Major VAT changes in Poland coming into force Jan. 1, 2022 – what to expect?

On 25 November 2021, the Polish Government published Law No. 2105 referred to as the “Polish Order” which covers a major tax reform in the country. The legislation affects several areas of taxation including Corporate Income Tax, Personal Income Tax, and Value Added Tax which is expected to come into force as of January 1, 2022. 

The summary of the VAT-related changes:

• VAT joint settlement by multiple taxpayers through the introduction of VAT groups. 

A VAT Group comprises in settling the tax on merchandise and administrations by a group of associated companies acting as a single VAT payer. A VAT group may be created by entities that are connected financially, economically, and organizationally. For a VAT group to be formed, entities must follow these three steps: 

1. 1. Conclude an agreement to set up a VAT group. 
   2. Appoint a legal representative
   3. Submit the registration application and requirements to the tax office. 

• Shortening VAT refund period for non-cash taxpayers to 15 days  

The amount of input VAT surplus to be transferred to the next settlement period shall not exceed PLN 3,000. 

Following the changes to Poland’s tax regime, the Polish government has also announced to reduce tax rates on petrol, gas, heating, and electricity as a response to buffer the high growth in inflation. The VAT will drop on:

• Gas to 8% from 23% (January-March 2022) 
• Electricity to 5% from 23% (January-March of 2022) 
• District heating to 8% from 23% (January-March 2022) 

Source: Journal of Laws Poland, Law No. 2105