Subject exemption from VAT and accounting services

Service-Tax

The act on tax on goods and services defines which entities may take advantage of the subjective VAT exemption. It also distinguishes a group of entities and economic activities that cannot take advantage of this privilege. Are there any changes to the VAT exemption in 2021? Read the article and find out what the subjective VAT exemption is!

Who can take advantage of the subjective VAT exemption?

Entities whose revenues from sales taxed in the previous tax year did not exceed PLN 200,000 net are eligible for the subject VAT exemption. This limit has been in force since 2017 in connection with the amendment to the provisions of the VAT Act and is still valid in 2021, pursuant to Art. 113 paragraph. 1 of the VAT Act.

The tax relief is also available to taxpayers who start their business in a given year, if the sales value expected by them does not exceed the amount of PLN 200,000 in proportion to the period of their business activity in the tax year.

What does not count towards the limit of PLN 200,000 of the sale value?

The sales value does not include:

  • intra-Community supply of goods and intra-Community distance sales of goods, which are not subject to taxation in Poland,
  • distance selling of imported goods, which is not subject to tax in Poland,
  • paid services that are exempt from tax,
  • goods that are classified by the taxpayer as fixed assets, intangible assets subject to depreciation (on the basis of income tax regulations).

How to opt out of the subjective VAT exemption?

The taxpayer has the right to voluntarily opt out of the subjective VAT exemption. For this purpose, he must submit a written notification to the head of the competent tax office before the beginning of the month from which the resignation would apply. This is done via the VAT-R form.

If the sale value exceeds the amount of PLN 200,000, the exemption loses its effect. Then the tax obligation returns and the taxpayer has to tax the entire transaction causing the limit to be exceeded.

After the taxpayer has lost the right to the exemption or resigned from it himself, he may, not earlier than after one year from the end of the year in which the right to exemption was lost or the exemption was waived, again use the exemption when he meets the above-mentioned conditions. For this purpose, it is necessary to submit an update application for VAT-R forms.

Who cannot take advantage of the subjective VAT exemption?

As mentioned before, the VAT Act indicates who cannot take advantage of the subjective VAT exemption.

This group not covered by the exemption includes:

  • taxpayers making deliveries, including:
    - articles made of or with precious metals,
    - goods subject to excise duty, with the exception of electricity and tobacco products, passenger cars, other than new means of transport, classified by the taxpayer, under the provisions on income tax, as fixed assets subject to depreciation,
    - new means of transport,
    - buildings, structures or parts thereof, in the cases referred to in Art. 43 sec. 1 point 10 lit. a and b of the VAT Act,
    - construction sites;
  • taxpayers providing legal or advisory services, jewelery or debt collection services, including factoring;
  • taxpayers who are not established in the territory of the country.
  • taxpayers supplying goods in connection with the conclusion of a contract under an organized system of concluding distance contracts, without the simultaneous physical presence of the parties, with the sole use of one or more means of distance communication until the conclusion of the contract, including:
    • cosmetic and toilet preparations (PKWiU 20.42.1),
    • computers, electronic and optical products (PKWiU 26),
    • electrical devices (PKWiU 27),
    • machinery and equipment not elsewhere classified (PKWiU 28),
  • wholesale and retail parts and accessories for:
    • motor vehicles, excluding motorcycles (PKWiU 45.3),
    • motorcycles (PKWiU ex 45.4);

The list of goods and services to which the VAT exemption does not apply is included in Annex 12 to the Value Added Tax Act.

Start a free 30-day trial period with no strings attached!

Accounting office and subject exemption from VAT

According to the interpretation of the Tax Chambers, an accounting office may take advantage of the subjective VAT exemption when:

  • none of the employees has the qualifications of a tax advisor,

  • preparing and signing declarations is a comprehensive element of the accounting service,
  • the services provided will be classified into the appropriate PKWiU group.

According to the regulations, taxpayers providing advisory services cannot benefit from the exemption. That is why the interpretations of the tax authorities are so important, as they allow for the correct approach to the matter.

Currently, “accounting and auditing services, tax advisory services” are classified under the group 69.2 PKWiU. When we enter a number regarding the provision of tax advisory services while running an accounting office, we will not be entitled to the VAT exemption.

However, the preparation and signing of tax declarations, as previously mentioned, is an element of comprehensive accounting services. It is not part of the consultancy.

In this case, the general ruling of April 9, 2015, ref. No. PT3.8101.2.2015.AEW.16, which stated that:

"For the purposes of determining the activities that may be performed by a tax advisor, the scope of activities considered as tax advisory activities has been defined by law. Tax advisory activities - in accordance with Article 2 (1) of the Tax Advisory Act - for the purposes of applying this Act, therefore include:

  1. providing taxpayers, payers and collectors, at their request or on their behalf, with advice, opinions and explanations regarding their tax and customs obligations and in matters of administrative enforcement related to these obligations;
  2. keeping, on behalf of and for taxpayers, payers and collectors, accounting books, tax books and other records for tax purposes and providing them with assistance in this regard;
  3. preparing, on behalf of and for taxpayers, remitters and collectors, tax returns and declarations or providing them with assistance in this regard;
  4. representing taxpayers, payers and collectors in proceedings before public administration authorities and in the field of judicial control of decisions, rulings and other administrative acts in the cases listed in point 1. "