VAT rates

Poland has a standard VAT rate of 23% as well as several reduced rates (8%, 5%, 4% and 0%) and exemptions.

The regulations governing VAT rates and exemptions for various goods and services are very complex. They often refer to non-tax laws, EU legislation, statistical classifications, or customs nomenclature.

We present example applications of the reduced VAT rates in Poland and explain why using the correct rate is important.

Who will find it of particular importance to choose the correct VAT rate?

Applying correct VAT rates is particularly important for:

• businesses selling goods or services to which rates other than 23% properly apply.

If such a business chooses a wrong rate or incorrectly applies an exemption, arrears of VAT may arise which will have to be paid to the tax authorities with interest and penalty tax (30% of the amount in arrears), while those in charge of VAT compliance may be held liable under criminal tax provisions.

• businesses selling goods or services to consumers (B2C), including especially e-commerce vendors.

Availability of reduced rates or exemptions is an important business factor for them which can crucially affect their margins and final prices and, hence, the competitiveness of their goods or services. The main reason is that consumers are unable to recover VAT included in the prices.

How can we help?

As part of our VAT rate compliance services we can:

• Determine the right VAT rate based on the applicable statistical and customs classifications and the properties and intended uses of all, some or particular goods or services you offer;

• Verify your goods and services to:
  • check if VAT rates and exemptions are correctly applied and identify any related risks, and/or
  • identify opportunities for use of reduced rates or exemptions;

• Develop a VAT rates matrix listing the particular rates and the goods and services on your offer to which they apply, and specifying conditions for their application;
• Obtain an official confirmation from the authorities that the given VAT rate or exemption is properly applied (whether as Binding Rate Information or a private tax ruling);
• Assist you in tax inspections or investigations, including those seeking to audit your use of reduced VAT rates or exemptions.