VAT in Poland
Polish VAT Rates
Poland has a standard VAT rate and two reduced VAT rates. Also, several items are zero-rated. The Polish VAT rates are as follows:
- Standard rate: 23%
- Reduced rates: 8%, 5% and 0%
The standard rate of 23% applies to all supplies of goods and services not specified as being subject to any of the other rates. For most goods and services subject to a reduced or zero rate, the statistical codes of the Polish Classification of Goods and Services (PKWiU 2008) are mentioned in the Polish VAT Act.
Poland has opted for the reduced and super-reduced VAT rates on several items allowed by the VAT Directive:
Foodstuff23%, 8% and 5%
Medical equipment for disables persons8%
Children's car sears8%
Books on other physical means of support5%
Periodicals8% and 5%
Admission to cultural services (theatre, etc)23% and 8%
Admission to amusement parks8%
Pay TV / cable23% and 8%
Writers / composers8%
Restaurant and catering services8%
Admission to sporting events8%
Medical and dental care8% and 0%
Shoes and leather goods8%
Clothing and household linen23%
Poland has also introduced two special reduced rates applicable on the following schemes:
- A special reduced rate of 7% applies to lump-sum refunds to flat-scheme farmers (article 115(2) of the Polish VAT Act.).
- A rate of 4% (lump-sum taxation scheme) applies to services rendered by taxi drivers (article 114 of the Polish VAT Act.). A taxi driver who has opted to use this scheme is not allowed to deduct any input VAT.
You can find further information on the VAT rates on the Polish tax authorities’ website under the following links:
Polish VAT Deduction limits
Input VAT can generally be deductible as long as the goods or services are used for business purposes. There are, however, certain items that are never deductible.
The list below provides details on deduction rules for each type of expense:
- Business entertainment is 100% deductible if it contributes to the growth of employees' competencies.
- Travel expenses such as taxi, train, and bus tickets are 100% deductible if documented with an invoice, with an exemption on single-use tickets (also if they are issued in the form of a receipt) that cover a route longer than 50 km, then it can be treated as an invoice.
- Purchased or leased passenger cars are 50% deductible, except for specific categories of trucks and vehicles used exclusively for business purposes.
- Fuel for the above vehicles (petrol, diesel, or gas), 50% of the input VAT is non-deductible, except for fuel purchased for specific categories of trucks and vehicles used exclusively for business purposes.
- Hotel accommodation is 0% deductible (with an exception when the VAT paid on the purchase of overnight accommodation and catering services that a taxable person will re-invoice to other taxable persons in the context of the provision of tourism services).
- Restaurant transactions are 0% deductible (the only exception is the purchase of ready meals by passenger transport companies for their passengers).
Deducting VAT prior to the beginning of the economic activity is only allowed under certain conditions. The expenses incurred should be connected to the expected business and the taxpayer must be VAT registered at the time of submitting the JPK_V7 file. In the VAT-R registration form, the appropriate period for which the first JPK_V7 file will be submitted must be selected. If the registration period includes a deduction option, then it is not required to submit overdue JPK files. However, if the period in which it is possible to deduct VAT has already expired, then the outstanding JPK_V7 files should be submitted.
Polish statute of limitations
Tax liability expires five years after the end of the calendar year in which the tax payment deadline passed. In practice, there are also situations when the statute of limitations can be suspended or interrupted, and therefore the period is often significantly extended (e.g. litigation).
Considering the discrepancies in interpretations of the VAT law and the latest ruling of the Supreme Administrative Court, to avoid disputes with tax authorities, input VAT should be claimed in a VAT return filed no later than the end of the fifth year following the year during which the deductible VAT was due.
Polish Tax point rules
The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs.
- General rule: Tax point arises when the goods are delivered to the customer or when the services are completed. For services that are accepted partially, the service is treated as being completed when the services were supplied in part and the payment is defined.
- Prepayments or advanced payments create a tax point. In these cases, VAT becomes due at the moment when the payment is received (if the payment is received in part, VAT becomes due with respect to the value received).
- Import: Tax point occurs, as a general rule, at the time of importation (when the customs debt arises).
- Vouchers: there are two types of vouchers: “single-purpose voucher” (SPV) and “multi-purpose voucher” (MPV). For SPV the place of supply of the goods or services to which the voucher relates and the VAT due on those goods or services are known at the time the voucher is issued and the tax point arises on transfer of the SPV. This is when the SPV is used as a means of payment, the supply of goods is made, and/or services are completed when an SPV is transferred. An MPV is a voucher other than a single-purpose voucher. A transfer of an MPV should be treated as being outside the scope of VAT.