Services outside the territory of the Republic of Poland, VAT exemption and cash register
Entrepreneurs who take advantage of the VAT exemption often make foreign transactions. The question arises whether the value of such transactions should be included in the limits on VAT exemptions or cash registers. Are all services outside the territory of the Republic of Poland exempt from VAT?
Generally, taxpayers whose value of taxable sales did not exceed the total amount of PLN 200,000 in the previous tax year are exempt from tax. The amount of tax is not included in the sales value.
Taxpayers starting their business during the tax year may take advantage of the subjective exemption, provided that the sales value predicted by the taxpayer does not exceed the limit of PLN 200,000 in proportion to the period of the conducted business activity. However, the right to exemption from the VAT settlement is lost if the proportional limit is exceeded during the year. The exemption shall cease to apply as soon as the limit is exceeded.
For taxpayers who continue their business, the condition is not to exceed the sales limit of PLN 200,000 in the previous tax year. The tax amount is not included in the sales value.
The term sale - in accordance with the content of art. 2 point 22 of the VAT Act - it should be understood as the supply of goods against payment and the provision of services against payment within the territory of the country, the export of goods and the intra-Community supply of goods.
Bearing in mind the above regulations, it should be stated that the value of foreign deliveries of goods, apart from intra-Community goods and goods exports, should be included in the limit.
Subject exemption of services provided outside the Republic of Poland in tax rulings
Director of the Tax Chamber in Katowice, in a letter of July 14, 2016, file ref. IBPP1 / 4512-343 / 16 / MG, announces:
(…) Pursuant to Art. 113 paragraph. 1 of the VAT Act, sales made by taxpayers whose sales value did not exceed the total of PLN 150,000 in the previous tax year [note aut. currently PLN 200,000]. The amount of tax is not included in the sales value.
According to Art. 2 point 22 of the VAT Act, one should understand the supply of goods for consideration and the provision of services against payment within the territory of the country, the export of goods and the intra-Community supply of goods.
Therefore, they do not constitute a sale within the meaning of the Value Added Tax Act, including: paid services outside the territory of the country (i.e. the provision of services, the place of provision of which is outside Poland).
Therefore, when determining the right to subjective exemption, only the value of taxable sales of goods and services in the territory of the country should be taken into account. As a consequence, the value of the provision of services, the place of taxation of which is outside the territory of Poland, is not taken into account (...).
A similar position was presented by the Director of the Tax Chamber in Katowice in the individual ruling of September 30, 2015, ref. No. IBPP4 / 44512-205 / 15 / LG, which indicated that:
(…) The place of taxation of the construction services in question will be the place where the immovable property is situated, ie the territory of Sweden.
Therefore, these services will not be taxed on the territory of Poland.
Accordingly, it should be stated that in the case of the Applicant's services whose place of supply is the territory of Sweden - turnover in this respect is not included in the value of sales referred to in Art. 113 paragraph. 1 of the act.
In other words, the value of these services is not taken into account when determining the sales value, beyond which the subjective exemption from value added tax is lost. (...)
The taxpayer performed a construction service in Germany for the amount of PLN 50,000, while in Poland the works performed for natural persons amounted to PLN 180,000. The limit for VAT registration has been exceeded. However, due to the fact that the service was performed outside the territory of the Republic of Poland, it should not be included in the limit. Thus, the taxpayer can still benefit from the exemption.
Services outside the territory of the Republic of Poland and the cash register
The obligation to use cash registers in business activities is imposed on taxpayers by the VAT Act. Detailed regulations on credit unions are currently included in the Regulation of the Minister of Finance on exemptions from the obligation to keep records with the use of cash registers. The turnover limit entitling to the exemption from recording with the use of a cash register for those who continue and start their operations is PLN 20,000 per year.
For the purposes of setting the limits, sales to non-business natural persons and flat-rate farmers are taken into account.
Also in the situation of a limit for a cash register, the definition of sale referred to above should be used. Thus, services provided outside the territory of the Republic of Poland are not included in the limit. Such a position was confirmed by the Director of the Tax Chamber in Katowice in the individual ruling of November 10, 2015, file ref. IBPP3 / 4512-610 / 15 / SR, indicating that:
(...) when the place of providing services is the territory of the EU or a third country, the Applicant will not be obliged to keep records of this sale, because he will not provide paid services in the territory of the country, and therefore he will not make the sale referred to in Art. 2 point 22 of the Act. The obligation to register sales to natural persons who do not conduct business activity and to flat-rate farmers with the use of a cash register applies only to the services provided, for which the place of provision (taxation) is the territory of the country (...).