VAT tax - operating principles


VAT is a tax on turnover paid by economic entities. Tax is paid primarily on goods sold and services rendered. Each business entity becomes a VAT taxpayer after exceeding a certain amount of its turnover (the limit of PLN 150,000 - in 2015 and in force in 2016).

Polish regulations define VAT as a tax on goods and services. It is called a value added tax, and it is related to the basic principle governing this tax.

The tax is paid monthly or quarterly. The taxpayer calculates tax on the value of the goods sold in a given period (this is the so-called output tax), but it is not yet a tax to be paid. Then, from the output tax, he deducts the amounts of VAT that he paid when purchasing the goods he sells or the needs he purchased (the tax included in the purchase invoices is the so-called input tax). The tax that is actually payable to the tax office in a given period is the difference between the tax due and the tax charged. In this way, the tax is actually only paid on the "value added", ie in practice on the amount of the margin added by the seller. Were it not for this mechanism, VAT would be paid many times by different entities on the same amounts.

Every economic entity becomes a taxpayer when:

  1. performs activities subject to VAT,
  2. the value of turnover (sales) exceeded the threshold of PLN 150,000.

You can voluntarily become a VAT payer, even if the taxpayer's turnover does not exceed the above amount. The advantages of being a VAT taxpayer include the possibility of deducting the tax charged by the taxpayer and companies cooperating with him. When starting a business, you can submit an appropriate declaration to the tax office and become a VAT taxpayer from the beginning of your business.