If you are a foreign entrepreneur who wants to do business in Poland, you may need to register for VAT (value-added tax) in this country. VAT is a tax on the consumption of goods and services that is collected by the seller and paid by the buyer. The standard VAT rate in Poland is 23%, but there are also reduced rates of 8%, 5% and 0% for certain products and services.
In this article, we will explain when and how you need to register for VAT in Poland, what are the benefits and obligations of being a VAT payer, and what are the penalties for non-compliance.
- When do you need to register for VAT in Poland?
According to Polish law, you need to register for VAT in Poland if:
- You are going to make taxable activities to which the Polish VAT applies such as:
- local sales to customers (B2C) made by an overseas business
- Intra-community acquisitions of goods from other EU countries made by overseas business
- Intra-community supplies from Poland to other EU countries
- Local sales to a non-Polish established businesses
- You are selling sensitive goods (e.g. buildings, computers, tabaco, cosmetics, etc) or services (e.g. law, consulting, jewellery, debt-collection, etc.).
Exemptions from the obligation of VAT registration in Poland can be applied by businesses established in Poland that:
- Have not reach the annual threshold of 200,000 PLN or in case you have just started your business you haven’t reach a proportion of this amount during the first calendar year of business activities, and the subject of the supply or provision of services are not goods or services which, pursuant to the provisions of the Act on tax on goods and services, cannot benefit from the subject-related exemption
- Have not reach the annual threshold of 50,000 PLN for Intra-community acquisitions of goods from other EU countries.
In case you are not obliged to register for Polish VAT, you still should consider VAT registration in Poland in case you want to make it possible or speed up the process of the VAT refund that you have paid on local purchases in Poland. This is the situation that arise usually in case:
- You have a fixed establishment (FE) in Poland for VAT purposes. A FE is any fixed place of business through which you carry out your economic activity, such as an office, a warehouse, a factory or a branch that can use the goods and services purchased for its purpose locally
- You sell goods under a reverse charge mechanism in Poland but have local purchases as well
- Your business is established in the country to which the VAT-REF procedure cannot be applied or you want to receive the input VAT quicker.
2. How do you register for VAT in Poland?
To register for VAT in Poland, you need to submit an application form (VAT-R) along with supporting documents (such as your certificate of incorporation, your tax identification number from your home country, your power of attorney if applicable, or other documents that our consultant will let you know) to the relevant tax office.
Unless you are neither a person having an e-signature (EU-Xades compliant) nor the profile entrusted by the Polish government nor you have no Polish TIN/NIP number assigned to your business, you cannot submit your application online but must do it personally or through your proxy at the tax office. Also Currently there is no possibility to file the attachments (e.g. company documents) to the form, so part of this paperwork must be done in an old-fashioned way. This applies for instance for overseas companies that make business in Poland. In such a case you have also obliged to add to the application a NIP form to assign you a Tax Identification number (TIN/NIP). The tax office will issue you a confirmation letter with your Polish tax identification number (NIP) and your Polish VAT identification number (VAT) as well a Polish VAT-EU number if you applied for it as well.
The standard registration time process usually takes up to 30 days from the date of submission. However, based on our experience usually it takes from 7-14 days, but it also may take longer if the tax office requests additional information or documents.
3. What are the benefits and obligations of being a VAT payer in Poland?
As a registered VAT payer in Poland, you can benefit from:
- Deducting input VAT that you paid on your purchases related to your taxable activity from output VAT that you collected on your sales
- Applying simplified procedures for intra-community transactions within the EU
- Applying simplified import procedure under which you will not be obliged to pay the import VAT on the border
- Claiming refunds of excess input VAT or carrying it forward to subsequent periods
- Claiming refunds of Polish VAT that you paid on your purchases under certain conditions
However, as a registered VAT payer in Poland, you also have some obligations, such as:
- Issuing invoices with proper information and keeping them for at least five years
- Filing monthly (obligatory for the new VAT starters) or quarterly SAF-T VAT returns electronically by the 25th day of the following month or quarter
- Paying any due VAT by bank transfer by the same deadline as filing returns
- Keeping records and books related to your taxable activity and making them available for inspection by tax authorities
- Reporting any changes or corrections regarding your registration data within seven days
- If you are established in Poland or has fixed establishment you can be also obliged to use a Polish electronic invoicing system called KSeF
4. What are the penalties for non-compliance with Polish VAT rules?
If you fail to comply with Polish VAT rules, such as not registering when required, not filing returns on time, not paying due taxes on time, not issuing proper invoices etc., you may face various penalties depending on the type and severity of your violation.
The penalties may include:
- Fines ranging from 10% up to 100% of unpaid taxes plus interest
- Additional taxes or penalties resulting from adjustments made by tax authorities during audits
- Criminal charges leading to imprisonment up to three years
Therefore, it is important that you consult with our expert before starting your business activity in Poland and follow all applicable regulations regarding Polish VAT. Our consultants and advisors will help you analyze whether you need a VAT registration in Poland and if so they will help you to go through the whole process of VAT registration and then to be compliant with Polish VAT law.
Read more about our VAT Reporting Services