New VAT matrix

Starting July 1st, 2020, new regulations came into life changing the content of appendices 3 and 10 for VAT Act about goods and services subject to VAT according to 8% and 5% rates, respectively.

How to establish if a good or a service are subject to 5% or 8% rate?

Step 1. Establishing if a good or a service are subject to 0% VAT rate or are VAT-exempt

To establish the VAT rate, it’s necessary to ensure if a given action is VAT-exempt (article 43 of VAT Act) or is subject to VAT tax based on 0% rate (article 83 of VAT Act).

Step 2. Choosing CN symbol (for goods) or Polish Classification of Products and Services (PKWiU) from 2015 (for services):

Indicating the symbols for goods or services subject to VAT tax according to lowered VAT rates is done on a basis of the description or::

I) in case of goods: CN symbol

II) in case of services: Polish Classification of Products and Services (PKWiU) of 2015.

Sometimes the CN symbols or Polish Classification of Products and Services (PKWiU) of 2015 are preceded by “ex” prefix which means that a reference to a particular symbol doesn’t apply to the whole classification connected with a given symbol but only a part of goods or services that are a part of the whole group..

Step 3. Establishing if goods or services are mentioned in appendices number 3 or 10 for VAT Act:

The vast majority of goods and services subject to VAT tax, and under the lowered VAT rates, have been mentioned in appendix no. 3 (goods and services subject to 8% tax rate) and no. 10 fir VAT Act (goods and services subject to 5% tax rate).

Step 4. Establishing if a given good or a service are subject to VAT tax according to the lowered rate as per other regulations:

Goods and services under the lowered VAT tax rates of 8% and 5% can also be defined in other regulations. It is necessary to point out the:

1) regulations of article 41, section 12-12f of VAT Act: these regulations are the legal basis for applying 8% tax rate in building industry, for providing preservation services and in food services

2) regulations of the ordinance of Minister of Finances of March 25,th, 2020 about goods and services for which the VAT tax rate is lowered and about terms of applying lowered rates (Poland’s Journal of Laws item 527 with changes.).

Step 5. The usage of 23% tax rate:

If during none of the above-mentioned steps it wasn’t established that for a particular activity it’s necessary to exempt the VAT tax or to apply a lowered VAT rate, that activity is subject to VAT tax based on 23% rate.

Legal grounds:

article. 41, article 43, article 83 and appendices no 3 and 10 to the act on March 11th, 2004 on value added tax (consolidated text: Dz.U – Poland’s Journal of Laws – from 2020 item 106 with changes.).

Source:
https://www.lexlege.pl/ustawa-o-podatku-od-towarow-i-uslug/art-41/
https://stat.gov.pl/Klasyfikacje/doc/pkwiu_15/index.html

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