Settling income tax and VAT (value added tax) quarterly is becoming an increasingly popular choice among entrepreneurs in Poland. This method offers real benefits to eligible taxpayers, but not everyone can use it. VAT in particular comes with strict conditions that determine who may choose this form of settlement.
Quarterly settlement is an alternative to the standard monthly settlement and considerably simplifies tax obligations. Instead of filing returns and making payments twelve times a year, taxpayers can reduce these tasks to just four settlement periods. Small businesses especially value this solution, as it helps them manage their finances better and plan their spending.
Quarterly settlement of income tax is available to small taxpayers and to taxpayers starting a business. A small taxpayer is a person whose sales revenue in the previous year did not exceed the equivalent of EUR 2,000,000, which in 2026 amounts to PLN 8,517,000 (from 1 January 2027: PLN 8,754,000)
Choosing quarterly settlement has a significant effect on a business's liquidity. Taxpayers can keep funds in the company for longer and use them more efficiently in day-to-day operations. At the same time, there are fewer formalities related to bookkeeping and tax handling, which saves time and administrative costs.
Quarterly income tax settlement – rules and deadlines
Quarterly settlement of income tax is a privilege available to a specific group of taxpayers. Quarterly income tax advances must be paid to the bank account of the tax office (urząd skarbowy) within strictly defined deadlines. The basic payment deadline is the 20th day of the month following the quarter; if that day falls on a weekend or public holiday, the deadline moves to the next working day.
The payment calendar for quarterly income tax advances is as follows:
- Q1 – advance payment by 20 April
- Q2 – advance payment by 20 July
- Q3 – advance payment by 20 October
- Q4 – advance payment by 20 January of the following year
The right to settle income tax quarterly is available to taxpayers specified in Article 44 section 3g of the PIT (personal income tax) Act. Under this provision, quarterly settlement is available to small taxpayers and to taxpayers starting a business
The definition of a small taxpayer for income tax purposes is precise and based on a revenue criterion. A small taxpayer is a person whose sales revenue in the previous tax year, together with output VAT in the case of an active VAT payer, did not exceed EUR 2,000,000 converted into zloty. In 2026 this limit is PLN 8,517,000, and from 1 January 2027 it is PLN 8,754,000.
An important feature of quarterly income tax settlement is that there is no obligation to file periodic returns. The taxpayer only has to calculate and pay the advances for each quarter. All these advances are then reported in the annual tax return, which is the final settlement of income tax for the tax year.
No periodic returns are filed for income tax advances settled quarterly. The taxpayer is only required to calculate and pay the advances for each period and then report them in the annual return
Taxpayers starting a business can settle income tax quarterly regardless of the amount of their revenue – in the year they start, provided that in that year and in the two preceding years they did not run a business on their own, as a partner in a partnership (a company without legal personality) or through a spouse with whom they have joint marital property (Article 22k section 11 of the PIT Act). This is especially beneficial for people who are just starting out and need more flexibility in managing their finances. Being able to keep funds for longer makes it easier to plan investments and grow the business.
Quarterly VAT settlement – conditions and restrictions
Quarterly VAT settlement is much more restrictive than quarterly income tax settlement. Taxpayers settling VAT quarterly file the JPK_V7K file (the quarterly version of JPK_V7 – a VAT return with records, SAF-T file): the records part for each month by the 25th of the following month, and the return for the quarter together with the records for the last month of the quarter – and they pay VAT by the 25th day of the month following the quarter. As with income tax, if the deadline falls on a public holiday or weekend, it moves to the next working day.
VAT payment schedule for each quarter of the year (JPK_V7K with the return for the quarter):
- Q1 – filing JPK_V7K and payment by 25 April
- Q2 – filing JPK_V7K and payment by 25 July
- Q3 – filing JPK_V7K and payment by 25 October
- Q4 – filing JPK_V7K and payment by 25 January
Quarterly VAT settlement applies only to small taxpayers within the meaning of Article 2 point 25 of the VAT Act, and only if at least 12 months have passed since VAT registration. A small VAT taxpayer is a person whose sales value in the previous tax year did not exceed the equivalent of EUR 2,000,000
The definition of a small taxpayer in VAT is similar to the one in income tax. A small VAT taxpayer is a person whose sales value including VAT did not exceed, in the previous tax year, the zloty amount corresponding to EUR 2,000,000. In 2026 this limit is PLN 8,517,000, and from 1 January 2027 it is PLN 8,754,000. The PIT limits and how they are converted are described in our article on the small taxpayer in PIT.
A key restriction is the requirement that at least 12 months have passed since VAT registration (Article 99 section 3a point 1 of the VAT Act). Quarterly VAT settlement is therefore not available, among others, to:
- Taxpayers starting a business who decide to register for VAT when they set it up
- Taxpayers who have so far been VAT-exempt and have decided to register for VAT
- Taxpayers who have exceeded the sales limit defining small VAT taxpayers
Taxpayers starting a business can become eligible for quarterly VAT settlement only after 12 months from VAT registration and after filing the VAT-R form (VAT registration application) again. During the first year of business they must settle VAT monthly
Further restrictions follow from Article 99 section 3a point 2 of the VAT Act. Quarterly VAT settlement is not available to taxpayers who, in a given quarter or in the four preceding quarters, supplied goods listed in Annex 15 to the Act, unless the total value of those supplies did not exceed PLN 50,000 in any month of those periods.
Another restriction is the obligation to accept card payments (Article 99 section 3a point 4 of the VAT Act in conjunction with Article 19a of the Entrepreneurs' Law). Taxpayers found, in a given quarter, not to have provided the option of paying with a payment instrument at every place where the business is actually carried out cannot settle VAT quarterly.
Benefits of quarterly tax settlement
Quarterly tax settlement brings taxpayers a number of tangible benefits that directly affect how the business operates. The most important advantage is a significant reduction in tax formalities. Instead of 12 transfers and returns a year, the taxpayer makes only 4 (in VAT, the JPK_V7K records are still sent every month), which saves time and administrative costs. For clients who settle quarterly, we prepare both the tax advance calculations and the monthly JPK_V7K files as part of our accounting services.
Financial benefits of quarterly tax settlement:
- Better business liquidity
- More freedom in planning business spending
- The option of using temporarily retained funds for current needs
- Lower bank charges related to tax transfers
- Simpler bookkeeping and settlement processes
Quarterly tax settlement has a positive effect on a company's liquidity, because it lets the business keep funds for longer. The temporarily retained amount can be used for current business expenses, investments or paying current liabilities
The benefit related to deducting VAT from purchase invoices is particularly important. Taxpayers settling VAT quarterly have more time to deduct VAT from purchase invoices. As a rule, VAT is deducted in the period in which the tax obligation arose for the seller, but not earlier than in the period in which the invoice was received, or – with quarterly settlement – in one of the two following quarters (with monthly settlement: in one of the three following months) – Article 86 sections 10, 10b and 11 of the VAT Act.
With quarterly settlement, this means the taxpayer has much more time to collect and settle all purchase invoices. This is especially important for companies that receive large numbers of invoices or operate in industries where documents arrive irregularly.
A construction company whose sales revenue (including VAT) amounted to PLN 8,000,000 in 2025 can use quarterly tax settlement in 2026. As a result, instead of filing 12 VAT returns and making 12 income tax advance transfers, the owner reduces these tasks to 4 times a year (the JPK_V7K records are still sent every month), which simplifies the company's tax handling.
Quarterly settlement also makes it easier to match payment deadlines to the business cycle. Companies with seasonal sales can manage their tax liabilities better by aligning them with periods of higher cash inflows.
How to switch to quarterly income tax settlement
Switching from monthly to quarterly income tax settlement is possible, but subject to certain time and procedural restrictions. The most important rule is that the frequency of income tax settlement can be changed to quarterly only once a year. The taxpayer can make this change only at the beginning of a new tax year, which is the calendar year.
Procedure for switching to quarterly income tax settlement:
- Checking eligibility for quarterly settlement
- Deciding on the change before the new tax year begins
- Paying advances quarterly from January
- Reporting the choice in the annual return for the year in which the change was applied
- Continuing quarterly settlement in subsequent years or returning to monthly settlement
The change in the frequency of income tax settlement is reported in the return for the year in which the change was applied. Under Article 44 section 3i of the PIT Act, taxpayers report their chosen method of paying advances in the return filed for the tax year
Importantly, the decision to switch to quarterly income tax settlement does not require prior notification of the tax office. The taxpayer can start settling quarterly from January of a given year and then report this in the annual return filed for that tax year.
A taxpayer who has opted for quarterly income tax settlement may return to monthly settlement in the following tax year. As with the switch to quarterly settlement, returning to monthly settlement is possible only at the beginning of a new tax year. The information in the return is given only for the year in which advances were paid quarterly (Article 44 section 3i of the PIT Act), so it is not marked in the return for a year settled monthly.
How to switch to quarterly VAT settlement
Switching from monthly to quarterly VAT settlement is more flexible than for income tax. Taxpayers who meet the conditions for quarterly VAT settlement can switch to quarterly settlement from the start of any quarter. However, returning to monthly settlement is possible only after 4 quarters settled quarterly (Article 99 section 4 of the VAT Act).
Conditions for switching to quarterly VAT settlement:
- Small VAT taxpayer status (turnover below the equivalent of EUR 2,000,000)
- At least 12 months since VAT registration
- No supplies of goods from Annex 15 above PLN 50,000 a month
- The option of paying by card at business locations
- Written notification of the head of the tax office (VAT-R update) within the deadline
VAT settlement can be changed from monthly to quarterly from the start of any quarter by filing an update of the VAT-R form (Article 99 section 3 of the VAT Act). The change must be reported by the 25th day of the second month of the quarter from which the business wants to settle quarterly
The procedure for switching to quarterly VAT settlement requires filing an update of the VAT-R form on time. If a taxpayer wants to settle VAT quarterly from Q1 2027, they should file the VAT-R update no later than 25 February 2027.
Examples of deadlines for reporting a switch to quarterly VAT settlement:
| Starting quarter | Deadline for reporting the change | Notes |
|---|---|---|
| Q1 | By 25 February | Change from January |
| Q2 | By 25 May | Change from April |
| Q3 | By 25 August | Change from July |
| Q4 | By 25 November | Change from October |
Flexibility in changing VAT settlement periods lets taxpayers adjust their tax obligations to the current financial and operational situation of the business. For example, a taxpayer may switch to quarterly settlement during a period of lower business activity, but returning to monthly settlement is possible only after 4 quarters settled quarterly.
Practical aspects of quarterly tax settlement
Quarterly tax settlement requires proper organisational and accounting preparation. Taxpayers must adapt their record-keeping and control systems to longer settlement periods. It is particularly important to collect accounting documents systematically and describe them properly throughout the quarter.
Key elements of organising quarterly tax settlement:
- Systematic collection and description of source documents
- Regular checks of the accuracy of the accounting records
- Monitoring when purchase invoices are received for VAT purposes
- Tracking the revenue limits that allow quarterly settlement
- Preparing a schedule of quarterly tax payments
Taxpayers settling quarterly must take particular care to receive purchase invoices on time, because VAT from these invoices can be deducted in the period in which the tax obligation arose for the seller or in one of the two following settlement periods
An important practical aspect is monitoring turnover to keep small taxpayer status. Exceeding the EUR 2,000,000 limit during the tax year means, for income tax, losing the right to quarterly advances from the following year and, for VAT, having to settle monthly already from the quarter in which the limit was exceeded (Article 99 section 5 of the VAT Act). Taxpayers should therefore check their revenue regularly and plan any changes in how they settle.
For VAT, an additional challenge is complying with the restrictions on supplies of goods listed in Annex 15. Taxpayers operating in industries covered by this annex must check the value of such supplies every month so as not to exceed the PLN 50,000 limit.
An IT company providing software development services decided to switch to quarterly tax settlement after its second year in business. This lets the owner plan cash flows better, and the money previously set aside for monthly tax advances can be used to develop the company and buy new computer equipment.
The practical benefits of quarterly settlement are particularly visible in companies with irregular cash flows. Businesses carrying out large projects or operating in seasonal industries can better match tax payment deadlines to their operating cycle.
Monitoring and keeping eligibility for quarterly settlement
Keeping the right to quarterly tax settlement requires continuous monitoring of several key indicators. Taxpayers must regularly check whether they still meet the conditions for this form of settlement, because eligibility can be lost at different points in the tax year.
Key indicators to monitor:
- Sales revenue in the current year
- The value of supplies of goods from Annex 15 to the VAT Act
- The option of paying by card at all business locations
- Timely filing of returns and payment of taxes
- Changes in the nature of the business
Taxpayers using quarterly settlement must monitor their turnover on an ongoing basis so as not to exceed the EUR 2,000,000 limit that gives small taxpayer status. Exceeding this limit means losing the right to quarterly income tax advances from the following tax year and, for VAT, monthly settlement from the first month of the quarter in which the limit was exceeded (if it was exceeded in the third month of the quarter – from the following quarter)
Particular attention should be paid to converting the euro limit into zloty. The conversion is made at the average euro exchange rate published by Narodowy Bank Polski (the National Bank of Poland) for the first working day of October of the previous tax year, rounded to PLN 1,000. This means the zloty limit may change depending on the exchange rate.
If eligibility for quarterly settlement is lost, the taxpayer must return to monthly settlement. For income tax, this change takes effect from the following tax year, whereas for VAT a change during the tax year is necessary – from the settlement for the first month of the quarter in which the limit was exceeded (Article 99 section 5 of the VAT Act).
Monitoring eligibility for quarterly VAT settlement is particularly complicated because of the many restrictions. Taxpayers must check not only their turnover but also the type of business they run, the timeliness of payments and whether they provide the option of cashless payment.
