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Poland cuts VAT on natural gas as prices surge

Poland is cutting VAT on natural gas to help address sharply rising energy prices. Poland’s government is cutting VAT on gas from 23% to 8%. 

The government is also providing direct cash relief to households. The allowance will be means tested, and determined according to household income. 

Inflationary pressure from rising fuel costs has affected households throughout Europe. Poland has felt the squeeze particularly hard.  

Petrol taxes lowered

Polish authorities are also lowering taxes on petrol for a limited time period. Petrol taxes will be lowered to the minimum level permitted by EU regulations.  

The government says it is also lowering duty on electricity.

Energy costs & VAT policy across Europe 

Lawmakers are looking to implement innovative policies to help households as supply chain issues and rising energy costs bite. Increasingly, governments are turning to VAT policy to help mitigate rising costs.

Consequently, across Europe, governments are reducing VAT or postponing increases to address inflationary pressure.  

In several instances, governments are directly cutting VAT on electricity. Spain, for example, is temporarily reducing VAT on electricity to 10% from 21%.

VAT policy driving consumer choice

When it comes to energy efficiency, VAT policy can also be a powerful influencer of consumer decisions. In Norway, almost 80% of total car sales in September 2021 were electric vehicles.

The overwhelming preference for electric cars is the result of incentives, including VAT exemptions, as well as strong disincentives to buy energy inefficient vehicles. 

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