Poland implemented its Value Added Tax (VAT) system in 1993, partially in anticipation of its entry into the European Union. This VAT system replaced the old Soviet-style Sales Tax. Locally known as ‘Podatek od towarów I usług’. Polish VAT rules is set by Poland, with the only proviso is that it is above 15%. The standard Polish VAT rate since January 2011 is 23%*.
Poland again updated the VAT system in 2004 upon its full consent into the EU. This included implementing all the EU VAT Directives’ rules on VAT registrations, returns, compliance, intrastate and other related requirements. The Polish VAT Act of 2004 contains most of the rules on VAT. This is also backed-up by various instructions and the Tax Ordinance Act of 1997. The Polish Ministry of Finance is responsible for the administration of the VAT system.
Foreign companies which provide either taxable goods or services in Poland may be require to VAT register as a non-resident trader, and obey with all the accounting and payment requirements.
There are also reduced rates of 8%* for certain foodstuffs; water supplies; pharmaceutical products; medical equipment for disabled persons; children’s car seats; domestic passenger transport; intra-community and international passenger transport by inland waterway and road; some newspapers and periodicals; admission to cultural events and amusement parks; some pay TV/cable TV; writers and composers; social housing; certain renovation and repair of private dwellings; certain agricultural supplies; hotel accommodation; restaurants (excluding alcoholic and certain other beverages); admission to sports events; use of sports facilities; undertaker and cremation services; collection of domestic waste; minor repairs of bicycles, shoes and leather goods, clothing and household linen; hairdressing; firewood; some take away food; some bars and cafes; cut plants and flowers for decorative use and food production; reduced rate of 5%* for some foodstuffs, fruit juices; certain books and periodicals (excluding e-Books); some agricultural supplies; 0%* rate for intra-community and international passenger transport (excluding inland motorway and road transport).
Poland VAT law
The laws establishing the VAT are national laws, therefore, all business entities conducting business in Poland have to comply with the Polish VAT Act and EU Council Directive 2006/112 on the common system of value added tax.
Polish VAT registration
With the implementation of the European Single Market initiative in the 1990’s, it became possible to buy and sell goods without a local company – known as non-resident (no permanent establishment) VAT trading. There is no VAT threshold in Poland for the registration of non-resident traders that are VAT/GST/Tax registered in their home state, but you will require one to record transactions and your Polish customers will want proof that you have obtained one.
For EU VAT registered companies selling goods over the intranet to consumers in Poland, the VAT registration threshold (distance selling) 160,000 PLN* per annum.
Poland sets a number of situations where foreign companies should register for VAT. It follows many other of its fellow EU member states. There are of course strict rules on the situations where a registration is permitted. Common scenarios which require a Polish VAT registration include:
- holding goods in warehouses as consignment stock for clients,
- operating live events and/or shows with paid-for admission on the door,
- a company that is a non-trader, but is receiving services in Poland under the ‘reverse charge’ rule,
- the self-supply of goods.
After the change to the place of supply VAT rules in the EU (2010 VAT Package), there are very dew situations where a foreign company must register for VAT if it is providing ONLY services.
Please note that providers of electronic, broadcast or telecoms services to customers in Poland only have to VAT register in the one EU country under the MOSS scheme to file a single return covering all 28* member states.
What information is required to get a Polish VAT number and registration?
Before a business carries out its first taxable transaction registration should be completed. The Polish tax office requires businesses to file forms NIP-2 (tax identification number form) and VAT-R (VAT registration form), along with the following documentation:
- If appropriate, a VAT certificate to prove the business is registered for VAT elsewhere in the EU,
- articles of Association,
- an excerpt from the company’s national trade register,
- an original copy of the agreement letter from the Polish bank where the business’ account will be held,
- a full description of the activities to be carried out in Poland,
- if a fiscal representative is used, ‘a power of attorney’(POA),
- a copy of the agreement with the organisation, if VAT compliance services are provided.
All copies of documents MUST be translated into Polish by a certified translator and certified by a notary.
Once the registration has been granted, which usually will take approximately 30 days, a unique Polish VAT number will be allocated to the company. All EU member states have fixed format for their VAT numbers, in Poland the prefix is PL followed by 10 digits. For example – PL 0987654321
Once the business has its VAT number, it is free to begin trading, and charging Polish VAT. But it MUST comply with the Polish VAT compliance rules, and file regular returns (see ‘Poland VAT Returns’ below).
Where are Polish VAT registrations submitted?
Foreign businesses should send their registration documents, by registered post, to the tax office of the Second Tax District, Warsaw at the following address:
Drugi Urząd Skarbowy Warszawa-Śródmieście
ul. Jagielońska 15
Poland VAT Fiscal Representation
EU entrepreneurs or businesses are not required to appoint a full VAT fiscal representative for the Polish tax authorities. Entrepreneurs or businesses without any headquarter or fixed place of business within the territory of the EU, are obliged to register for VAT purposes in Poland and to appoint a fiscal representative.
The selection of a fiscal representative follows through the conclusion of a written agreement with an entitled business entity.
The fiscal representative is by law liable for tax liabilities of the foreign entity which they represent. They are also required to take specific actions on behalf of the entity and to fulfil its tax responsibilities.
Due to high requirements towards the fiscal representatives and considerable risks that lie with them, the opportunities in Poland are very limited.
Poland VAT Compliance
Non-resident traders providing taxable supplies in Poland are obliged to obey with the local VAT rules and rates. In terms of accounting and recording, this covers the following:
- Arranging invoices with the revelation details outlined in the Polish VAT Act,
- electronic invoices with an appropriate signature, legitimacy and agreement by the recipient,
- accurate invoicing of customers for goods or services in accordance with the Polish tax point (‘time of supply’) VAT rules,
- accounts and records to be maintained and MUST be held for at least 8 years,
- the use of approved foreign currency rates,
- processing of credit notes and other corrections.
Poland VAT Rates
The standard VAT rate in Poland is 23%*; reduced rates are 8%*, 5%* and 0%*. (please refer to the second paragraph of this page)
Supplies of good and services VAT registered in Poland MUST charge the correct VAT rate, and accumulate the tax for onward payment to the Polish tax authorities through a VAT filing: see ‘Poland VAT Returns’ below.
What is the tax point for Polish VAT?
The tax point (‘time of supply’) rules in Poland regulate when the VAT is actually due. It is then due to the tax authorities 7 days after the VAT reporting period end (‘monthly’ or ‘quarterly’).
For most ‘goods’, it is the time of delivery, or passage of title. For ‘services’, it is the completion of the actual service.
Poland VAT Returns
Companies with a Polish VAT number MUST submit regular returns detailing all taxable supplies (sales) and inputs (costs). Generally, returns are normally submitted monthly in Poland. The tax authority has 60 days to make the reimbursement after the VAT return has been submitted.
Poland was the last country to join the group of EU member states lacking VAT ledgers to be submitted together with the VAT return. Only within the last 12 months, Poland has added two returns to the number of VAT obligations that MUST be submitted by registered businesses.
This new VAT ledgers return MUST be filed by large companies only. Businesses with a turnover exceeding €50M* or with more than 250 employees* MUST submit their ledgers on a monthly basis. The level of detail and format of these ledgers will be the same as the SAF-T.
This new requirement also relates to non-established VAT registered foreign companies. Although only appropriate to large taxpayers as from the 1st July 2016, this requirement has been extended to medium-sized companies from the 1st January 2017 and to all registered companies as from the 1st July 2017. The regularity of filing of this new return is still monthly, regardless of the VAT returns being filed on a quarterly basis. The tax authorities have not published any explanation about the complications that this might create for quarterly reporting companies. To finish, the due date to submit this new return is the 25th day of the month, following the reporting period.
Poland Intrastat & EC Sales Lists (ECLs)
Intrastat reporting fills the gap left by the removal in 1993 of customs reporting on the movement of goods within the EU. It empowers governments and the EU to track the trade between countries for statistical purposes. Increasingly, it is also being used as a check on possible VAT fraud.
Polish instrastat reporting threshold for goods is set at PLN 3,000,000* (arrivals) and PLN 1,500,000* (dispatches).
Reference period shall be the calendar month, in which intra-community trade took place (dispatch or arrival of goods). There is a possibility to submit information for a period shorter than one month in form of partial declaration, however, all partial information must in total cover the full monthly reference period.
Intrastat declaration for a given reference period shell be submitted by 10th day of a month following the period of intrastat declaration.
Final partial declaration for a given reporting period must be filed by 10th day of a month following the period of intrastat declaration.
Like ECL’s, it is detached from the EU VAT returns and reporting process, although created on the same data.
What goes into intrastat declarations?
Instrastat filings require details of all dispatches (sales) of goods to other EU countries, plus the arrivals (purchases). The details required for each transaction should include:
- The description of the goods,
- product code of the goods,
- quantity and the value of the goods,
- delivery terms,
- the country of departure and arrival (using country codes),
- along with any shipment costs.
When to submit intrastate reporting?
There are annual reporting threshold for each EU country. These can also be different for dispatches from a country (sales) vs. arrivals (purchases) within the same country. These thresholds are much higher than that of VAT registration thresholds.
Intrastat reporting is virtually always monthly across the EU. Filings are commonly started at the same time as the VAT return, and are sent to the proper statistical office for the country concerned.
Additional supplementary reporting obligation for company’s selling across EU borders is the EC Sales List (ESL). This provides details of sales or transfer of goods and services to other VAT registered companies in other EU countries. The tax authorities around Europe use ESL’s to check that VAT is being correctly and entirely declared by all parties in cross-border transactions.
What goes into the ESL?
- The names of European Union customers,
- their VAT numbers,
- their country code,
- along with the value of sales, or of credit notes, within the reporting period.
ESL’s are usually filed with the EU VAT return. EU countries have different reporting frequency – monthly or quarterly, with most filings being electronic.
Poland VAT Refunds
Any company registered with the Polish tax authorities, as a non-resident VAT trader MUST report taxable transactions through periodic filings, known as ‘returns’.
How often are Polish returns necessary?
Returns In Poland can be filed electronically or manually.
The default tax period for VAT in Poland is one calendar month. Nevertheless, the VAT reporting period, quarterly or monthly, can be selected by a business when registering using the VAT-R form. If a business chooses to file quarterly returns, it may still be required to make monthly VAT pre-payments depending on the turnover. Only businesses with a turnover of less than PLN 5,068,000* may make quarterly payments. Businesses supplying ‘sensitive’ goods such as steel, fuel and rough gold, MUST make monthly returns and payments.
What Polish VAT can be deducted?
Additionally, when declaring sales or output VAT in the Polish return, companies can offset this by the corresponding input or purchase VAT. There are some exceptions, which include:
- Accommodation and restaurant services,
- Cars where the vehicle is not used exclusively for business purposes (under certain circumstances 50%* of the input VAT may be deducted).
The deadlines for filing Polish VAT returns?
Polish monthly or quarterly VAT returns are due on the 25th of the month following the period end. Any Polish VAT due MUST be paid at the same time. In the case where a business has opted to file quarterly returns, but is required to make monthly prepayments, VAT due for the quarter should be paid as below:
- Compulsory prepayment in first two months of the quarter of an amount comparable to one third of the total VAT paid in the previous quarter,
- VAT due in the third month is calculated using the VAT return for that quarter.
Polish VAT penalties
If there are incorrect declarations or late fillings of Poland VAT returns, foreign companies might be subject to penalties. Penalties normally take the form of interest charged on the amounts of unpaid VAT. The interest rates are currently set at twice the Polish National Bank rate plus 2%*. The rate charged must be a minimum of 8%*.
The Polish tax assessment period is five years from the end of the year in which a business was liable for VAT.
How can you recover Polish VAT credits?
If there is a surplus of VAT ‘inputs’ over ‘outputs’ (more VAT incurred than charged), then a Polish VAT credit arises. In theory, this is due back to the VAT registered business from the tax authorities. This credit can be reimbursed or carried forward to offset any tax due in the next period. Any business applying for a VAT refund in Poland will be subject to time limits, subject to the nature of the transactions involved.
All of the above information is correct as of February, 2017 and also specifically highlighted with *.