Global Daily Tax News, Polish Government Clears 2025 VAT Law Changes, (Sep 19, 2024)

Poland's Council of Ministers has signed off on legislation to align Polish value-added tax law with new rules being introduced across the EU from January 1, 2025.

First, the legislation would implement the changes to the VAT exemption scheme for small businesses, alongside EU-wide changes from January 1, 2025.

Under EU law, member states may provide that supplies may be made free from value-added tax by a small business providing its annual turnover does not exceed a given threshold. As well as not being required to charge value-added tax on their supplies, small businesses may be exempted from certain or all VAT obligations relating to identification, invoicing, accounting, or returns. A major drawback of the exemption, however, is that, almost always, businesses may not claim back any value-added tax on their inputs.

Changes are being implemented across the EU to enable companies doing business across EU borders to benefit from the small business scheme in multiple states. Non-resident businesses doing business in Poland will be able to benefit from the scheme, for instance, if their supplies fall below the Polish monetary threshold and their EU-wide turnover does not exceed EUR100,000.

Further, the legislation provides for the implementation of changes to the place of supply rules for live-streamed events. From January 1, 2025, the place of supply for services and ancillary services related to events that are streamed or otherwise made virtually available will be the place where the non-taxable person is established, has their permanent address, or usually resides. The change affects business-to-customer (B2C) supplies of virtual events within the EU.

Presently, under the EU VAT Directive, access to cultural, artistic, sporting, scientific, educational, entertainment, or similar events are liable to VAT in the location they are held. However, from January 1, 2025, where a participant attends only virtually, the supply of that service will be taxable in the country where the virtual attendee is located.

Finally, the legislation provides that taxpayers will no longer be able to apply the special margin scheme to works of art, collectors' items, and antiques that have been taxed at a reduced rate of VAT.

The changes will apply from January 1, 2025.