Bad debt relief in Polish VAT allows a creditor to reduce output VAT on an invoice that a business partner has not paid within 90 days of the payment deadline. You file the adjustment in the JPK_V7 return for the period in which the 90th day falls — without needing to notify the debtor. At the same time, the debtor is required by law to reverse the input VAT they previously deducted. Legal basis: Articles 89a and 89b of the Polish VAT Act of 11 March 2004.
What is bad debt relief in Polish VAT?
Bad debt relief is the right of an active (czynny) VAT taxpayer to reduce their taxable base and output VAT when a business partner fails to pay an invoice within 90 days of the due date. After those 90 days, the receivable is considered likely uncollectible (Article 89a(1a) of the VAT Act).
How does the mechanism work?
You issued a VAT invoice and remitted output tax to the tax office. Your counterparty never paid. After 90 days from the payment deadline, you are entitled to adjust your return and recover that VAT. In practice, the adjustment works like reversing a sale in JPK_V7 — you enter negative amounts in the sales fields for the current reporting period.
The relief has two sides. The creditor (seller) may adjust output VAT — it is a right, not an obligation. The debtor (buyer) must adjust input VAT — this is a legal obligation that arises automatically, regardless of whether the creditor acts (Article 89b(1) of the VAT Act).
Who can use this relief?
Only active VAT taxpayers registered in Poland who supplied goods or services within the country. The relief does not apply to intra-Community transactions, exports, or internal invoices (such as imported services).
What conditions must the creditor meet?
The creditor must meet three conditions simultaneously: they must be an active VAT taxpayer on the day before filing the adjusted return; no more than 3 years may have passed since the invoice was issued (counted from the end of the year of issue); and the receivable must not have been settled or assigned by the date of filing (Articles 89a(2)–(3) of the VAT Act).
Full list of conditions
| Condition | Details | Legal basis |
|---|---|---|
| Probable uncollectibility | 90 days from the payment deadline with no payment or assignment of the receivable in any form | Art. 89a(1a) |
| Creditor’s status | Active VAT taxpayer on the day before filing the adjustment | Art. 89a(2)(3a) |
| Debtor’s status (B2B) | The debtor was an active VAT taxpayer at the time of the supply and on the day of the adjustment; they must not be in insolvency, restructuring, or liquidation proceedings | Art. 89a(2)(1) and (3b) |
| Time limit | 3 years from the end of the year in which the invoice was issued | Art. 89a(2)(5) |
| Receivable not settled | The receivable must not have been paid or assigned by the date the return is filed | Art. 89a(3) |
From our experience at Progress Holding, businesses most often lose the right to relief by missing the 3-year deadline. An invoice from March 2024? The deadline expires on 31 December 2027. After that date, the opportunity is gone for good.
Relief for sales to consumers and VAT-exempt taxpayers
Since 1 October 2021 (SLIM VAT 2 amendment, Journal of Laws 2021, item 1626), bad debt relief also covers sales to persons who are not active VAT taxpayers — including consumers and VAT-exempt businesses. However, the conditions are stricter (Article 89a(2a) of the VAT Act):
- The receivable is confirmed by a final court judgment and enforcement proceedings have been initiated, or
- The receivable has been entered in a national debtor register (e.g. BIG InfoMonitor, KRD, ERIF), or
- The debtor has been declared personally bankrupt (consumer insolvency).
In our practice at Progress Holding, the most common route is registration in the BIG debtor register. It is faster and cheaper than court proceedings, though it requires sending a payment demand with a 30-day deadline beforehand (under the Act on Sharing Economic Information).
When exactly does the right to a VAT adjustment arise?
The right to adjust arises in the return for the period in which the 90th day falls from the payment deadline stated on the invoice or in the contract. The adjustment is filed on a current basis — you include it in the JPK_V7 for that period, not retroactively for the month the invoice was originally issued.
Example: calculating the 90-day period
You issued an invoice on 10 January 2026 with a payment deadline of 24 January 2026. The counterparty did not pay. The 90th day from the deadline is 24 April 2026. If you file monthly, the adjustment goes into JPK_V7M for April 2026. If you file quarterly, it goes into JPK_V7K for Q2 2026.
What if you miss the correct period?
If you fail to include the adjustment in the return for the period in which the 90th day fell, you do not lose the right to relief. However, you must file an amended JPK_V7 return for that earlier period — not for the current one. A 2025 ruling by the National Tax Information Service (ref. 0114-KDIP1-3.4012.425.2025.2.ISK) confirmed that retroactive amendments are acceptable, provided the 3-year time limit has not expired.
Partial adjustment
If the counterparty paid part of the invoice, you may only adjust the VAT attributable to the unpaid portion. You do not need to wait until the entire invoice goes unpaid. The relief works proportionally to the outstanding amount.
What are the debtor’s obligations under bad debt relief?
A debtor who has not paid an invoice within 90 days of the payment deadline must reduce their deducted input VAT in the return for the period in which the 90th day falls (Article 89b(1) of the VAT Act). This obligation is automatic — it does not depend on whether the creditor used the relief.
When can the debtor avoid the adjustment?
The debtor does not need to adjust input VAT if they settle the invoice by the last day of the reporting period in which the 90th day falls. Example: payment deadline 15 January 2026, 90th day is 15 April 2026. If the debtor pays by 30 April (the last day of the month), no adjustment is required.
What if the debtor pays after the adjustment?
If the debtor settles the debt after making the adjustment, they may increase their input VAT again in the return for the period of payment (Article 89b(4) of the VAT Act). Likewise, the creditor must increase their output VAT after receiving payment (Article 89a(4)). This is known as “reversal of the relief” — both parties return to their original position.
In our client work at Progress Holding, we most often see payment delays of 4–6 months. That means two adjustments: one after 90 days, another after payment arrives. It adds bookkeeping work, but in the meantime the business recovers cash flow.
How to report bad debt relief in JPK_V7
You report the adjustment in the JPK_V7 file (both the records section and the declaration section) for the current reporting period. The creditor enters negative amounts on the sales side. The debtor adjusts fields K_46 and K_47 in the records section. Since JPK_V7 came into effect, a separate VAT-ZD notification is no longer required.
Creditor’s adjustment — step by step
- Mark the KorektaPodstawyOpodt field (value “1”) — referencing Article 89a(1) of the VAT Act.
- In the records section, enter the invoice with negative amounts in the fields corresponding to the VAT rate (K_15–K_20). Include both the net amount (taxable base) and the VAT amount.
- Include the invoice payment deadline — since January 2022 this is a mandatory field in JPK_V7. The tax office uses it to verify whether 90 days have elapsed.
- In the declaration section, the values flow into fields P_15–P_20 (with a minus sign), reducing output VAT for that period.
- Report each invoice individually — every invoice covered by the relief must be listed separately with full identification data.
Debtor’s adjustment — step by step
- Mark the KorektaPodstawyOpodt field (value “1”) — under Article 89b(1) of the VAT Act.
- Enter adjustment amounts only in fields K_46 and K_47 in the records section — not in the standard purchase fields.
- Effect: the adjustment reduces input VAT, which means a higher VAT liability for that period.
Reversing the relief after payment
When the counterparty finally pays, the creditor marks the KorektaPodstawyOpodt field referencing Article 89a(4) and enters positive amounts on the sales side. The debtor makes an analogous positive adjustment on the purchase side. Both parties return to the original settlement. The reversal relates to the period in which the receivable was settled — not the period of the original relief.
How much money can you recover through bad debt relief?
You recover exactly the amount of VAT shown on the unpaid invoice — 23%, 8%, or 5% of the net value, depending on the rate. For an invoice of PLN 100,000 net at 23% VAT, you recover PLN 23,000 in output tax.
Recovery amounts at different invoice values
| Net invoice amount | VAT rate | VAT recoverable |
|---|---|---|
| PLN 10,000 | 23% | PLN 2,300 |
| PLN 50,000 | 23% | PLN 11,500 |
| PLN 100,000 | 23% | PLN 23,000 |
| PLN 250,000 | 23% | PLN 57,500 |
| PLN 50,000 | 8% | PLN 4,000 |
| PLN 100,000 | 8% | PLN 8,000 |
There is no minimum threshold. An invoice for PLN 500 gross with PLN 93.50 in VAT also qualifies. With dozens of small unpaid invoices per year, the total recovered VAT can reach several thousand zlotys. At Progress Holding we have processed hundreds of such adjustments, and we know that businesses most often overlook exactly these small amounts.
How to recover VAT on invoices unpaid by consumers
Adjusting VAT on sales to consumers or VAT-exempt taxpayers requires meeting one of three additional conditions: a final court judgment plus enforcement proceedings, registration in a debtor register (BIG), or a declaration of consumer insolvency (Article 89a(2a) of the VAT Act).
The fastest route: BIG debtor register
- Send a payment demand — by registered letter or email with delivery confirmation. Keep proof of dispatch.
- Wait 30 days from delivery of the demand (required by the Act on Sharing Economic Information).
- Register the debt in a BIG register (BIG InfoMonitor, KRD, or ERIF) — registration is paid but significantly cheaper than court proceedings.
- File the VAT adjustment in JPK_V7 for the period in which the register entry became effective and 90 days have elapsed from the payment deadline.
The court route
For larger amounts or when you also want to enforce the claim, file a lawsuit for payment. For invoices up to PLN 75,000, consider the electronic payment order procedure (EPU). Once you obtain a final payment order and refer the case to a bailiff, you meet the condition under Article 89a(2a)(1). Both routes can be pursued simultaneously.
Does bad debt relief also apply to income tax (PIT and CIT)?
Yes. Since 2020, an analogous bad debt relief exists in Polish income taxes. The creditor reduces their taxable base by the net amount of the unpaid invoice after 90 days. The debtor increases their taxable base by the same amount (Article 26i of the PIT Act, Article 18f of the CIT Act).
How to report it in PIT and CIT
In CIT, you report the relief in the CIT-8 return (section E.5) with a mandatory CIT/WZ attachment. In PIT, you use the PIT-36 or PIT-36L return with a PIT/WZ attachment. The 90-day and 3-year time limits work identically to VAT. You can apply the VAT relief and income tax relief independently — one does not preclude the other.
Progress Holding offers a VAT and CIT return preparation and adjustment service. If you have overdue receivables and want to recover both VAT and overpaid income tax, we prepare the full set of adjustments in a single process.
Common mistakes with bad debt relief — what we see in practice
Based on accounting services for over 500 companies at Progress Holding — including regular monitoring of overdue receivables — we have identified five mistakes that cost businesses real money.
Mistake 1: exceeding the 3-year deadline
28% of clients who come to us with arrears have invoices that are more than 3 years past the end of the year of issue. In those cases, bad debt relief is no longer available. Maintain a ledger of overdue receivables and monitor deadlines — do not put off the adjustment.
Mistake 2: not verifying the debtor’s VAT status
Before filing the adjustment, check the VAT taxpayer register at podatki.gov.pl to confirm the debtor is still an active VAT taxpayer and is not in insolvency, restructuring, or liquidation. A printout from the day before filing is required as evidence. About 15% of new clients lack this document in their files, which exposes the adjustment to challenge during an audit.
Mistake 3: filing the adjustment in the wrong JPK_V7 period
The adjustment should go into the JPK_V7 for the period in which the 90th day fell. If you miss that period, you must file a retroactive amendment — not include the relief in a later month. Assigning the wrong period triggers questions from the tax authority and delays the settlement.
Mistake 4: forgetting to reverse the relief after payment
If the counterparty eventually pays, you must increase output VAT in the period you received payment (Article 89a(4)). Omitting this is an understatement of VAT with all the consequences that entails. At Progress Holding, we monitor incoming payments automatically and generate reversal adjustments as soon as they are posted — no client forgets the reversal.
Mistake 5: ignoring small invoices and lacking systematic monitoring
Businesses that issue hundreds of invoices per month lose thousands of zlotys annually because they do not monitor overdue receivables systematically. A dedicated ageing report with a 90-day threshold is the minimum that every accounting department should have. Our system automatically flags invoices that qualify for relief.
Does the creditor need to notify the debtor?
No. Since JPK_V7 was introduced, the creditor has no obligation to inform the debtor about the adjustment. The debtor’s obligation to adjust arises automatically after 90 days — regardless of whether the creditor has taken any action.
In JPK_V7, the creditor reports the invoice payment deadline. The tax office uses this data for cross-verification — checking whether the debtor made the required adjustment on their side. This is one of the most effective audit tools used by the National Revenue Administration (KAS).
Frequently asked questions
Can I use bad debt relief if the debtor is in insolvency proceedings?
No — if on the day before filing the adjusted return the debtor is undergoing insolvency, restructuring, or liquidation proceedings, standard bad debt relief does not apply (Article 89a(2)(3b) of the VAT Act). Exception: consumer insolvency — in that case, an adjustment is possible under Article 89a(2a)(3).
How long do I have to make the adjustment?
You have 3 years from the end of the year in which the invoice was issued. Invoice from March 2024 → deadline is 31 December 2027. The adjustment should relate to the period in which the 90th day fell. If you missed that period, you file a retroactive amendment, but still within the 3-year limit.
Do I need to send a payment demand to use the relief?
No. The regulations do not require a payment demand as a condition for relief on transactions with active VAT taxpayers (B2B). A demand is, however, necessary for relief on consumer transactions — registering a debt with BIG requires a prior demand with a 30-day deadline. Regardless of the legal requirements, documenting collection attempts is good practice in case of an audit.
Does the relief apply to advance payment invoices?
Yes. The relief covers any receivable arising from a VAT invoice documenting a supply of goods or services within the country — including advance payment invoices. It does not cover internal documents (e.g. imported services) or accounting notes.
What happens if the debtor does not adjust their input VAT?
The tax office identifies the missing adjustment through cross-verification of JPK_V7 data from the creditor and debtor. A debtor who has not reversed the deducted VAT on time is understating their tax liability — they face late-payment interest and penalties under the Tax Ordinance and the Fiscal Penal Code.
Can I adjust only part of an unpaid invoice?
Yes. If the counterparty paid part of the amount due, you may only adjust the VAT attributable to the unpaid portion (Article 89a(1) of the VAT Act). The debtor likewise adjusts input VAT only on the unsettled part.
How to effectively recover tax on unpaid invoices
Bad debt relief in Polish VAT is a practical tool for improving cash flow — it lets you recover tax that you paid to the tax office even though you never received payment from your counterparty. Monitor overdue receivables monthly. Verify the debtor’s VAT status at podatki.gov.pl before each adjustment and keep a printout on file. File adjustments in JPK_V7 for the correct period, and after receiving payment — do not forget to reverse the relief.
If you sell to consumers, consider registering the debt in a BIG register as a fast track to recovering VAT without court proceedings. Do not overlook small invoices — the absence of a minimum threshold means every unpaid invoice is your money frozen with the tax office.
Need help filing bad debt relief, monitoring overdue receivables, or amending your JPK_V7? Contact us at Progress Holding: +48 603 232 418 or office@progressholding.pl. We will review your receivables, prepare VAT and CIT adjustments, and ensure you recover your tax on time.
