Value Added Tax (VAT)
Before you read material concerning VAT check the advantages and disadvantages of the status of a payer for VAT purposes.
If you are an entrepreneur registered in CEIDG, you do not need to have a status of active VAT payer.
The VAT taxation is governed by the Act on the goods and services tax, hereinafter "VAT Act".
VAT is a tax on goods and services (indirect tax). Activities which are subject to VAT:
- sales (delivery) and
- resale of goods and services.
As many times particular goods (service) are sold or subject to another taxable activities - as many times they are subject to VAT.
- If you want to read the detailed information concerning settlement of VAT, go to the guide Settlements with te tax office
The tax rates for goods and services
23 % - this is the standard rate of VAT (from 1 January 2011. The new rates are of a temporary nature and are applicable for the period from 1 January 2011 to 31 December 2016).
8 % - this rate is applied, inter alia, to goods and services listed in Annex 3 to the Act on the goods and services tax and to supply, construction, renovation, modernisation, energy efficiency or conversion of buildings or parts of them included in the construction of social housing agenda
5 % - rate includes basic foodstuffs (e.g. bread, dairy products, meat preparations, preparations made from cereals, flour, groats, pasta, juice) and printed books and on disks, tapes or other physical media and specialist periodicals. The list of goods covered by the 5 % rate is set out in Annex No 10 to the Act on goods and services tax,
0 % - preferential rate applicable to the intra-Community supply of goods and the export of goods. It shall also apply to:
- the operations specified in Article 83 of the Act on the goods and services tax, including inter alia: goods and services related to maritime and air transport and transport services relating to export of goods, international transport services;
- certain services provided by operators engaged in tourism, (services supplied for the direct benefit of the traveller outside the Community).
Applying a VAT rate of 0 % to the given activity means economic non-taxation (fiscal burden), while acknowledging this transaction as the taxable transaction, which allows deduction of the input tax paid on the acquisition of the goods and services (0 % rate functions as an exemption from VAT with right of deduction).
In order to avoid cumulation of taxation the right to a deduction (refund) was introduced, consisting in the fact that the tax payer has, in principle, the right to reduce the size of tax liability. It operates in such a way that the entrepreneur may reduce the tax due by the tax charged in purchasing transactions. When an entrepreneur receives the invoice he pays for the goods/service gross amount (inclusive of VAT). When the entrepreneur issues an invoice, in principle it includes the amount of VAT (provided the transaction is exempted or taxed at 0 %). VAT paid (purchasing invoices) lowers the amount of tax to be paid to the tax office (VAT on sales invoices).
VAT is, as a general rule, the difference between VAT obtained from the sale of goods/services to customers (output tax) and the VAT paid when purchasing goods/services (input tax).
The taxpayer calculates and pays the tax to the competent tax office.
Please note that also from expenditures incurred before registration of business you may deduct VAT.
You do not know how to do this, we can help you. Read the additional information.
VAT taxpayers are entities carrying out an independent economic activity irrespective of the purpose and results of that activity. If you are an entrepreneur registered in the CEIDG, in principle you are not obliged to register as a VAT payer. If you register your business activity in KRS – you will have to register as a VAT payer. See the article Registration for VAT purposes.
To register as a VAT payer use a VAT-R form
The Act distinguishes between active taxpayers i.e. those who are required to submit tax returns for the tax on goods and services and other taxpayers, i.e. those persons who are exempt from VAT, but they may be subject to registration. Tax payers are subject to mandatory registration (registration shall be effected as soon as the submission of application) and it is connected with acquisition by the payer of specific competences i.e. the right to deduct input tax and the right to issue invoices entitling the registered counterparty to deduct.
If you do not know whether you want to be a VAT payer, we can help you. Read the article The advantages and disadvantages of registration as a VAT payer.
A taxpayer may be both an entity established within the EU and outside.
Check the interactive guide – Registration as a VAT payer.
Payers intending to carry out intra-Community transactions are be obliged to register with the tax office as a tax payer for EU VAT. In this case the national tax identification number is preceded by a two-letter indication of EU Member State. In the case of Polish taxpayers it is the NIP number preceded by PL.
A catalogue of activities subject to the tax on goods and services includes:
- a supply of goods for consideration and
- the supply of services for consideration within the territory of the country.
Supply of goods means the transfer of the right to dispose of the goods as an owner. The provision of services means any provision to a natural person, legal person or organisational unit without legal personality which does not constitute a supply of goods.
Exports of goods
This is export of goods from Polish territory outside the Community, confirmed by the competent authority under the provisions of customs legislation.
Imports of goods
The import of goods means:
the carriage of goods from the territory of a third country i.e. not belonging to the EU territory,
the intra-Community acquisition of goods for consideration within the territory of the country.
The intra-Community acquisition of goods for consideration means:
the acquisition of the right to dispose as an owner of the goods, which as a result of the supply are dispatched or transported to the territory of Member State other than the Member State of dispatch, regardless of who carries the goods and on whose instructions the goods are transported.
The intra-Community supply of goods (WDT)
This intra-Community supply is export of goods from the territory of the Republic of Poland to the territory of a Member State other than Poland.
An intra-Community supply of goods is taxed at the preferential rate of 0 % provided that the taxable person supplies to a customer who is registered as a VAT payer (with a correct and valid identification number), the taxable person has the proof that the goods have actually been exported from Poland to another EU Member State.
If you do not know how to register as a VAT taxable person for intra-community transactions purposes, we can help you. Read the interactive guide Registration of taxable persons for intra-Community transactions purposes.
If you want to know more about VAT in cross-border trade, refer to additional information.
The standard rate of VAT is currently 23 % (from 1 January 2011. The new rates are of a temporary nature and shall be implemented for the period from 1 January 2011 to 31 December 2016).
At the same time, the provisions of the Act on the taxation of goods currently foresee the use of two reduced rates: 8 % and 5 %.
The tax rate of 8 % is applied i.e. to goods and services listed in Annex 3 to the Act on the goods and services tax and the supply, construction, renovation, modernisation, thermal modernisation or conversion of buildings or parts thereof categorised as a construction of social housing agenda.
The list of goods subject to the 5 % rate is set out in Annex No 10 to the Act on the taxation of goods and services which covers basic food products (e.g. bread, dairy products, meat preparations, cereal products: flour, groats, pasta, juice) and printed books and those on discs, tapes or other physical media and specialist periodicals.
The preferential rate of 0 % is applied to the intra-Community supply of goods and to the export of goods. It also applies to:
- the activities mentioned in Article 83 of the Act on the tax on goods and services, including, i.a. goods and services related to maritime and air transport and the means of transport, international transport services;
- certain services provided by operators engaged in tourism (this concerns services supplied for the direct benefit of the traveller outside the Community, article 119 of the VAT Act).
Applying a VAT rate of 0 % to a particular activity means economic non-taxation (fiscal burden), while acknowledging the transaction as taxable sales, which allows for the deduction of input tax on the purchase of goods and services related thereto (0 % rate functions as an exemption from VAT with the right to deduct).
As a taxable person for VAT purposes you are obliged to issue invoices to buyers of your goods or services. VAT Act and the implementing provisions govern what elements should be included on a properly issued invoice. Correct invoicing is very important. Tax administration authorities may challenge the right to deduct VAT if the invoice has been issued incorrectly. Here you will find information on invoicing.
If you sell goods e.g. via the Internet, information that helps to identify the moment at which the tax obligation arises, can be found here.
Recording and reporting obligations
Entrepreneurs can settle the accounts with the tax office monthly or quarterly. This means that both the tax liability and the tax refund can exist for monthly and quarterly periods. For this purpose they are obliged to submit relevant returns VAT -7/ VAT-7K (interactive form). In the first case, the deadline for submission of returns is the 25th of the month following the settlement period. In the second case, returns shall be submitted until the 25th day of the month following each sequential quarter (25 April, 25 July, 25 October, 25 January). Taxable persons who opted for quarterly settlements must submit a written notification to the head of the competent tax office - at the latest by the 25th day of the second month of the quarter for which the return is submitted for the first time.
The above mentioned rule does not apply to small taxpayers who have opted for the cash method. According to the act, they are obliged to settle tax on goods and services on a quarterly basis and submit a VAT- 7K return (interactive form).
EU VAT taxable persons carrying out intra-Community transactions apart from VAT declarations are required to submit EU VAT returns (interactive form).
In this tax there is no annual settlement.
If the entrepreneur is no longer a VAT payer/closes economic activity, then he must submit a VAT-Z notification (interactive form) to the competent head of the tax office and draw up a physical inventory.Share Print