VAT tax (part 3) - Subject scope of taxation - definition of a VAT payer


The concept of independent business activity

Article 15 para. 2 of the Act on tax on goods and services, specifies what a business really is. It follows from this regulation that economic activity covers all activities of producers, traders or service providers, including entities obtaining natural resources and farmers, as well as the activities of freelancers. Economic activity includes, in particular, activities consisting in the use of goods or intangible assets on a continuous basis for commercial purposes.

On the other hand, self-conducted economic activity does not recognize the following activities:

  • for which the revenues are listed in art. 12 sec. 1-6 of the Act of July 26, 1991 on personal income tax (Journal of Laws of 2010, No. 51, item 307, as amended);
  • for which the revenues are listed in art. 13 points 2-9 of the Act of 26 July 1991 on income tax from natural persons, if, due to the performance of these activities, these persons are related to the ordering party to perform these activities with legal ties creating the legal relationship between the person ordering the performance of the activities and conditions for performing these activities, remuneration and liability of the person ordering the performance of these activities towards third parties.

Acting as a VAT taxpayer

The definition of a VAT payer can be found in Art. 15-17 of the Act.

Pursuant to Art. 15 sec. 1 taxpayers are legal persons, organizational units without legal personality and natural persons, independently carrying out economic activity, regardless of the purpose or result of such activity.

Another article says that taxpayers are, inter alia, legal persons, organizational units without legal personality and natural persons:

  • non-taxable persons carrying out the occasional intra-Community supply of new means of transport;
  • making intra-Community acquisitions of goods;
  • obliged to pay the tax pursuant to art. 42 sec. 8 or sec. 10.

Exclusions from the group of VAT taxpayers

Tax regulations provide for the possibility of tax exemption. There are 2 groups of VAT exemptions:

Subjective exemption

According to Art. 113 paragraph. 1 of the VAT Act, taxpayers whose value of taxable sales 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.

Entities that have just started operating during the tax year are also entitled to the exemption. This is what paragraph 9 of the above article, which says: During the tax year, the taxpayer who commences the activities specified in Art. 5 is exempt from tax, if the estimated sales value does not exceed, in proportion to the period of business activity in the tax year, the amount of PLN 150,000.

Objective exemption

The taxpayer may also benefit from the objective exemption provided by Art. 43 sec. 1 of the Act, which defines the types / types of activity that are exempt on this land. Among them can be mentioned:

  • the supply of second-hand goods, provided that the delivering goods did not have the right to reduce the amount of tax due by the amount of input tax;
  • delivery of undeveloped areas other than construction areas;
  • universal postal services provided by the operator obliged to provide such services, and the supply of goods closely related to these services;
  • private teaching services at pre-school, primary, junior high, post-gymnasium and tertiary levels, provided by teachers;
  • sanitary transport services;
  • delivery of human organs and breast milk;
  • a supply of blood, plasma in full composition, blood cells or blood products of human origin, not being drugs;

The topic will be discussed in more detail in part 8 of the cycle.

Institution of a tax representative

According to Art. 18a paragraph. 1 of the VAT Act. Taxpayer (a legal person, an organizational unit without legal personality and natural persons who independently conduct business activity, regardless of the purpose or result of such activity) who do not have a registered office or a permanent place of business in the territory of a Member State, subject to registration as an active VAT taxpayer, it is obliged to appoint a tax representative.

A tax representative may be a natural person, a legal person or an organizational unit without legal personality, if jointly meets the following conditions:

  • has its registered office in the territory of the country;
  • is registered as an active VAT payer, and in the case referred to in art. 18d paragraph. 1 - as an EU VAT taxpayer;
  • for the last 24 months it has not been in arrears with payments of individual taxes constituting the income of the state budget, which separately for each tax exceed 3% of the amount of due tax liabilities in individual taxes; the share of arrears in the amount of tax is determined in relation to the amount of due payments for the settlement period to which the arrears relates;
  • for the last 24 months a natural person who is a taxpayer, and in the case of taxpayers who are not natural persons - a person who is a partner in a civil or commercial partnership without legal personality, a member of the managing authorities, chief accountant, has not been legally convicted under the Act of 10 September 1999 - the Code penal fiscal (Journal of Laws of 2007, No. 111, item 765, as amended) for committing a fiscal offense;
  • is entitled to provide professional tax consultancy in accordance with the provisions on tax consultancy or to provide bookkeeping services in accordance with the provisions on accounting.

A tax representative is appointed by way of a written agreement, which should include:

  • the names of the parties to the contract and their addresses and identification data for the purposes of tax, value added tax or a tax of a similar nature, respectively;
  • address where documentation for tax purposes will be kept and stored;
  • a declaration of the entity, which is established a tax representative, about the fulfillment of the conditions referred to in paragraph 1. 1;
  • the scope of the authorization in the case specified in art. 18c paragraph. 1 point 2;
  • in the case referred to in Art. 18d paragraph. 1, the consent of the tax representative to perform the duties and activities of the taxpayer for which he was established, on his own behalf and for the benefit of the taxpayer.

A tax representative performs on behalf and for the benefit of the taxpayer for whom it has been established:

  • obligations of this taxpayer in terms of tax settlement, including the preparation of tax returns and summary information, and the maintenance and storage of documentation, including records, for tax purposes;
  • other activities resulting from the provisions on tax on goods and services, if authorized to do so in the contract.

He is jointly and severally liable with the taxpayer for the tax liability that the tax representative settles for and on behalf of that taxpayer.