In this article we will focus on the obligations and difficulties related to the registration for value-added tax (VAT).
What is necessary to know about the obligation to register for VAT in Poland?
Registration is mandatory for:
- natural persons
- legal persons
- organizational units with no legal personality, which independently conduct business activity, regardless of the purpose or result of such activity.
Business activity for VAT purposes is any activity conducted by producers, traders, or service providers (including natural resource extractors), farmers, and freelancers.
Economic activity specifically includes activities involving the use of goods or intangible assets on a continuous basis for gainful purposes and activities performed in the territory of Poland subject to value-added tax (VAT).
Companies intending to make intra-Community purchases and delivery of goods or import or provision of services for which the taxpayer is a service recipient established in another member state, are also subject to registration.
Even if a given entity is not an active VAT payer, they are obliged to register for VAT-EU, provided that the value of intra-Community purchases exceeded PLN 50,000 in the given or previous tax year.
However, the obligation to register as a VAT-EU taxpayer does not apply to the provision of services to individuals from other EU countries who do not conduct business.
Activities subject to VAT include:
- paid supply of goods and paid provision of services within the territory of the country
- the export of goods
- import of goods on national territory
- intra-Community acquisition of goods for consideration within the territory of the country
- intra-Community supply of goods.
In practice, the obligation of taxation as for most of these activities, in strictly defined cases, may be shifted onto the buyer under the so-called reverse charge (RCM). Then the seller is not obliged to undergo registration given that activities conducted in Poland are only those to which RCM is applicable.
However, this is not always possible, e.g., when transactions subject to VAT are carried out between two taxpayers with their registered office or permanent place of business outside of Poland, or when intra-Community acquisition of goods takes place in Poland.
Most often, foreign entities are required to register for VAT purposes when they engage in cross-border transactions to or from Poland, such as intra-Community supply of goods, export of goods or intra-Community acquisition of goods.
Who is exempt from the registration for VAT purposes?
In simple terms, taxpayers are exempt from the obligation to register for VAT purposes when performing activities in the territory of Poland related to the handling of a very wide range of air and sea operations in passenger and cargo traffic.
However, if a given entity performs activities in Poland that are exempt from VAT, they are not obliged to register for VAT.
At this point, it is worth noting that an entity becomes a VAT payer due to factual circumstances, i.e., the performance of activities which are taxable in Poland. Registration is only a formality. If despite the obligation an entity fails to register, they are not exempt from the obligation to pay tax plus interest, but they also become vulnerable to criminal fiscal liability. The VAT registration application should be submitted to the proper head of the tax office before performing the first VAT-taxable activity. Simply put, this will usually be the supply of goods or services subject to taxation in Poland.
Similarly, in the case of intra-Community transactions, the declaration must be filed before carrying out the first such transaction.