TAX FREE procedure

Businesses selling goods in retail stores can take advantage of the TaxFree procedure. After meeting certain conditions, stores can facilitate VAT refunds for their customers from outside the European Union who paid the tax when purchasing products. The company can also apply the 0% VAT rate on the products themselves. This solution is advantageous for the seller.
Author:
Aleksandra Kilian
TAX Specialist

Due to the changes in the regulations governing the TaxFree procedure, taxpayers intending to introduce VAT refunds for travellers into their operations, or continue making such refunds, must register in the TaxFree system on the PUESC platform by 31 December 2021.

How does it work?

The TaxFree procedure consists of the possibility of obtaining a VAT refund on goods purchased in Poland by travellers, or, on the seller’s side, the possibility of applying a 0% VAT rate under certain conditions. Individuals living outside the EU who have removed their purchased products from the EU can apply for a VAT refund on their purchases. The value of the goods entered in a single document must exceed PLN 200. The VAT can be refunded by the seller or by an entity designated by the seller.

Necessary conditions for VAT refunds

To carry out VAT refunds, certain conditions must be met:

  • The seller must be an active VAT payer recording sales using a cash register (at each point of sale).
  • The head of the tax office must be notified of commencement of TaxFree sales. From 2022 TaxFree registration in the PUESC system will replace this requirement.
  • The seller must make information available to travellers concerning the rules for VAT refunds in four languages—English, German, Polish and Russian—and label points of sale with a sign informing customers of the possibility of using the TaxFree procedure (this is a statutorily established logo, which should be modified along with the changes introduced from 2022).
  • The head of the tax office must be notified of the place where the traveller making the purchase of goods may receive the tax refund, and in the case of designation of an entity to pay out the refunds, copies of contracts in force with these entities must be submitted. From 2022, this element will be included in registration on the PUESC platform.
  • From 2022, in connection with the change in regulations, a further condition is registration in the TaxFree system on the PUESC platform.

Documents required to apply the procedure

Through 31 December 2021

As of now, to obtain a refund, the traveller must present the refund document (issued by the seller) along with a fiscal receipt containing a stamp from customs confirming that the product was removed from EU territory.

From 1 January 2022

In connection with the revised regulations, the complete set of documents will be issued and transmitted electronically from the national TaxFree system located on the PUESC platform.

Using this system, the seller will issue and store documents, record amounts of VAT refunds paid out to travellers, and also indicate the place of sale and refund of VAT.

In light of introduction of the electronic system, it will be necessary to use online cash registers. The seller will not be required to attach a physical cash register receipt to the TaxFree document, as the receipt will be electronic.

Tax advantages for the seller

When applying the TaxFree procedure, the seller can apply the 0% VAT rate for goods subject to the procedure. To apply this rate, the seller must meet several conditions:

  • Register in the TaxFree system on the PUESC platform
  • Fulfil the aforementioned conditions authorizing the seller to make refunds to travellers
  • Hold documents confirming the VAT refund obtained by the traveller, e.g. confirmation of the bank transfer
  • Hold documents confirming removal of the goods from the EU.

The seller can apply the 0% VAT rate in two instances:

  • In the VAT SAF-T file (JPK_VAT) for the given settlement period, if prior to submission of the file the seller receives documents confirmed by the customs office showing that the goods were removed from the EU, or
  • If the first condition is not met, through a tax correction in the month of receipt of the aforementioned documents, if the seller receives them within 10 months after sale of the goods. The seller will first have to tax the sale under general rules, and then, after fulfilling the condition of possession of the document, the seller will able to reduce the previously reported VAT.

Registration procedure

To commence TaxFree sales from 2022, it will be necessary to register in the PUESC system. Registration involves:

  • Establishing an account on the PUESC platform indicating TaxFree activity, or updating the information in an existing account
  • Completion of a TaxFree form, in which the seller should:
    • Indicate the sales locations and link them to online cash registers
  • Add the names of employees assigned specific authorization to handle the VAT refund procedure (optional)
    • Declare the entities with which the seller has signed a contract to carry out the refunds (if applicable).

If you have additional questions or doubts about the TaxFree procedure or registration for the procedure, we are ready to help.

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