The Ministry of Finance has recently been consulting on several significant tax changes. In "Tax This and That," we previously wrote about changes to the property tax. Today, we'd like to present the proposed changes to the VAT tax.
The VAT Act (like the Corporate Income Tax Act) provides certain preferences for small businesses. One of these is the possibility of VAT exemption for taxpayers whose total sales value did not exceed PLN 200,000 in the previous tax year. Only taxpayers within the meaning of the Polish VAT Act are eligible for this exemption. It is not available to foreign entrepreneurs who are not registered for VAT in Poland. They must charge VAT on sales of PLN 1.
The draft published on the Government Legislation Center website proposes the implementation of the SME (small medium-sized enterprises) procedure. This procedure will provide VAT exemption to entrepreneurs from other European Union countries. The condition for benefiting from the exemption is sales in Poland worth no more than PLN 200,000 and sales within the European Union worth no more than EUR 100,000. To benefit from the exemption, foreign entrepreneurs will need to obtain an identification number containing the EX code in their country of establishment. However, the exemption will be limited to EUR 85,000 (or the equivalent in local currency).
The bill also provides for the possibility for Polish taxpayers to benefit from VAT exemption in another European Union member state, subject to the conditions specified in that country. The tax office responsible for the taxpayer's registered office will, upon request, issue an identification number containing the EX code, provided that their annual sales in other European Union member states do not exceed €100,000.
This solution is in line with the VAT Directive, which allows its application from March 2020. Comments on the project could be sent to the Ministry of Finance until July 16.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of July 5, 2024
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