VAT registration in Poland is mandatory for companies that exceed a certain sales limit during the tax year. There are certain exemptions from the registration requirements, as well as additional requirements for intra-Community transactions and activities.
In this article, our team of Polish company formation agents discusses the VAT registration procedure, the eligibility for VAT exemptions as well as the currently applicable VAT rates. Our team is able to provide complete assistance for opening and registering a company. Investors who are interested in receiving this type of assistance can reach out to us.
VAT registration procedure in Poland in 2021
Have you opened a company in Poland? In this case, you should know that while some registrations are mandatory, VAT registration in Poland is not obligatory so. Companies may be eligible for an exemption to registration. There are two possible scenarios in which a business is not required to do so: one according to the sales volumes in a given period and another according to the specific services or products that are being offered by the company. Investors are first required to determine in which of the two categories they fit in.
Companies are not required to register for VAT purposes in Poland if the sales during the tax year do not exceed 200,000 PLN. In this case, the company managers are required to follow through with the registration procedure with the local Tax Office in order to obtain the registration number.
The procedure can be started immediately after obtaining the registration certificate from the National Court Register. When filling the application, the company manager must also present:
•the registration certificate
•excerpt from the company foundation deed
•a standard form that must be filled in by the manager.
An important distinction is made between companies that are already registered and those that are just being incorporated and expect that their sales will exceed the limit. Investors can calculate the number of days until the end of the year and multiply it by 200,000 then divide it by 365 in order to obtain a value that will help them determine whether or not the company is to be registered.
The main steps for VAT registration in Poland are the following:
prepare the documents: these can differ base don whether or not the company is incorporated in Poland; foreign companies are asked to provide the Articles of Association of the foreign company, among others.
pay the fees: this is an optional step as VAT registration in Poland is free; however, investors who require confirmation of registration pay 170 PLN.
register as a VAT payer: the VAT-R application is to be submitted electronically or in paper form with the municipal office.
comply with the requirements: once registered, the taxpayer is expected to comply with the mandatory requirements for creating and keeping an accurate VAT record.
For companies that did not register and that exceed the VAT exemption limit, each subsequent sale after the 200,000 PLN will be subject to VAT. It is understood that in this case the exemption is no longer applicable and the business should register as a VAT payer in Poland.
There are several declarations that are to be submitted to the tax offices by taxpayers registered for VAT purposes in 2021. These include VAT-7 and VAT-7K. the VAT is usually paid on a monthly basis and small taxpayers are also allowed to pay on a quarterly basis. The returns are to be submitted and paid within 25 days after the month to which the VAT obligation applied to. A split payment mechanism for VAT can be available for business-to-business transactions. In this case, some incentives may apply to the business that acts as the purchaser.
Penalties apply in case of overstated input VAT as well as in the case of understated input VAT and they can range between 20% and 30%. One of our agents who specialize in Polish company formation can provide more details on the applicable penalties.
When is it mandatory to register for VAT purposes in Poland?
Our team of agents who specialize in company formation in Poland can provide you with needed clarifications if you wish to determine the need for registration. Below, we list some scenarios in which companies are required to register regardless of the value of the sales:
-the company delivers goods that are subject to excise duty: in Poland, these are tobacco products or passenger cars, among others; companies that deliver electricity are exempt from this provision;
-the company delivers other types of special goods: as per the Act on tax on goods and services, such as coins or scrap from precious metals;
-the company provides certain types of services: included here are legal services, debt collection, and consultancy services except for certain consulting services related to farming;
-others: the company has no registered office in Poland; in this case, if the company does however have a permanent place of business then it will submit the registration with the tax office in the area where this place of business is located.
Please note that the examples above should be used as a general guideline and it is recommended to consult with one of our agents after you open a company in Poland in 2021 in order to determine if the business activities make it mandatory to register for VAT purposes. You can also consult with us for VAT registration purposes if you have a company with a virtual office in Warsaw.
In those cases in which the taxable person is unable to be present in the country for VAT registration purposes, a representative can be appointed by means of a power of attorney. This involves a set of costs as well as the actual preparation of the document, however, one of our agents can handle this procedure and assist you as a representative. When using this method the power of attorney can be either a specific one (solely for the purpose of the VAT registration) or a general one (that will allow the appointee to also take care of other matters, as per the instructions in the document).
It is important to note that, when using an appointed representative, the document needs to be arranged for and drawn up so as to observe the application submission deadline, for example before the date of the first sale of goods and services that is subject to VAT.
When is VAT registration in Poland voluntary?
Companies can choose to register for VAT on a voluntary basis. This means that they choose to opt-out of the VAT exemption and prepare for the usual procedure, like the companies that are required to do so. This is a business decision that can be made for the purpose of making some deductions in the course of the tax year (for example, the deduction of the VAT on company purchases).
Companies in Poland that are exempt from VAT are only required to keep simplified sales records (containing information such as the date and value of the sales and the value of the cumulative value of sales). One of our agents who specialize in company formation in Poland can provide more details.
It is important to note that companies are required to keep accurate sales records. This means including the sales for each day (and no later than the start of the following business day). The tax authorities may inspect company owners who fail to do so and, should the officials estimate that the sane exceeds the tax exemption limit, then the company will be obliged to pay the due tax.
Companies in Poland can but are not mandatorily required to register for VAT in the following cases:
-when investors open a company in Poland during a tax year and they know that they will not exceed the limit of sales value (provided that this calculation is conducted properly);
-the company did not exceed the sales limit in the previous year;
-the company does not have a registered office in Poland, neither a permanent or habitual place of residence and it only engages in activities such as transport or communication services for non-taxable persons.
One of our agents specializing in company formation in Poland can give you more information about these situations.
All applications for VAT registration, whether voluntary or mandatory, are verified by the tax office and the process becomes final once the VAT-R form is submitted (this means that the registration is complete at the date of the submission at the earliest). A taxpayer will not be registered if false data was provided in the application if the company does not exist or of the company founder or the representative cannot be contacted using the data provided in the application. Likewise, if the tax office has data that proves that the company was subject to tax offenses, the registration would not be possible. VAT registration will not take place for a company that has been banned from doing business by a court.
When all of the documents are in order, registration requests are processed as soon as possible, if not immediately in most cases. In the event in which the application is incomplete or if the data is doubtful, the process will take longer.
Company owners who have lodged an application for VAT registration and have been refused can lodge a legal complaint with an administrative court. If this is the case, we suggest reaching out to our team of agents specializing in company formation in Poland for more details on how the appeal can be handled.
What are the VAT rates in Poland?
The VAT rate in Poland is 23% and the Government established exceptions for several goods and services. A new VAT rates matrix started to apply to certain types of services and products in July 2020. Our team can give you more details about these changes that will influence those doing business in the country in 2021.
. The following reduced VAT rates apply in Poland:
-8%: for tourist services, health-care, newspapers, transportation, water distribution and house renovation and construction procedures;
-5%: for certain foodstuffs and books (or other physical means of support), periodicals, agricultural inputs.
-0%: some types of goods and services may be zero-rated or even exempt, such as intra-community supplies or exports.
The following video contains information on the VAT rates and registration in Poland:
VAT refund in Poland
For receiving a VAT refund in Poland, a resident company must file an application to the Head of the Second Tax Office in Warsaw. Foreign entities are no longer obliged to file a VAT refund claim in a Member State where they paid VAT. Therefore in order to recover VAT retained for local acquisitions of goods and services, the companies can now submit an application to the Polish tax authorities through the tax authorities in their own country. The application must be filed until the September 30 of the calendar year following the refund period.
Together with the application, the taxable entity must also submit certain supporting documents including invoices or customs duty documents and the certificate of VAT residence from the applicant’s country. It usually takes approximately 4 months for the tax authorities to process the claim. If the refund is not granted within deadline the company is entitled to penalty interest.
There are also certain time ranges that must be taken into consideration. For example it is not possible to receive a VAT refund in Poland for a period shorter than three months or longer than one year. When the Polish authorities finish the claim and papers verification, the VAT amount will be transferred to the applicant.
The VAT Act prohibits the deduction of input VAT for hospitality services or purchase of fuel for cars. The tax refund is usually transferred in the bank account indicated by the taxpayer but it can also constitute security for loans.
What are the main requirements for VAT filing and reporting in Poland?
Polish companies that are registered taxpayers are required to make monthly or quarterly returns as well as keep registers containing the sales and purchases subject to VAT. Those companies that activate as VAT-registered EU taxpayers and carry out their activities on an intra-Community level, are required to submit an “EC Sales and Purchases List” – a return that is submitted each month.
VAT returns are filed via an electronic system and the surplus of output VAT over the input VAT is to be paid within 25 days from the end of the month in which the tax obligation took place. A refund is possible in those cases in which the input VAT is higher than the output VAT.
VAT taxpayers in Poland that fail to fulfill their obligations are subject to penalties as per the Criminal Fiscal Code. When a VAT liability is due, the respective company is required to pay the outstanding amount as well as any penalty interest. Our team of company formation agents in Poland can give you more details about the laws and the applicable penalties.
Taxpayers in Poland who are subject to VAT are required to document their transactions and this is performed with the help of an invoice. According to law, each of these documents must include specific information in order to be a recognized proof of payment. The general requirements for invoices state that they must at least include the following details about the transaction:
- the name of the seller and its address;
- the name of the buyer and its address;
- their Polish tax identification numbers;
- the invoice number which is a sequential one;
- the date of issue, the date the goods were supplied and received;
- the name and types of goods, as well as the measuring unit for the quantity, sold;
- the unit price for the goods without the applied VAT;
- the value of the provided goods or services without the applied VAT (the net value);
- the calculated VAT rate;
- the net value of the goods and services (total);
- the total due payment amount, including the VAT amount.
When the total invoice value does not exceed 450 PLN or approximately 100 euros, companies may issue simplified invoices (these can skip elements such as the net value or the measuring unit as well as the net unit price). In all cases, the invoice must include the needed information so as to determine the amount of the VAT according to the particular rate applicable to the goods or services for which the invoice was issued.
Any data changes regarding the VAT records or submission (such as the change in the accounting method, for example from monthly to quarterly) should be lodged with the tax office within 7 days from the date on which they occurred. Other changes about the company, such as an address change, will be included in the VAT-R form. However, company owners need to remember to notify these changes about the company particulars accordingly and not only to the tax office.
Intra-community VAT work in Poland
For performing intra-community transactions to or from another company in a Member State of the EU, the taxable entity must notify the head of the Tax Office of its intention by submitting a notification before the first supply or acquisition of goods takes place. In this way, the company will be registered as an EU taxpayer and its status will be confirmed so it will be able to perform the transaction. The acquisition of goods will be taxed in Poland but if the goods are transported to another EU member state, VAT must be paid there.
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