Four different levels of the VAT rate are used in usual business transactions in Poland:
VAT rate 0%
– for export and intracommunity delivery of goods
VAT rate 5%
– for basic food, like bread, milk, cheese, meat preparations etc.
– for books and newspapers
VAT rate 8%
– for sale, construction, renovating and modernization of buildings that comply with the social building program
– for products stipulated in Annex 10 to the VAT Act
VAT rate 23%
– basic VAT rate for domestic sales of all other products and services that are not specified elsewhere – the most common VAT rate in Poland
Besides the four VAT rates you may also come across two other abbreviations on Polish invoices: “zw” and “np” that are also sometimes treated as “VAT rates”.
The first one (= “zwolniony”) means that the services on the invoice undergo the VAT regulations but they are exempt from the taxation. A long list of such services you may find in the Article 43 of VAT Act. It includes among others: medical services, bank services, social services, education etc.
The latter one (= “nie podlega”) means that the services on the invoice don’t undergo the VAT regulations in Poland and they should be taxed in another country. This is usually the case of services provided by a Polish company to a foreign one: If the buyer of services is a foreign business entity it is almost always him who should tax the transaction in the country of his residence.
The above mentioned VAT rates are to be applied officially till the end of 2016. They have been introduced in 2011, according to official sources because of the worldwide spreading financial crisis. Initially they were intended only for 3 years, i.e. till the end of 2013. But then their validity was extended by the next 3 years, till the end of 2016. Whereas, by the year 2010, the VAT rates were lower, respectively 0%, 3%, 7% and 22%, during the last pre-election campaign the politicians promised to restore the former VAT rates. It should happen starting from the beginning of 2017. Frankly speaking, hardly no one in Poland expect this seriously. If politicians keep their promises we’ll see in a few months. 😉 However, in the meantime you’d better stick to the VAT rates stipulated at the beginning of this article while planning your business in Poland.