Value added tax (VAT) is one of the most important elements of the Polish tax system, and accounting for it correctly requires a thorough knowledge of the applicable rates. Entrepreneurs who run a business and are registered as active VAT payers must keep up with changes in the rules that may affect their tax liabilities. In 2026, the rates of 23%, 8%, 5% and 0% apply, and the most recent significant changes to their scope came into force on 1 April 2025 (Act of 24 January 2025, Journal of Laws (Dz.U.) 2025 item 222) and affect various industries and types of business.
Knowing the current tax rates is key not only to issuing invoices correctly, but also to the financial planning of a business. Applying the wrong VAT rate can cause problems during a tax inspection or customs and fiscal inspection, and can affect the competitiveness of your products or services. That is why every entrepreneur should keep their knowledge in this area up to date.
The standard VAT rate in Poland is 23 percent and applies to most goods and services. The 23 and 8 percent rates are temporarily increased rates (Article 146ef of the VAT Act) – under the Act they are 22 and 7 percent (Article 41(1) and (2)); the period in which they apply is linked to the level of defence spending, and no end to it had been announced by 8 November 2026. The VAT Act also provides reduced rates of 8 percent, 5 percent and 0 percent for certain categories of products and services. In addition, some transactions may benefit from subject-matter exemptions
The Polish VAT rate system has been designed to reflect the social function of certain goods and services. Basic necessities, such as food, are subject to preferential rates, while luxury goods are taxed at the standard rate. This structure is meant to reduce the tax burden on lower-income households.
The role of statistical classifications in determining VAT rates
Determining the correct VAT rate requires not only knowledge of tax law, but also the ability to use statistical classifications. The Combined Nomenclature, known as CN codes, plays a fundamental role in assigning a product to the correct tax rate (for services, PKWiU – the Polish Classification of Products and Services – is used). This system ensures a uniform approach to product classification throughout the European Union.
Determining the correct VAT rate starts with identifying precisely the nature of the goods sold or services provided. Next, you need to find the right CN code that accurately describes the product. Only on the basis of this code can you establish which VAT rate should be applied under the VAT Act.
Entrepreneurs who are unsure about the correct VAT rate can apply for a Binding Rate Information (WIS, Wiążąca Informacja Stawkowa). WIS is issued by the Director of the National Tax Information (KIS) and binds the tax authorities towards the applicant (Article 42c of the VAT Act), which protects the applicant during a tax inspection. There is no fee for the application – you pay only for tests or analyses, if they are needed (Article 42e). WIS is issued for 5 years (Article 42ha)
Binding Rate Information is an effective legal protection tool for entrepreneurs. To obtain it, you file an application via the e-Tax Office (e-Urząd Skarbowy), in which you must describe the goods or service in detail (Article 42b(1a) and (2)). The authority must issue the WIS without undue delay, and no later than three months from the date the application is received (Article 42g(1)).
Using WIS is particularly recommended when launching new products, starting a business in a new industry or where tax rules leave room for interpretation. This allows the entrepreneur to operate with greater certainty that the VAT rates applied are correct.
Basic VAT rates applicable in 2026
The Polish VAT rate system is based on four basic levels of taxation, each with its own detailed application. This structure results from the implementation of EU law and the specific features of the Polish economy. Each rate is assigned to specific categories of goods and services, as set out in the relevant annexes to the VAT Act.
The standard rate of 23 percent is the general rule and applies to all goods and services not expressly listed in the rules as subject to other rates. It covers, among others, most professional services, electronics, clothing, furniture and many other everyday products.
- Check the nature of the goods or services sold
- Identify the correct CN code (for services – PKWiU) in the statistical classification
- Check whether the goods are listed in the annexes to the VAT Act
- Determine the correct rate on the basis of the rules
- Apply the rate on the VAT invoice
The 8 percent rate applies to selected goods and services listed in Annex 3 to the VAT Act. It covers, among others, garden soil and newspapers and periodicals (except regional and local ones, which are taxed at 5 percent), and, under Article 41(12), also construction services under the social housing programme. This rate is preferential and supports certain sectors of the economy
The preferential 5 percent rate applies mainly to food products listed in Annex 10 to the VAT Act. It covers most foodstuffs, which is meant to reduce the tax burden on households. In addition, this rate applies, among others, to printed books, dummies for babies and children, child car seats, hygiene products and media such as discs, tapes and solid-state non-volatile storage devices – only with publications covered by item 19 of Annex 10.
The 0 percent rate is particularly relevant in international trade and applies mainly to exports of goods and intra-Community supplies of goods. It also applies to goods listed in Annex 8 to the Act (Article 83(1)(26)) and in other special cases set out in Article 83(1) of the VAT Act.
The most important VAT rate changes in 2025
The most recent significant changes to the VAT rate system came into force on 1 April 2025 under the Act of 24 January 2025 (Journal of Laws (Dz.U.) 2025 item 222) and still apply in 2026. They result both from alignment with EU law and from national legislative decisions. Some of the changes announced in the draft (equines, hemp) ultimately did not come into force.
One of the most important changes is the extension of the 0 percent rate to rescue vessels and lifeboats used at sea. Previously, the provision covered only vessels with CN codes ex 8905 90 10 and ex 8906 90 10 (seagoing), and from 1 April 2025 it covers ex 8905 90 and ex 8906 90, provided they are used at sea (Article 83(1)(1)(b)). Vessels used only on inland waters are not covered by this rate. The change is intended to support rescue operations and improve safety at sea.
| Product category | Previous rate | Rate from 1 April 2025 | Notes |
|---|---|---|---|
| Rescue vessels used at sea | 23% (vessels other than seagoing) | 0% | Article 83(1)(1)(b) |
| Medical devices | 8% | 8% | Preferential rate retained (Article 145c) |
| Live equines | 8% | 8% | Increase from the draft not adopted (Annex 3 item 7) |
| Industrial hemp products | unchanged | unchanged | Increase from the draft not adopted |
| Menstrual cups | 23% | 5% | Rate reduced (Annex 10 item 18a) |
The retained 8 percent rate for medical devices applies to devices covered by former item 13 of Annex 3 (as worded before the Medical Devices Act of 7 April 2022) that are placed on the market and made available under the transitional rules of Article 120(4) of EU Regulation 2017/745 or Article 110(4) of EU Regulation 2017/746 (Article 145c of the VAT Act); the 8 percent rate also applies to their repair and maintenance (Article 145d). This ensures continuity of preferential taxation in the medical sector
The draft amendment announced an increase in the VAT rate for live equines from 8 percent to 23 percent, but the Act of 24 January 2025 did not introduce it. Live horses, asses, mules and hinnies are still listed in item 7 of Annex 3 to the VAT Act and are taxed at 8 percent, which matters for the equestrian and breeding industries.
Similarly, the increase announced in the draft for industrial hemp products intended for smoking or inhaling without combustion, such as dried hemp, did not come into force – the VAT Act does not contain a separate item for them. The rate for such products depends on their CN classification, and if in doubt it is worth applying for a WIS.
- Extension of the 0% rate to rescue vessels and lifeboats used at sea
- 8% rate retained for medical devices from former item 13 of Annex 3 (Article 145c)
- Live equines – still 8% (increase not adopted)
- Industrial hemp products – unchanged (increase not adopted)
- VAT rate on menstrual cups reduced from 23% to 5% from 1 April 2025
A positive change for consumers is the reduction of the VAT rate on menstrual cups from 23 percent to 5 percent (item 18a of Annex 10). This change is part of efforts to reduce the tax burden on women's hygiene products and make them more affordable.
Temporary 8% VAT rate replaced by a permanent one
Until 31 March 2025, the preferential 8 percent VAT rate for some agricultural and horticultural products resulted from the regulation on reduced rates (§ 11 of the Minister of Finance regulation of 9 December 2023, Journal of Laws (Dz.U.) 2023 item 2670, extended by Dz.U. 2024 item 1944). From 1 April 2025, these goods – together with fertilisers, plant protection products and feed – were included in items 10a–10c of Annex 3 to the VAT Act, so the 8 percent rate now applies with no end date. This is intended to support the agricultural sector and keep products essential to agricultural and horticultural production affordable.
The preferential rate covers fertilisers, soil improvers, growth stimulants, growing media and digestate as defined in the Act on Fertilisers and Fertilisation, as well as plant protection products and feed (items 10a–10c). The exception is mineral growing media, which do not benefit from this preference; garden soil is taxed at 8 percent under the separate item 12 of Annex 3.
The 8 percent rate also applies to EU fertilising products, such as soil improvers, liming materials, biostimulants and growing media, as defined in Regulation (EU) 2019/1009 of the European Parliament and of the Council. The rules exclude mineral growing media, growing media for mushroom cultivation and inhibitors from preferential taxation
A special category is microbial fertilising products as defined in the Act on Fertilisers and Fertilisation. To benefit from the preferential 8 percent rate, these products must be entered in the register of microbial fertilising products kept under that Act.
Including these goods in the Act stabilises agricultural production costs – the rate no longer expires on 31 March 2025, as the regulation provided. Businesses in this sector should nevertheless continue to monitor changes in the rules.
Special cases of determining VAT rates
Polish tax law provides several special procedures for determining VAT rates that differ from the standard solutions. These procedures were introduced to simplify settlements for certain groups of taxpayers and to support selected sectors of the economy.
Entrepreneurs providing taxi services can use a preferential flat rate of 4 percent. This option does not apply to car hire with a driver, which is subject to the standard VAT rates. The 4 percent rate has been temporarily increased by the legislator (Article 146ef(1)(4)), and the basic flat rate is 3 percent (Article 114(1)).
The flat-rate VAT for taxi drivers is a simplified form of accounting for VAT. A taxi driver chooses it by notifying the tax office by the end of the preceding month, does not deduct input VAT and files the short VAT-12 return, and may opt out no earlier than after 12 months (Article 114(1)–(4) of the VAT Act). This greatly simplifies bookkeeping
Flat-rate farmers (rolnicy ryczałtowi) are another group that benefits from special tax arrangements. Under Article 115 of the VAT Act, they are entitled to receive a flat-rate VAT refund of 7 percent from the buyer (Article 146ef(1)(3)). As with taxi drivers, this is a temporarily increased rate from the basic level of 6.5 percent (Article 115(2)).
A flat-rate farmer selling agricultural products to a purchasing point receives from the buyer a flat-rate VAT refund of 7 percent of the net value of the products sold. This mechanism is intended to put farmers on a par with other VAT taxpayers, who can deduct input VAT on their purchases.
The flat-rate scheme for farmers was designed with the specific nature of farming in mind, where it is difficult to keep detailed records of all transactions. It allows farmers to recover part of the VAT included in the prices of the means of production they buy without having to register as active VAT payers.
Subject-matter VAT exemptions
The system of subject-matter exemptions is an important part of Polish VAT law and covers a wide range of goods and services. These exemptions have various justifications – social, economic and technical. Applying them means that the seller does not charge VAT to the buyer, but at the same time cannot deduct the input VAT related to that activity.
The basic list of subject-matter exemptions is set out in Article 43 of the VAT Act. It includes, among others, the supply of goods used exclusively for exempt activities, provided that the supplier was not entitled to reduce output tax by input tax when acquiring, importing or producing those goods. Separate exemptions also apply to imports – for example, the VAT exemption for importing goods of no commercial value.
The supply of buildings may be exempt from VAT, but the Act lays down special conditions for applying this exemption. Key factors include the time that has passed since the building was first occupied and how it is used
The public services sector benefits from a wide range of subject-matter exemptions. Universal postal services are exempt from VAT to ensure universal access to basic postal services. Similarly, medical care services are exempt, covering both diagnostic and therapeutic services provided by authorised entities.
The education sector also receives preferential tax treatment. The exemptions cover not only educational services provided by public schools, but also private tuition and foreign language teaching. This is intended to support the development of human capital and make education more accessible.
- Supply of goods used exclusively for exempt activities
- Supply of buildings subject to certain conditions
- Universal postal services provided by operators
- Medical care and diagnostic services
- Educational services and private foreign language teaching
- Financial and insurance services
Financial and insurance services are another important category of subject-matter exemptions. They include, among others, granting loans and credit, transactions in securities, insurance services and the management of investment funds. These exemptions result from the specific nature of these services and the difficulty of determining their added value.
Businesses providing VAT-exempt services state the legal basis for the exemption when issuing invoices (Article 106e(1)(19) of the VAT Act), and in practice mark such items as "zw" (exempt). There is no tax on such invoices for the buyer to deduct, which affects the buyer's business costs
Practical aspects of applying VAT rates
Applying VAT rates correctly in business practice requires not only knowledge of the rules, but also the ability to interpret them in specific business situations. Entrepreneurs must be particularly careful when determining rates for new products or services and when changing their product range.
Issuing a VAT invoice starts with correctly identifying the subject of the sale and assigning the right tax rate to it. In accounting systems, rates should be assigned directly to products or services, which minimises the risk of invoicing errors. For exempt sales, the legal basis for VAT exemption on an invoice is also a mandatory element.
Particular attention should be paid to mixed transactions, where one document covers goods or services subject to different VAT rates. In such cases, the value of sales must be split by rate and shown accordingly on the invoice.
Modern accounting systems can automatically assign VAT rates to stock items. This means the entrepreneur does not have to think about the correct rate every time they issue an invoice, which speeds up the process considerably and reduces the risk of errors
Checking that VAT rates are applied correctly should be part of a company's regular internal procedures. This is particularly important when tax rules change and some products may change their tax classification.
Documentation relating to the application of VAT rates should be kept until the tax liability becomes time-barred – as a rule, 5 years from the end of the year in which the tax payment deadline expired (Article 112 of the VAT Act, Article 70 § 1 of the Tax Ordinance Act (Ordynacja podatkowa)). These documents may be essential during a tax inspection or in disputes with the tax authorities.
The impact of VAT rates on business competitiveness
The level of VAT rates directly affects a company's competitiveness on the market, especially in price-sensitive sectors. Businesses in industries covered by preferential VAT rates can offer their products at lower final prices, which is a significant competitive advantage.
Changes in VAT rates can significantly affect the profitability of a business. A rate increase raises the final price of a product, which may reduce demand, especially for goods with high price elasticity. A rate reduction, on the other hand, can stimulate sales and improve competitive position.
A business selling menstrual cups could improve its competitiveness from 1 April 2025 thanks to the reduction of the VAT rate from 23% to 5%. With an unchanged net price, this change allows retail prices to be cut by about 15% (1.05 / 1.23 ≈ 0.854), which can significantly improve the product's affordability and the company's sales results.
Strategic planning in the context of VAT rate changes requires taking into account not only the direct price effects, but also competitors' reactions and consumer behaviour. Businesses should monitor announcements of legislative changes and prepare to implement them well in advance.
International business further complicates VAT rate issues. Exporters can use the 0% rate, which improves their competitiveness on foreign markets, but this requires meeting certain procedural conditions – in particular, having proof that the goods left the EU before the deadline for filing the VAT return (Article 41(6) of the VAT Act). We prepare JPK_V7 files – including for export sales – for clients as part of our accounting services.
