-to-date with the latest changes to Polish VAT rules and regulations to ensure smooth operations and continued success.

Do you need help with your VAT compliance? Book a free call with one of our VAT experts to find bespoke solutions for your business, optimize your VAT costs, and reach millions of new potential customers.

Frequently Asked Questions

What is the VAT rate in Poland in 2023?

The standard 23% VAT rate applies to most goods & services except those goods and services where special VAT provision provides additional rates or treatments.

What are the different Polish VAT rates?

In Poland, the standard VAT rate is 23%, reduced rates are 8% and 5%, and the zero rate is 0%.

What is the VAT rate in Poland for restaurants?

In Poland, the standard VAT rate for restaurants is 23%.

How do I register for VAT in Poland?

Registering for VAT in Poland requires applying to the local tax office and obtaining a VAT number.