The goods and services tax (VAT) was introduced into Polish tax system in 1993. Regulations in the field of VAT have often been amended in order to harmonise Polish solutions relating to turnover taxes with the current European common system of value added tax. At present, the fundamental legal act in the scope of VAT is the Act of 11 March 2004 on the Goods and Services Tax (the VAT Act).
Subject of the tax
In principle, VAT taxpayers (taxable persons) are natural or legal persons as well as organizational entities without legal personality carrying out economic activity regardless of the aim or result of that activity.
Economic activity covers all activities of producers, traders or service providers, including entities obtaining natural resources and farmers as well as activities of the professions. Economic activity also includes, in particular, activities which consist in the use of goods or intangible fixed assets in a continuous manner for profit-gaining purposes. In very simple terms, economic activity covers, as a rule, any business activity.
Public authorities and offices servicing such authorities are not considered taxable persons when they act within their capacity as public authorities (activities covered by a special legal regime applicable to the public body, e.g. in respect of public tasks), excluding activities carried out under civil law contracts concluded.
Object of the tax (taxable activities)
The following activities are liable to VAT:
1. supply of goods for consideration and the supply of services for consideration within the territory of the country,
2. exportation and importation of goods,
3. intra-Community acquisition of goods for consideration within the territory of the country,
4. intra-Community supply of goods.
The following activities are not subject to VAT:
• transactions of transfer of an enterprise or an organised part of an enterprise,
• activities that cannot be the subject of a legally effective contract.
The VAT Act introduces specific procedures that refer to: small entrepreneurs, flat-rate farmers, travel agents, supplies of second-hand goods, works of art, collector's items and antiques, investment gold, telecommunication, broadcasting or electronic services provided by entities established within the territory of the EU to non-taxable persons, telecommunication, broadcasting or electronic services provided by non-EU-established entities to non-taxable persons, foreign entities supplying international road transport services involving occasional carriage of passengers, intra-Community triangular transactions and travellers' tax refund system.
Intra – Community transactions
The main rule of levying VAT on trading between Polish taxable persons and VAT taxable persons registered for that purpose in different Member States of the European Union consists in the way VAT is charged, i.e. VAT on goods traded between taxable persons is generally collected in the country where dispatch or transport of the goods to the person acquiring them ends. In Poland 0% VAT rate (an exemption with a right to deduction) is applied to intra-Community supplies of goods.
In Poland business entities interested in performing commercial activities with VAT entities registered in other European Union countries (i.e. supplies and acquisitions of goods and services) are obliged to notify the head of the tax office about their intention to start intra-Community transactions.
Polish VAT taxable persons who carry out intra-Community transactions have to use their taxable persons' identification numbers (NIP) for EU transactions. Polish taxable persons' EU identification number is preceded by a prefix (country code) "PL", for instance PL9999999999.
Taxable persons who carry out IC supplies and acquisitions of goods and provide services for VAT taxable persons or for non-taxable legal persons, identified for the purpose of value added tax are obliged to complete and submit recapitulative statements (VAT EU) regarding those transactions.
As a rule, the obligation of completing and submitting recapitulative statements refers to taxable persons performing activities such as:
- intra-Community supply of goods,
- intra-Community acquisition of goods,
- supplies under intra-Community triangular transaction,
- providing services to taxable persons or non-taxable legal persons identified for the purposes of value added tax, which are liable to tax within the territory of a Member State other than the territory of Poland.
One should bear in mind that the obligation of submitting the recapitulative statements also applies to supplies of goods or services covered by the domestic reverse charge mechanism (goods and services listed in Annex 11 and 14 to the VAT Act).
As of 1 January 2017 recapitulative statements must be submitted on a monthly basis and only be electronic communication means by the 25th day of the month following the month in which the tax liability in respect of conducting transactions arose.
Intra - Community acquisition of goods
Intra-Community acquisition of goods should be understood, as an acquisition of goods (acquisition of the right to dispose of the goods as an owner) which, as a result of supply, are dispatched /transported (by the supplier, acquirer of goods or for their benefit) into the territory of a Member State other than the territory of the Member State of departure of the dispatch /transport.
Generally, intra-Community acquisition of goods in the territory of Poland takes place when transport of goods ends in Poland and a supplier is a taxable person and at the same time an acquirer of the goods is either a taxable person or a non-taxable legal person.
Similarly to the reverse charge rule, in the case of intra-Community acquisition of goods the settlement of the output VAT is to be effected by an entity acquiring the goods. The amount of output tax on intra-Community acquisition of goods constitutes at the same time the amount of input tax, which is liable to deduction. The rate applicable to intra-Community acquisition of goods is that applied to the supply of the goods within the territory of Poland.
As a rule, when an acquirer of goods is a taxable person exempt from VAT or a non-taxable legal person, intra-Community acquisition of goods does not occur provided that the total value of IC acquisitions of goods during the tax year and in the preceding tax year did not exceed the amount of 50.000 PLN .
Intra-Community supply of goods
Intra-Community supply of goods should be understood, as a transfer of goods from the territory of Poland to the territory of another EU Member State with the right to dispose of the goods as an owner. As a rule, intra-Community supply of goods takes place when a supply is carried out by a taxable person registered as an EU VAT taxable person, provided that the acquirer of the goods is a VAT taxable person identified for the purposes of intra-Community transactions in the territory of a Member State other than Poland or a non-taxable legal person identified for the purpose of VAT in another EU Member State. Intra-Community supply of goods is taxable at a 0% rate. The supplier may deduct the amount of input tax on acquired goods and services connected with such supplies.
Generally, distance selling takes place when a taxable person in one Member State dispatches or transports goods by himself or on his account to a non-taxable person in another Member State (for instance a non-business natural person). As a general rule, the place where the supply of goods is taxable, under a distance sale mechanism, is the Member State to which the goods are dispatched or transported. If, however, the supply of goods involved in a distance sale does not exceed an annual threshold (a limit) set by the state to which the goods are supplied, then the place of taxation is the Member State where the goods are stored for dispatch or where transport commences. In respect of the distance sale, when the value of such sale in any Member States exceeds a threshold set by that state, then:
- VAT chargeable on all subsequent sales is accounted for in the Member States to which the goods have been supplied,
- the supplier is liable to register for VAT purposes in the Member State to which the goods have been supplied.
Currently, in Poland the limit amounts to 160.000 PLN. A taxable person (who has not exceeded the limit) may, however, choose the option to be taxed in the country of destination, upon written notification to the head of the tax office.
Foreign entities – Reverse - charge
In order to improve VAT collection, the obligation of tax settlement in accordance with the reverse-charge rule was introduced. When a taxable person, not having the place of establishment or a fixed establishment in the territory of Poland, supplies goods or services within the territory of Poland, VAT is to be settled and paid by the purchaser of the goods or services, with the exception of services connected with immovable property provided by an entity registered for the VAT purposes in Poland.
Registration of foreign enterprises for VAT purposes
The relevant tax authority for foreign enterprises not having the place of establishment or fixed establishment in Poland is the Head of Second Tax Office Warszawa Śródmieście, (15 Jagiellońska St., 03-719 Warszawa, telephone: 048225113500; e.mail: firstname.lastname@example.org)
Taxpayers not having the place of establishment or fixed establishment in Poland, (required to register as active VAT taxpayers) are obliged to appoint a tax representative. However this obligation does not apply to taxpayers having the place of establishment or fixed establishment in the EU. A tax representative may be any legal person or organisational unit without legal personality that has established his business within the territory of Poland or natural person who has his permanent address in the territory of Poland provided that the person fulfils - the following conditions:
• is registered as an active VAT taxpayer and in certain circumstances as an EU VAT taxpayer,
• is not in arrears in respect of the taxes which constitute income of the state treasury – which exceed 3 per cent of the due tax,
• has not been sentenced within the last 24 months in accordance with the Fiscal Penal Code for a fiscal crime,
• is authorised to provide professional tax advisory services under the Tax Advisory Act or bookkeeping services pursuant to the Accounting Act.
Polish law enables customs agencies to become tax representatives under certain conditions. The tax representative is jointly and severally liable with the taxpayer for tax obligations of the taxpayer he represents.