Registering as a VAT-exempt taxpayer in Poland: procedures and requirements

Registering as a VAT-exempt taxpayer is an important part of running a business within the Polish tax system. Businesses may find themselves using the VAT exemption while at the same time having to, or wanting to, register formally in that capacity. Understanding the procedures and requirements for registering as a VAT-exempt taxpayer is key to operating correctly within the tax system.

A VAT-exempt taxpayer may, in certain circumstances, make a mandatory or voluntary registration in order to obtain the status of an active VAT taxpayer. At the same time, there are situations in which a business is obliged, or has the option, to register specifically as a VAT-exempt taxpayer. These different scenarios need a detailed explanation, so that businesses can make informed decisions about their tax status.

Legal basis of VAT taxpayer status

Under Article 15 of the Act of 11 March 2004 on tax on goods and services (the VAT Act), taxpayers are legal persons, organisational units without legal personality and natural persons who independently carry out business activity, regardless of its purpose or result. This definition covers a wide range of entities engaged in various forms of business activity.

Business activity is defined very broadly under the VAT Act and covers all activity of producers, traders or service providers, including entities extracting natural resources and farmers. The definition also extends to the activity of people in the liberal professions, as well as to the use of goods or intangible assets on a continuous basis for profit (Article 15(2) of the VAT Act).

Active VAT taxpayers must keep detailed records and file JPK_V7M (monthly) or JPK_V7K (quarterly) files (VAT return with records, SAF-T file), which must be sent electronically to the tax office (urząd skarbowy) together with any corrections. They must also pay the output VAT resulting from these returns, which involves regular settlement obligations. You can pass VAT records and JPK_V7 files over to us by choosing our bookkeeping services.

The tax system takes a flexible approach to taxpayer status, allowing a change between different forms of taxation as the circumstances of the business change. This flexibility lets businesses adapt their tax status to their current business and legal situation.

Types of VAT exemption for taxpayers

A VAT-exempt taxpayer can use two basic types of exemption (the first two items below), which differ significantly in their legal basis and conditions of use; in practice, the situations in the next two items also occur:

• Small business (subjective) VAT exemption – based on not exceeding a certain value of sales (Article 113(1) and (9) of the VAT Act)
• Objective VAT exemption – resulting from the type of goods or services sold (Article 43(1) and provisions issued under Article 82(3))
• Using both exemptions at the same time – e.g. a taxpayer using the small business exemption with part of its sales exempt objectively (as a rule, that part does not count towards the limit, Article 113(2) point 2)
• Exemption in other EU countries under the SME scheme – for taxpayers based in Poland whose turnover in the EU does not exceed EUR 100,000 (Article 113b)

The small business VAT exemption covers businesses whose sales did not exceed PLN 240,000 (from 1 January 2026; previously PLN 200,000) in either the previous or the current year. For taxpayers starting a business during the tax year, the limit is set in proportion to the number of days of activity, which ensures fair treatment of new businesses.

An important feature of the VAT system is that an active VAT taxpayer may have mixed sales, covering both VAT-taxable sales and sales exempt objectively. This happens when a taxpayer carries out varied business activity, part of which is subject to VAT and part of which is covered by the objective exemption.

Article 96(4) of the VAT Act specifies that the head of the tax office, after verifying the data given in the VAT-R registration form (the VAT registration application), registers the taxpayer as an active VAT taxpayer or, in certain cases, as a VAT-exempt taxpayer, and confirms this registration at the taxpayer's request. The verification includes checking that the conditions for the relevant tax status are met.

Registration procedures for a VAT-exempt taxpayer

Registering as a VAT-exempt taxpayer involves the following steps:

1. Analysing whether the conditions for the small business or objective exemption are met
2. Preparing documents confirming the type and scope of the business activity
3. Completing the VAT-R form with the relevant markings for the exemption
4. Filing the registration form with the competent tax office
5. Waiting for verification and confirmation of registration by the head of the tax office

A business that meets the conditions for the small business or objective VAT exemption and has not previously registered as an active VAT taxpayer does not have to file the VAT-R form to declare that it uses the VAT exemption – Article 96(3) of the VAT Act states that such taxpayers "may file" a registration form. It is enough to meet the conditions for one of the available VAT exemptions.

Even though registration is not compulsory, a business may voluntarily file the VAT-R registration form as a VAT-exempt taxpayer. Such voluntary registration can be useful for various reasons, including keeping clear tax records and avoiding possible interpretation problems in the future.

Under Article 96b(1) of the VAT Act, the Head of the National Revenue Administration (KAS (National Revenue Administration)) keeps an electronic list of VAT entities, known as the VAT taxpayer white list. The list covers entities that the head of the tax office has not registered or has removed from the register as VAT taxpayers, and entities registered as VAT taxpayers, including those whose registration has been restored.

There are, however, special circumstances in which a business must file the VAT-R form even if it wants to use the objective or small business VAT exemption. These situations require mandatory registration despite the use of the exemption.

Registration for EU transactions for exempt taxpayers

A VAT-exempt taxpayer that intends to expand its business to include transactions with customers from the European Union must meet certain registration requirements. This applies in particular where it plans to import services or provide services to customers from EU countries (registration as an EU VAT taxpayer (podatnik VAT UE) – Article 97(3) of the VAT Act).

The main categories of EU transactions requiring registration are:

• Import of services from customers in EU countries (services under Article 28b)
• Provision of services to VAT taxpayers from EU countries (services under Article 28b)
• Intra-Community distance sales of goods (WSTO) to consumers in EU countries above the limit – VAT-R registration before notifying VAT OSS (described below)
• Intra-Community acquisition of goods (WNT), when its value exceeds PLN 50,000 in a year or the taxpayer chooses to tax WNT (Article 97(2), Article 10(1) point 2 and (6))

In the cases involving services and WNT, the VAT-exempt taxpayer should file the VAT-R form, ticking the relevant box to report that it is starting to buy services from EU suppliers or sell services to EU customers. This registration is necessary to operate correctly within the system of intra-EU transactions.

Registering for EU transactions does not mean automatically losing the status of a VAT-exempt taxpayer. The taxpayer may continue to use the exemption for its main activity while being registered for the purposes of certain transactions with EU customers.

This registration procedure aims to ensure transparency and control over intra-EU transactions, while allowing VAT-exempt taxpayers to take part in international trade without giving up favourable tax exemptions in their domestic activity.

Example of registration for EU transactions: A VAT-exempt taxpayer providing graphic design services plans to provide services to a German company. It must file the VAT-R form, ticking the box for providing services to EU customers and confirming that it uses the small business exemption. After registration, it will have to file VAT-UE recapitulative statements (Article 100(1) point 4), but will still be exempt from VAT in its domestic activity.

Returning to the VAT exemption – conditions and procedures

An active VAT taxpayer that previously used the VAT exemption and then gave it up or lost it may, in certain circumstances, return to the status of a VAT-exempt taxpayer. This process is subject to strictly defined time and value conditions, which must be met together.

The procedure for returning to the VAT exemption involves the following stages:

1. Checking that 12 months have passed since the end of the year in which the exemption was lost
2. Checking that the PLN 240,000 limit has not been exceeded in the year of return and the previous year
3. Preparing documents confirming that the conditions are met
4. Filing an updated VAT-R form indicating the return to the exemption
5. Adjusting the record-keeping systems to the requirements of an exempt taxpayer

The first condition for returning to the VAT exemption is a time requirement – the taxpayer cannot return earlier than after 12 months, counting from the end of the year in which it lost the right to the VAT exemption or gave it up (Article 113(11) of the VAT Act). This waiting period aims to keep the tax system stable and avoid frequent changes of tax status.

If an active VAT taxpayer meets the above time and value conditions, it gains the right to return to the small business VAT exemption. To use this right effectively, it must file an updated VAT-R form (Article 96(12)) stating that it will use the small business VAT exemption.

In effect, this process means registering as a VAT-exempt taxpayer, which has certain consequences for running the business. The taxpayer then loses the right to deduct VAT on purchases, but at the same time does not have to charge VAT on its sales, as long as it stays within the exemption limits.

The procedure for returning to the VAT exemption requires careful planning and economic analysis, because a change of tax status can significantly affect the profitability of the business, especially where purchases of goods or services subject to VAT make up a large share of costs.

Registering for VAT OSS

The VAT OSS (One Stop Shop) system is a modern solution for taxpayers making intra-Community distance sales of goods (WSTO, formerly "mail-order sales") to consumers in European Union countries. Both active VAT taxpayers and VAT-exempt taxpayers can make such sales with tax charged in Poland up to an annual limit of EUR 10,000, i.e. PLN 42,000 (Article 22a of the VAT Act; the limit covers WSTO together with telecommunications, broadcasting and electronic services for consumers in the EU).

The benefits of registering for VAT OSS include:

• Being able to sell to all EU countries through one system
• Filing one return instead of registering in each EU country
• Central settlement of VAT through the Polish tax office
• Simplified documentation and reporting procedures
• Lower administrative costs of handling VAT

The limit is cumulative and covers total annual WSTO to all EU countries to which sales are made (in neither the previous nor the current year). After the limit is exceeded, sales are taxed in the consumer's country, and the taxpayer must choose between registering for VAT in the individual EU countries of destination and registering for the VAT OSS scheme.

For VAT-exempt taxpayers, there is a special procedural requirement for registering for VAT OSS. Before such a taxpayer files the registration for the VAT OSS scheme on the VIU-R form, it must first file the VAT-R registration form and indicate in it that it uses and will use the VAT exemption, if that is its intention. The head of the tax office identifies the taxpayer in the scheme using the number by which it is identified for tax purposes (Article 130b(5) of the VAT Act).

This order of steps is essential to operating correctly within the VAT OSS system. Without prior registration as a VAT-exempt taxpayer, effective registration for the VAT OSS scheme may not be possible, and tax settlements may become complicated.

The VAT OSS system greatly simplifies procedures for businesses making cross-border sales, replacing registration in many EU countries and centralising reporting obligations in one place. This solution is particularly useful for small and medium-sized businesses developing e-commerce on a European scale.

Special cases of registration for exempt taxpayers

The VAT Act provides for several special situations in which registration as a VAT-exempt taxpayer is required or possible. One of them concerns taxpayers based in Poland who are exempt from VAT under the small business or objective exemption and intend to use the small business VAT exemption in other EU countries under the SME scheme (Small and Medium Enterprises).

Special cases requiring registration include:

• Using the SME scheme in other EU countries (Article 96(3c))
• Taxpayers based in another EU country using the SME exemption in Poland – registration as a "VAT-exempt taxpayer" (podatnik VAT zwolniony) if they file a notification for registration as an EU VAT taxpayer (Article 96(4) point 2 letter b)
• Losing or giving up the exemption and starting taxable sales (Article 96(5))
• EU transactions requiring registration as an EU VAT taxpayer (Article 97(2)–(3))
• Notifying the VAT OSS scheme (VAT-R registration before the VIU-R notification)

Taxpayers that have not yet been registered as VAT-exempt taxpayers must file the VAT-R registration form before filing the notification of starting to use the small business VAT exemption under the SME scheme (Article 96(3c) of the VAT Act). This order of steps is mandatory and cannot be changed.

The head of the tax office, after verifying the data given in the VAT-R registration form, registers the taxpayer in the relevant category and, at the taxpayer's request, confirms this registration. This confirmation has significant legal importance and is the basis for using the relevant rights and exemptions.

The SME scheme is part of a wider system of facilities for small and medium-sized businesses in the European Union, allowing them to use tax exemptions in different Member States without having to go through separate registration procedures in each of those countries.

Obligations and rights of a VAT-exempt taxpayer

Although a VAT-exempt taxpayer does not charge VAT on its sales, it is still subject to certain obligations under tax law. The basic obligation is to keep sales records, which must be kept in accordance with the requirements of the VAT Act and its implementing regulations.

The basic obligations of a VAT-exempt taxpayer include:

1. Keeping sales records in accordance with the VAT Act (for each day – Article 109(1))
2. Monitoring the value of sales against the exemption limits
3. Properly documenting business transactions
4. Filing recapitulative statements for EU transactions
5. Keeping documents for the required period

The sales records of a VAT-exempt taxpayer should contain all the information needed to identify transactions and customers and to check compliance with the exemption limits. It is particularly important to monitor the value of sales against the PLN 240,000 limit (from 2026) for the small business exemption.

A VAT-exempt taxpayer has no right to deduct VAT on purchases of goods and services used in its business. This rule is fundamental for calculating business costs and setting sales prices, because VAT on purchases becomes part of the costs of the business.

Where the business is mixed, covering both VAT-exempt and taxable sales, the taxpayer must keep records that separate taxable sales from exempt sales and the input VAT related to each of them (Article 90(1), Article 109(3)). This requirement aims to ensure transparent settlements and proper checks on compliance with the conditions of the exemptions.

A VAT-exempt taxpayer keeps the right to apply for an individual tax ruling (KIS) on matters concerning its tax status and obligations under the VAT rules. Such rulings can be particularly useful for complex businesses or when planning changes to the business.

Practical aspects of operating as an exempt taxpayer

Operating as a VAT-exempt taxpayer involves certain practical aspects that may affect how the business is run and its relations with customers. One of the most important is issuing invoices and documenting business transactions.

The key practical aspects include:

• Properly marking invoices without VAT
• Informing customers about the status of an exempt taxpayer
• Calculating prices taking into account the lack of the right to deduct VAT on purchases
• Monitoring the exemption limits in real time
• Preparing for a possible change of tax status

A VAT-exempt taxpayer issues invoices without VAT, and this must be properly marked on the documents. With the objective exemption, the invoice must state the legal basis for the exemption (Article 106e(1) point 19); with the small business exemption, this is not mandatory on an invoice issued outside KSeF (National e-Invoicing System) (§ 3 point 3 of the regulation of the Minister of Finance of 29.10.2021, Journal of Laws (Dz.U.) 2021 item 1979), but in a structured invoice in KSeF the basis is given in fields P_19A–P_19C. A note on the basis of the exemption allows customers to classify the transaction correctly in their tax records.

Customers who are active VAT taxpayers cannot deduct VAT on purchases from a VAT-exempt taxpayer, which may affect price competitiveness. On the other hand, a VAT-exempt taxpayer may offer lower prices because it does not have to charge VAT, which may be a competitive advantage.

Particular attention should be paid to monitoring the value of sales against the limits of the small business exemption. Exceeding the PLN 240,000 limit in a tax year means losing the right to the exemption from the transaction with which the limit was exceeded (Article 113(5)) and having to register as an active VAT taxpayer before the day the exemption is lost (Article 96(5) point 2), which changes the tax obligations.

If the business is seasonal or its income is irregular, it is worth monitoring the value of sales on an ongoing basis so that you can prepare in good time for a possible change of tax status. Such planning may include preparing record-keeping systems suited to the requirements of an active VAT taxpayer.

Practical example: A business trading online with sales of PLN 15,000 a month (PLN 180,000 a year) uses the small business exemption. It issues invoices with the note "zwolnione z VAT na podstawie art. 113 ustawy o VAT" (exempt from VAT under Article 113 of the VAT Act). It cannot deduct 23% VAT on a purchase of goods for PLN 50,000, so its real cost is PLN 61,500. At the same time, it does not charge VAT on sales, which allows it to be competitive on price.

Inspection and verification of exempt taxpayer status

The tax authorities (through verification activities and tax inspections) and the KAS authorities (through customs and tax inspections) have the right to verify whether taxpayers use the VAT exemption correctly. Such an inspection may cover checking whether the conditions for the exemption are met, whether records are kept correctly and whether the declared status matches the actual business activity.

During an inspection, the following are subject to particular verification:

1. The value of sales against the limits of the small business exemption
2. The type of business activity in the context of objective exemptions
3. Whether sales records are kept correctly
4. Whether the invoices issued comply with legal requirements
5. Compliance with information obligations

A VAT-exempt taxpayer should keep all documents relating to its business until the tax liability becomes time-barred – as a rule, 5 years from the end of the year in which the tax payment deadline passed (Article 112 of the VAT Act, Article 86 § 1 and Article 70 § 1 of the Tax Ordinance Act (Ordynacja podatkowa)). These documents may be needed in the event of an inspection or to clarify questions of interpretation.

If there are doubts about your tax status or the interpretation of the rules, you can apply for a tax ruling from the competent authority. Such a ruling may provide legal protection in later inspections, provided you act in accordance with it (Articles 14k–14m of the Tax Ordinance Act).

The tax authorities may also carry out checks after the event, verifying settlements and tax status for past periods. That is why keeping reliable documentation and records is key to the taxpayer's legal security.

Frequently asked questions

Practical example: A trading business with turnover of PLN 180,000 a year uses the small business VAT exemption. It plans to expand into selling graphic design services to German businesses. It must file the VAT-R form, indicating that it uses the exemption and is starting to provide services to EU customers, even though it will continue to use the exemption in its domestic activity.