The provisions on the place of taxation of VAT are based on uniform rules in the EU. The provisions of Council Directive 2006/112 / EC on the common system of value added tax (VAT Directive) provide for clear principles on the country in which the specified service is subject to VAT. The Polish VAT regulations are in line with EU-VAT law. The foreign companies from EU that make purchases in Poland or carry out deliveries in Poland issue or receive typically invoices without VAT in the context of intra-Community supply or intra-Community acquisition. However, there is sometimes a requirement for a VAT registration in Poland.In the following, most cases are discussed in which a foreign firm has to apply for a Polish VAT number.
As a rule, the obligation to register VAT in Poland arises when a foreign company has to declare a Polish VAT (Polish podatek od wartości dodanej or podatek VAT ). These are the situations in which the VAT liability (tax liability) is not transferred to service / goods recipient under the reverse charge procedure.
Construction works in Poland – no VAT registration
The construction works are to be regarded as services connected with immovable property. As a general rule, the services that are performed in connection with an immovable property are subject to VAT in that country where the immovable property is located. The Polish regulations (Article 28e of the Polish VAT Act) are in line with UE-Directive.
Decisive here is the location of the plot on which the construction work is carried out. It does not matter for whom (VAT-liable person, private person) the services are provided or where the recipient of the service is located (in Poland or other EU state). The determination of the VAT place of taxation is independent of whether the parties are registered as VAT payers or have a European VAT registration number (USt-IdNr. or VAT-UE).The place of taxation for the services connected with a immovable property is always in the country where the property is located.
If a foreign entrepreneur carries out the construction work in Poland for another Polish company, Poland is considered as the place of taxation . These works are subject to Polish VAT and should be declared in Poland. However, the foreign entrepreneur may carry out construction work in Poland as cross-border service and transfer the tax liability to the recipient (Polish taxpayer). It is so called reverse charge. In this case, there is no obligation for the entrepreneur from other EU state to register for VAT purposes in Poland because the foreign company is not obliged to declare and pay the Polish VAT (the duty is transferred to the recipient of the service).
The German company A from Berlin performs the construction works for a Polish company from Poznań. The construction works refer to a property in Poland. The German company should issue the invoice without Polish or German VAT. The invoice should indicate the VAT identification number of the supplier and the beneficiary. This requires an indication of reversal of tax liability. The following wording or its translation should be included in the invoice: „the tax liability of the recipient of the service” (Polish: „odwrotne obciążenie” or the EU-wide recognized „reverse charge”).
Construction work in Poland – VAT registration requirement
A duty for a foreign contractor to obtain VAT number in Poland arises when the tax liability is not transferred to a Polish beneficiary. Registration for VAT in Poland is therefore required in the following situations:
- Construction work is carried out in Poland for a private person who is not a taxable person
- Construction works are carried out in Poland with the use of subcontractors
If the works are carried out for a private individual, the reverse charge procedure must not be used. The private person cannot declare VAT (not a taxpayer), so the tax liability cannot be transferred to them. It must thus an invoice with the Polish VAT ( podatek VAT ) with the tax rate of 8% (housing) or 23% be issued and then the output VAT has to be paid to tax office.In order to fulfil this obligation, the VAT registration in Poland is necessary.
A German construction company C from Munich is modernizing an apartment for Adam Kowalski in Szczecin. C has to issue an invoice with Polish VAT 8% and register in Poland for VAT purposes.
If the construction works are carried out by a foreign entrepreneur with the use of subcontractors, the VAT registration in Poland is also obligatory. It is irrelevant which country the subcontractor comes from (Poland, Germany, other EU country, third country). The obligation to register VAT is due to the fact that the German company will receive a invoice from subcontractors indicating that the tax liability has been reversed. This means that the foreign entrepreneur is obliged to declare and pay the VAT in Poland. He cannot transfer this obligation to the recipient. If, from the point of view of Polish tax law, the foreign entrepreneur is a VAT payer, he must register for VAT in Poland in order to submit the VAT declaration (Polish deklaracja VAT). It should be noted that in Poland a reversal of the tax liability is also applicable to domestic construction services .
The German entrepreneur A from Berlin performs the construction works for a Polish company from Poznań. The construction works are connected with immovable property in Poland. Basically (as in example 1) the invoice can be issued without VAT. However, A has used a Polish (C) and a German (D) subcontractor. C and D issue an invoice for works carried out under the reverse charge procedure. A has an obligation to declare VAT in Poland. A has to register for VAT in Poland.
Sale of goods from the warehouse in Poland
Registration is also required if a foreign entrepreneur sells the goods from the warehouse in Poland. This applies both to the sale to private persons (B2C) and to other firms (B2B).It does not matter if the sale is for a domestic or foreign person.A registration requirement arises in both cases.
From the point of view of the foreign entrepreneur, who transports goods to a warehouse located in Poland, there is a so-called „Intra-Community movement„. The goods are shipped from one country to another (for example from Germany to Poland). It is of no importance that the goods are not sold at this stage, but only sent from one warehouse to another by the same person. The intra-company movement to Poland leads to the VAT registration obligation in Poland. The sale of goods from the Polish warehouse is to be regarded as domestic sale (PL). The invoice should be issued with Polish VAT, indicating the Polish tax number (NIP) .The seller is therefore subject to registration for VAT in Poland.
In particular, Amazon business partners who ship their goods to Amazon’s logistics centers in Poland may be dealing with this situation. Amazon offers a Fulfillment by Amazon (FBA) service, after which the goods are stored by Amazon and if they are purchased, Amazon organizes the shipping. The seller remains the owner of the goods. The goods are often stored in logistics centers in Poland and from this point the delivery to end customers takes place.In this case, registration for sales tax in Poland is mandatory before the first sale.
The Amazon business partners can register for VAT in Poland and immediately waive the delivery threshold in regard to distant selling. The waiver shall be valid after 30 days from the date of submission of the declaration to the competent authority. This would allow the foreign entrepreneur, whose goods are sent from the warehouse in Poland to other country for private individuals, to issue an invoice with local (delivery place) VAT. Sales tax in Poland (23%) is higher than in (for example) Germany (19%).
If a foreign entrepreneur carries out deliveries from its country to Poland to private persons in the context of the distant selling, a local VAT (the seller’s state of origin) can be shown in the invoice up to a certain threshold. These are exclusively B2C transactions.
For Poland, the delivery threshold is PLN 160,000 (EUR 37,300) per annum. When calculating the delivery threshold, VAT is not taken into account (only net value of the goods).If the supplying entrepreneur exceeds the delivery threshold in Poland, he must register for VAT in Poland, charge Polish VAT and pay it there.
The delivery thresholds can be waived in the state of origin in relation to the specific country (eg Poland).
Sales of goods in Poland – VAT in Poland
In certain cases, the sale of goods in Poland is considered to be a Polish transaction in terms of VAT. The seller is then subject to registration in Poland. This applies, for example, to the case where the goods are first purchased in Poland and then sold in Poland, with the goods not leaving the territory of Poland. In such a sale, the Polish sales tax should be reported and the seller is required to pay sales tax in Poland. However is it possible on certain conditions to issue a invoice in reverse charge procedure.
The same applies to the sale during fairs or exhibitions in Poland.If a foreign entrepreneur sells goods during fairs in Poland, he must often register for VAT purposes in Poland.
Passenger transport through the territory of Poland
Foreign bus companies which occasionally carry out international passenger transport services in Poland with buses and coaches registered outside Poland are obliged to declare the services rendered in Poland for VAT purposes.There is a registration requirement for VAT purposes.
The tax rate is currently 8% and will be charged for each kilometre driven in Poland. There are two possible taxation procedures :
- according to general rules
- according to simplified rules.
The simplified taxation procedure is that the registration of the bus operators takes place online and requires less information (name, seat, tax number). The VAT declaration can also be submitted online. A major disadvantage: in the simplified taxation procedure no input tax may be deducted or no input tax refund may be requested.
If the foreign bus company often makes purchases in Poland (fuel, toll), it is advisable to choose the taxation procedure according to general rules and to claim input tax deduction.
Even before undertaking the first transaction, which may be subject to VAT in Poland, it is advisable to carry out a tax analysis on whether the registration requirement in Poland will arise and what the consequences may be. The late registration can lead to negative consequences for a foreign entrepreneur.It would therefore be useful to clarify with a specialist whether a registration obligation in Poland will arise.
If you need further information on VAT registration in Poland and tax assistance, please contact JLT Legal & Tax at any time.Our more than 10 years of experience in the support of international clients guarantees high quality and efficient legal and tax consulting in Poland.
radca prawny i doradca podatkowy
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JLT Jadżyn Legal & Tax
Poznań / Posen