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VAT Exemption under the SME procedure in Poland

Effective January 1, 2025, Poland has implemented the Special SME Procedure.
Author:
Gerard Goliasz
Senior TAX Specialist

What does this mean for EU entities based outside Poland?Entities based in an EU member state other than Poland can apply for a VAT exemption in Poland.

SME – conditions

To qualify for the VAT exemption in Poland under the SME Procedure, a company must meet the following conditions:

  • The business's registered office must be located in an EU member state other than Poland.
  • The total annual value of goods supplied and/or services rendered in a given tax year, for which the place of taxation is within the EU, excluding value-added tax, including the value of sales within Poland (excluding VAT), must not exceed €100,000 in the previous or current tax year.
  • The company must meet the conditions for a subjective exemption in Poland, i.e., the value of sales excluding VAT must not exceed PLN 200,000 or the proportional amount for the period of business activity in the previous or current tax year.
  • The company does not supply goods or provide services excluded from the subjective exemption in Poland, such as certain cosmetic and toiletry preparations, computers, electrical devices, or automotive parts and accessories.

How to apply for VAT exemption under the SME procedure in Poland

To apply for the SME procedure, submit a request in the EU member state where your business is based. The tax administration of that state will contact the Polish Tax Administration. After exchanging information, if both tax administrations agree that the conditions for VAT exemption in Poland are met, the tax administration of your country will issue a unique EX identification number for use in Poland.

Registration obligations in Poland

As a rule, there is no obligation to register for VAT purposes in Poland. If you are already registered as an active VAT taxpayer in Poland, the Polish Tax Administration will automatically deregister you from the active VAT taxpayers' register or retain you with the status of a “VAT-exempt taxpayer,” if your company was required to register as an EU VAT taxpayer.

When Can You Start Benefiting from the VAT Exemption in Poland?

A company becomes a VAT-exempt taxpayer on the date the EU member state where it is based informs you of the issuance or confirmation of the unique EX identification number for use in Poland.

Can you opt out of the exemption?

Yes. Opting out will take effect as follows:

  • From the first month of the quarter following the quarter in which the notification of opting out was submitted, if submitted in the first or second month of the quarter.
  • From the second month of the quarter following the quarter in which the notification of opting out was submitted, if submitted in the last month of the quarter.

Loss of exemption

The VAT exemption will be lost if the turnover exceeds:

  • PLN 200,000 or the proportional amount for the period of business activity in the tax year.
  • € 100,000 in annual EU turnover.
    Starting from the transaction that caused one of these thresholds to be exceeded, the company will lose the VAT exemption.
  • The company performs any activities that exclude the right to exemption.

Important: Loss of the exemption is reversible, but only after one year from the end of the year in which the exemption was lost or forfeited.

SME – obligations

A VAT-exempt taxpayer under the SME procedure must:

  • Issue invoices upon the buyer's request.
  • Maintain sales records to monitor when the subjective exemption threshold is exceeded in Poland.
  • Submit summary reports if performing transactions as an EU VAT taxpayer.
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