Polish government is introducing changes to VAT regulations aimed at facilitating the operations of small entrepreneurs, particularly in the context of cross-border activities within the European Union.
The project adopted by the Council of Ministers aligns Polish law with EU regulations, enabling small Polish companies to benefit from VAT exemption in other EU member states.
The project also stipulates that VAT on all online broadcasts of sports, entertainment, or cultural events will be due to the countries where the recipients of these services are located.
The key proposed changes include:
1. VAT exemption for small businesses across the EU
Currently, Polish entrepreneurs with a turnover of up to 200,000 PLN can benefit from VAT exemption in Poland. However, when conducting business in other EU countries, they must pay VAT from the first transaction. The new directive (2020/285) changes these rules, introducing VAT exemptions for small businesses in other EU countries as well. This will be a significant convenience for small businesses operating in foreign markets.
2. Reporting requirements and limits
Companies benefiting from VAT exemptions in another EU country will have to meet certain conditions, such as submitting quarterly reports on their turnover in individual countries. The turnover limit above which a business will be required to pay VAT in the EU will be set at 100,000 euros.
3. New rules on online services taxation
The VAT amendment also includes changes in the taxation of streaming services and access to virtual events. The new regulations clarify that VAT will be charged in the country of consumption of the service, i.e., where the consumer is located.
4. Changes in the place of taxation for services
The definition of the place of provision for certain services is also changing, including access to cultural, artistic, or entertainment events when they are broadcast online. VAT will be settled in the country where the recipient of the service is located.
Summary
The changes planned by the Ministry of Finance are part of the implementation of the EU directive and should be viewed positively.
The amendment, although not yet passed by the Sejm, is expected to come into force on January 1, 2025.
