VAT (Value Added Tax), less commonly referred to as value-added tax, was introduced in Poland in 1993. Poland’s accession to the European Union in 2004 made it necessary to harmonize Polish tax law with EU law.
Currently, the most important sources of VAT law in Poland are the Goods and Services Tax Act of March 11, 2004. (Journal of Laws No. 54. Item 535) and Council Directive 2006/112/EC of November 28 on the common system of value added tax.
According to Article 5 of the VAT Act, the following are subject to taxation:
The VAT Act excludes the application of taxation to transactions involving the disposal of a business or an organized part thereof. Also excluded from taxation are activities that cannot be the subject of a legally effective agreement (theft, pimping, drug trafficking).
According to the general rule, the tax obligation for the supply of goods arises at the time the supply is made. With the provision of services, on the other hand, generally when they are performed.
The basic rate of VAT in Poland is 23%. Reduced VAT rates are 8%, 5% and 0%. Some activities are exempt from VAT (Art. 43).
Registration of a taxpayer as an active taxpayer should be made before the date of performing the first taxable activity on the VAT-R form. Registered entities are required to submit monthly (by the 25th day of the following month/quarter) by means of electronic communication – JPK_V7M file for taxpayers settling monthly, or a JPK_V7K – file – for taxpayers settling quarterly. Taxpayers settling quarterly in the first and second months of the quarter complete and send only the record part of the file It is not until the third month of the quarter that they fill out the record part and the declaration part
When calculating VAT, the taxpayer calculates the obligation as the difference between output VAT (on sales) and input VAT (on purchases). At the same time, it should be borne in mind that it is entitled to reduce the amount of output tax by the amount of input tax only to the extent to which goods and services are used to carry out taxable activities. If the output tax exceeds the amount of input tax, a liability to the Internal Revenue Service arises. Otherwise, there is an excess of input tax over output tax, which the taxpayer can show in the JPK file for transfer to the next accounting period, or request a refund to a bank or VAT account. It is also possible to credit the overpayment to future obligations. The basic statutory deadline for tax refunds is 60 days from the date the taxpayer files the return.
It is worth mentioning that VAT revenues to the state budget in Poland are strongly related to the dynamics of economic development. Tax revenues to the state budget for 2022 from this tax are expected to be more than 237 billion PLN, accounting for more than 50% of all tax revenues. Value Added Tax is also a tribute that is particularly vulnerable to abuse and extortion. However, a number of measures are being implemented year after year to prevent this.
Author: Monika Grab, VAT specialist at accounting office MDDP Outsourcing.