Important changes in Polish VAT rules

Polish VAT rules modifications

The most relevant changes affect your periodic VAT compliance. At the moment, if your Polish turnover exceeds 5 million PLN (circa €1.15M), you are obliged to file a quarterly return and make monthly pre-payments on the first and second month of the quarter. A monthly filing is also possible upon request. Following the changes announced last week, monthly reporting will be mandatory for all taxpayers exceeding the given threshold and the pre-payment system will be abolished. If you are currently making pre-payments in Poland, you will be obliged to file 8 additional returns every year as from next January. Feel free to contact us for help with these new returns.

Refund under new Polish VAT rules

There are also changes in VAT refunds starting next January. The current rules set a time limit for the Polish authorities to give back a VAT refund of 60 days. This limit will be reduced to 25 days when a number of conditions are met, such as requesting a small amount (PLN 15,000) and not having any tax arrears for the past two years. Where these conditions are not met, the 60-day limit will remain applicable although a bank guarantee may be requested when asking for the repayment.

Registration changes

With respect to VAT registrations, a bank guarantee may be required before the VAT number is granted. This will be the case when the applicant had tax debts in the last two years. This guarantee will range from PLN 20,000 to PLN 200,000. In addition, a VAT registration may be denied when the taxpayers are not capable of contacting the applicant. This last point is important for foreign taxpayers registering for VAT in Poland, as they must make sure that they are approachable at all times by the tax authorities.

The penalty system will also be updated with new penalties of up to 30% of the VAT due. This penalty will apply whenever the business requests an excessive VAT refund or makes a smaller payment than the applicable amount for the relevant period. The penalties can go up to 100% where there is no underlying supply on an invoice issued.

Small established Polish companies may also benefit from an increased VAT registration threshold, which has been raised from PLN 150,000 to PLN 200,000. This threshold does not apply to foreign taxable persons that are not established in Poland, these companies must register for VAT as soon as they make their first taxable supply in the country.

Finally, the scope of domestic reverse charge will be extended to several construction services supplied by subcontractors and supplies of certain new goods such as gold, silver and certain IT equipment.

The above changes are likely to impact any company registered for VAT in Poland. We suggest reacting as soon as possible to be ready for 1 January when these amendments are introduced. Please get in contact with us to get free help on your Polish VAT compliance.