VAT refund for foreign entities

According to Polish VAT regulations, tax refund is given to an entity from EU Member States or from third countries provided that this entity:
1. is a registered VAT taxable person in the EU Member State of the establishment or a VAT taxable person or of a similar nature in the country of the establishment;
2. does not carry out, in the period for which it claims the tax refund, any supply of goods or services for consideration, exportation of goods or intra-Community supply of goods with some exceptions in Poland;
3. does not have its establishment or fixed establishment within the territory of Poland in the period for which it claims the tax refund.
The tax refund is made respect of input VAT charged upon services and goods purchased in or imported to Poland.
The refund of the tax, in relation to entities from third countries, is vested with the principle of reciprocity.
The refund period can not be longer than one calendar year, and not shorter than 3 calendar months.

Applications can refer to a shorter period of time, provided that it refers to the last months of a calendar year e.g. November and December.

The amount of VAT refund may not be lower then the amount in PLN equivalent of:
1. 400 EUR – in case the application refers to the period shorter than one tax year – but not shorter than 3 months;
2. 50 EUR – in case the application refers to the whole tax year – or a period shorter than the last 3 months of the year.

In case of entity from EU Member State the tax is refunded upon application submitted electronically via the tax administration of the Member State of its establishment. The entities from third countries submit their applications to the Head of the Second Tax Office Warszawa-Śródmieście in writing. The application should be filled in Polish.

Applications should be submitted until September 30th of the year following the tax year refered in the application. The Head of the Second Tax Office Warszawa-Środmieście issues a decision concerning the amount of tax refund within 4 months since the day an application with all necessary documents has been delivered. Tax refund is made within 10 working days from the day of issuing a VAT refund decision.

Tax rates

The VAT rates in Poland have changed since 1 January 2011. Furthermore they may change in the subsequent years depending on the ratio of public debt to gross domestic product.

The standard rate is currently 23%

Moreover, reduced rates are applicable for certain goods and services:
• 5% – inter alia for certain food products, including unprocessed food, and certain beverages (e.g. spice plants, fish, meat, dairy products, bread, confectionary, eggs, juices), books printed or published on discs or tapes,
• 8% – inter alia for certain food products and beverages not covered by other rates, new housing structures and housing construction services covered by the social housing program, passenger transport, restaurant services.
Exportation of goods, intra-Community supply of goods and international transport services are subject to 0% rate, under certain conditions.

Exemptions from taxation

According to the VAT provisions some activities are subject to exemption (under certain conditions), in particular educational service, health care and welfare services, some financial and insurance services.

Taxpayers carrying out activities exempt from VAT are not entitled to deduct upon the purchase of goods and services related to exempt activities.

Exemptions for small enterprises

  The VAT Act provides that taxpayers whose value of sales in the preceding tax year has not exceeded 200.000 PLN are exempt from VAT. A taxpayer who begins his business activities during a year is to be exempt from tax provided that the sales value does not exceed 200.000 PLN, in proportion to the period of conducting business activity in the tax year. The sales value does not include the tax amount. Taxpayers may resign from such an exemption upon written notification to the head of the tax office.

When the value of sales of goods and services exceeds the above mentioned amount the exemption expires upon exceeding this amount. The surplus of the sales above this amount is to be taxed.

Taxpayers who have lost their right to apply the tax exemption or abandoned this exemption, may again take advantage of the exemption no sooner than one year the end of the year during which this right expired or the exemption abandoned.

Tax deductions

As far as goods and services are used for the purpose of taxable activities, taxpayers are entitled to deduct input tax (with some exceptions).

Tax refund

In case the amount of deductions exceeds the amount of VAT due (for a given tax period). A taxpayer in entitled either to tax refund usually within 60 days of the VAT return submission or carry the excess VAT forward to the following tax period. On the taxpayer's request (under certain conditions) tax refund may be made within 25 days of the tax return submission.

Tax returns

Generally VAT taxpayers are obliged to submit their tax returns for monthly periods and to pay due tax no later than the 25th day of the following month. So called "small taxpayers" (whose value of sales (including tax) in the preceding tax year has not exceeded the Polish zloty equivalent of 1.200.000 EUR or in case of a brokerage enterprise, managing investment funds, operating as an agent – 45.000 EUR) who apply cash accounting scheme are obliged to submit their tax returns quarterly.

Taxpayers who do not apply cash accounting scheme may submit their tax returns quarterly (upon written notification to the head of their local tax office) provided that they make advance payments of 1/3 of tax for the first and second month of the quarter.