Service-Tax

The limit of VAT exemption remains unchanged

Some entrepreneurs may take advantage of the VAT exemption. The legislator distinguishes two types of VAT exemptions:

subjective (specifies the sales limit benefiting from the VAT exemption);
objective (exemption due to the object of activity).

What is the issue of the VAT exemption limit? How should it be determined? Will the limit for the coming years change? We explain below.

VAT exemption limit - EU and national regulations

The issue of the limit of VAT exemptions has been defined in EU regulations, and more precisely in art. 287 point 14 of Directive 2006/112 / EC. According to its wording, the VAT exemption limit for Polish entrepreneurs should be EUR 10,000. The conversion of the limit should be made at the exchange rate on the day of accession to the EU. According to these guidelines, it amounts to PLN 50,000.

In Poland, the limit of VAT exemption until the end of 2015 is higher than the one mentioned above and amounts to PLN 150,000, which has been specified in Art. 113 paragraph. 1 of the VAT Act:

“Sales by taxpayers whose sales value did not exceed the total amount of PLN 150,000 in the previous tax year are exempt from tax. The amount of tax is not included in the sales value. "

From 2016, the VAT exemption limit resulting from the directive was to be restored. However, Poland applied to the EU Council for an extension of the preferential, higher limit amount until the end of 2018. The EU Council agreed with Poland's request.

VAT exemption limit - how to determine?

The limit of VAT exemption, as already mentioned, is PLN 150,000. It should be emphasized that in the case of entrepreneurs who started their business activity during the tax year, the limit of VAT exemption should be set proportionally.

Pursuant to the VAT Act, when determining the exemption limit, the entrepreneur takes into account the sales value without tax. Importantly, it should be remembered that the exemption limit does not include:

intra-community delivery of goods (WDT),
mail order sale from the territory of the country (note here: only the one that would not be taxed in the country),
mail order sale within the territory of the country,
sale of fixed assets and intangible assets subject to depreciation,
the paid delivery of goods and the paid services, exempt from tax pursuant to art. 43 sec. 1 or regulations issued on the basis of art. 82 sec. 3, with the exception of:

real estate transactions,
services referred to in art. 43 sec. 1 points 7, 12 and 38-41 of the VAT Act,
insurance services

- if these activities are not ancillary transactions.

Important!

After the VAT exemption limit is exceeded, the exemption ceases to apply, starting from the activity in which this amount was exceeded.

Who cannot benefit from the VAT exemption due to the limit?

The subjective exemption from VAT is not available to everyone. The legislator in Art. 113 paragraph. 13 of the VAT Act clearly defines:

“The exemptions referred to in sec. 1 and 9, does not apply to taxpayers:

1) making deliveries:

a) goods listed in Annex 12 to the Act (scrap from precious metals or with the participation of these metals),
b) goods subject to excise duty, within the meaning of the provisions on excise duty, with the exception of:

- electricity (PKWiU 35.11.10.0),
- tobacco products,
- passenger cars, other than those mentioned in point (a) e, classified by the taxpayer, pursuant to the provisions on income tax, as fixed assets subject to depreciation,

c) buildings, structures or parts thereof, in the cases referred to in Art. 43 sec. 1 point 10 lit. a and b,
d) construction areas,
e) new means of transport;

2) providing services:

a) legal,
b) consultancy, with the exception of agricultural consultancy related to the cultivation and breeding of plants as well as animal breeding and breeding, as well as related to the preparation of a plan for the development and modernization of a farm,
c) jewelery;

3) who do not have the seat of economic activity in the territory of the country. "