VAT exemption for small businesses in the EU – draft regulations

VAT exemption for small businesses in the EU – draft regulations

VAT exemption for small businesses in the EU – draft regulations
At present, a taxable person without a registered office in Poland settles VAT from the first sale made within the territory of our country. However, small entrepreneurs will soon benefit from the facilities introduced by the proposed amendment to the VAT Act.

What changes in VAT for small businesses is the legislator preparing?

The Ministry of Finance is working on a draft act introducing changes to VAT, which may be particularly important for small enterprises. The new regulations implement Directive 2020/285 and:

  • allow small enterprises with their registered office in another EU Member State to benefit from VAT exemption in Poland, and
  • allow Polish small businesses to benefit from VAT exemption in other EU Member States.

The proposed changes will therefore be addressed to all small enterprises operating in various EU Member States.

Benefiting form VAT exemption – what are the conditions?

The conditions for small enterprises to benefit from the cross-border exemption will be:

  • the need to register the business in the country where the business is based, and
  • submitting quarterly information on the turnover achieved in each EU Member State.

Small entrepreneurs will submit quarterly information to the Member State of their establishment. They will not be obliged to submit VAT and JPK returns.

Moreover, an entrepreneur benefiting from the exemption in a Member State where he or she does not have his or her registered office will have to comply with the national exemption limit and the general EU limit of EUR 100,000. After exceeding one of these limits, the entrepreneur will lose the right to exemption.

Facilities for small businesses – when?

The draft act amending the Act on Goods and Services Tax and certain other acts, developed by the Ministry of Finance, is to be adopted by the Council of Ministers in the third quarter of 2024. New solutions are to be available to entrepreneurs at the beginning of 2025.

VAT settlement – how can we help?

We offer comprehensive VAT compliance solutions for foreign entities based outside the EU, which includes both fiscal representation and VAT settlement services, as well as comprehensive VAT compliance solutions addressed to foreign entities based in the EU. We provide VAT settlement services based on the experience and extensive expertise of our experts.

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