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Major changes to the Polish VAT system

Split Payments

It was announced this week that the Polish government are planning on enforcing split payments for industries susceptible to VAT fraud, in particular: trading fuel, scrap metal, electronics, precious metals, steel and car parts. These changes will most likely come into force in July 2019, and will concern B2B transactions.

The impact on foreign entities who currently settle by means of bank transfers which are subject to VAT in Poland will be required to open a bank account in Poland. This, however, is not completely clear how this will been forced at this point.

New Matrix of VAT Rates

There will be a new list of goods and services which are currently taxed at 8% VAT, but will be reduced to a rate of 5% based on CN codes and PKWiU 2015 (Polish classification of goods and services), with the goal of applying one tax rate for all.

This general reduction of the VAT rate is offset by an increase in the rate for other selected goods and services. We understand this aspect of the new legislation will come into effect from 1st June, 2019, with the rest of the legislation enforced by 1st January, 2020.

Effect on Most Popular Goods

– Reduction of VAT rate from 8% to 5%;

  • Tropical and citrus fruit, edible nuts, soups, broths, homogenised and dietetic foods,as well as baby products including baby food and nappies.

– Reduction of VAT rate from 23% to 5%;

  • Bread of all kinds and cookies.
  • Books of all kinds: printed, e-books, newspapers, journals and magazines.

– Reduction of VAT rate from 23% to 8%;

  • Mustard, sweet peppers and processed spices.

– Increase in VAT rate from 8% to 23%;

  • Ice used for food and refrigeration purposes.
  • Lobsters, octopus, crustaceans and aquatic invertebrates, including their related products such as caviar and dishes served in restaurants.

– Increase in VAT rate from 5% to 23%;

  • Fruit and vegetable based drinks.

Binding rates information (WIS) will also be introduced and will be instrumental in providing taxpayers with the knowledge to establish the correct VAT rate.

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