The Act on VAT tax defines the requirements for VAT registration. Is every entrepreneur obliged to disclose in the register? What is the registration process like? How to maintain tax records? We provide answers to these questions in the article below.
Table of Contents
- Mandatory VAT registration
- Optional VAT registration
- Statutory exemptions from VAT registration
- VAT registration process
- Maintaining VAT records
Mandatory VAT registration
VAT registration is obligatory for: natural persons, legal persons, and organizational units without legal personality independently conducting business activities as producers, traders, and service providers, including farmers and entities obtaining natural resources.
The obligation to register as a VAT taxpayer arises when:
- The value of sales in the previous year exceeded 200 000 PLN (subjective criterion).
- The economic activity involves the sale of goods or services indicated in the Act (objective criterion).
If you start your business mid-year, you should calculate the sales threshold based on your business’s duration. If the sales value exceeds 200 000 PLN, the exemption is no longer applicable. It becomes invalid from the moment of the activity which results in exceeding the statutory limit.
Regardless of the above conditions, certain activities require mandatory VAT registration. This results from provisions of the VAT Act. Activities subject to mandatory VAT registration include:
- supply of goods subject to excise duty (with statutory exceptions),
- legal services,
- business activity not registered in Poland.
Optional VAT registration
Optional VAT registration may take place when an entrepreneur:
- starts a business in the current tax year and knows he won’t exceed 200 000 PLN in net sales. The sales are calculated proportionally to the number of months in which the business operates.
- showed sales revenues below 200 000 PLN net in the previous tax year,
- conducts activities exempt from VAT (Art. 43, VAT Act),
- does not have a registered office, permanent place of business, permanent place of residence or usual place of residence in Poland and provides in Poland only services such as transportation or telecommunication to non-taxable persons in Poland.
Statutory exemptions from VAT registration
The VAT Act includes a catalogue of entities exempt from the obligation to register. This involves:
- Exemption based on subjective criteria. They are related to the type of conducted activity. If an entrepreneur exclusively performs activities listed in Art. 43, they are exempt, regardless of their revenue. Examples include medical services and care for disabled individuals.
- Exemption based on objective criteria. It focuses on not exceeding the 200 000 PLN sales limit. It also concerns those who start a business during the year and are planning the sales limit.
Being exempt from VAT means that the entrepreneur:
- Is not obliged to file VAT settlement declarations, e.g., JPK V7M.
- Does not settle tax due on sales in the Tax Office.
- Does not have the right to deduction (return) of input tax.
VAT registration process
VAT registration can be initiated by:
- a personal visit at the Tax Office,
- by correspondence via Polish post,
- Through the Biznes.gov.pl portal or the Tax Portal.
Entrepreneurs subject to mandatory VAT registration should choose the “active VAT taxpayer” option on the VAT-R form. Entrepreneurs exempt from VAT do not have to submit this form. However, if they choose to, they select the “VAT exemption” option. The registration application is free. It is possible to request a registration confirmation certificate for a fee of 170 PLN.
Applications should be submitted:
- Before the first sale of VAT-taxable goods or services.
- Before losing the right to be exempt from VAT registration.
- Before the beginning of the month in which the entrepreneur intends to resign from the personal exemption or exemption to which he is entitled as a flat-rate farmer.
After submitting the application, the Tax Office will verify it. Registration will be granted on the day of submission if there are no deficiencies. Registration may be refused by the Tax Office, for example if:
- False information is provided.
- The company doesn’t exist.
- The tax office cannot contact the entrepreneur.
- The court has banned the entrepreneur from conducting economic activity.
In case of a refusal, the entrepreneur has the right to:
- Request the Head of the Tax Office to rectify the violation,
- File a complaint to the administrative court.
You should notify about changes to the data provided in the application within 7 days. This concerns modifications such as switching to VAT settlement on a quarterly basis. You can do it on the VAT-R form, specifying that it is about updating data. This doesn’t apply to changes in personal names or company names. They are processed using the NIP-2 form.
Maintaining VAT records
Active VAT taxpayers are obligated to maintain electronic VAT records. These records are used to prepare accurate tax declarations, summary reports, and the Unified Control File (JPK_VAT). They include records of:
- Sales – used to calculate the tax due for a given settlement period.
- Purchases – used to determine the deductible tax.
VAT records do not cover expenses for tax-exempt, non-taxable, or non-deductible purchases. They do not affect either the amount of tax liability or the correctness of VAT settlement. These are recorded in other books. The VAT record must include details such as:
- subject of taxation,
- tax base,
- the amount of tax due,
- the value of tax corrections due,
- the value of deductible tax reducing the amount of tax due,
- corrections to deductible tax.
There is also a simplified model of record. It applies to entrepreneurs who:
- do not maintain VAT records due to a subjective exemption. In this case, there is no obligation to maintain VAT records for exclusively VAT-exempt activities.
- maintain a simplified record due to the 200 000 PLN limit.
The simplified record has no statutory form. It should be kept daily, but no later than the day before the sale. It helps monitor compliance with the 200 000 PLN sales limit. It should include information like the date of sale and the sales value.
VAT registration is a legally regulated procedure for entrepreneurs conducting business in Poland. It can be mandatory or optional and is associated with certain obligations. Its purpose is to maintain the stability and security of economic transactions.
If you are interested in the above article and want to know more about the subject, we invite you to cooperate with us. Experts from our legal office in Łódź are eager to support you. Contact us today and let us help you. If you simply need help in establishing a family foundation, send us a message.