Subjective VAT exemption - loss and resignation


On January 1, 2017, an amendment to the VAT Act came into force, introducing a number of changes to VAT. One of them is the increase of the personal exemption limit from VAT, which currently amounts to PLN 200,000. Read our article and find out who is entitled to the subjective VAT exemption and in what cases it can be lost!

Subject exemption from VAT

The subject exemption from VAT is lawfully available to taxpayers whose total value of taxable sales does not exceed PLN 200,000. The second condition for the exemption is to perform activities not listed in art. 113 paragraph. 13 points 1-3 of the VAT Act.

Art. 113 sec. 13 points 1-3 of the VAT Act:

Exemptions (...) do not apply to taxpayers:

  • making deliveries:
    • goods listed in Annex 12 to the Act,
    • goods subject to excise duty, within the meaning of the provisions on excise duty, with the exception of:
      1. electricity (PKWiU,
      2. tobacco products,
      3. 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,
    • buildings, structures or parts thereof, in the cases referred to in Art. 43 sec. 1 point 10 lit. a and b,
    • construction areas,
    • new means of transport;
  • providing services:
    • legal,
    • in the field of 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 development plan and modernization of a farm,
    • jewelery;
who do not have their registered office in the territory of the country.

In the case of taxpayers starting a business, the expected turnover is taken into account. This means that they can benefit from the exemption under the law when starting their business, until the value of their sale exceeds the amount of PLN 200,000 in proportion to the period of business activity conducted in 2017.

Loss of the right to personal exemption from VAT

When the taxpayer's turnover exceeds the specified limit of PLN 200,000, he automatically loses the right to personal exemption from VAT and at the same time arises with him a tax obligation.

A taxpayer who, due to exceeding the limit, has lost the right to personal exemption from VAT, is obliged to submit a VAT-R notification and from then on his duties will include, among others:

  • issuing VAT invoices,
  • keeping the required records for VAT purposes,
  • filing a VAT declaration.

Subjective VAT exemption - resignation

A taxpayer who is entitled to a subjective exemption from VAT may also resign from it at any time of running a business. For this purpose, he is obliged to submit the registration application before the beginning of the month in which he resigns from the exemption. In this case, the entrepreneur becomes an active VAT payer from the beginning of the month following the notification. It is similar in the case of taxpayers who started their activity during the tax year, but they have to register before making the first activity subject to VAT. In both cases, the registration application is made on the VAT-R form at the competent tax office.