What is the VAT exemption limit in 2026?
The sales limit qualifying for VAT exemption in Poland is 200,000 PLN per year. If your revenues are lower, you are not obliged to register as an active VAT payer.
The proportionality rule for new companies is important. If you start a business during the year, this limit is not the full 200,000 PLN. You calculate it proportionally to the number of days remaining until the end of the year. at Progress Holding, we help calculate this limit precisely during company registration so that you do not fall into a tax trap right at the start.
Formula for the proportional limit:
Limit = 200,000 PLN × (number of days of business activity / number of days in the year).
Who cannot benefit from VAT exemption?
There is a group of activities that excludes the right to VAT exemption, regardless of the turnover achieved. If you perform these activities, you must register for VAT before the first sale.
These regulations are strict and provide for no exceptions. This mainly applies to advisory industries and trade in sensitive goods. Our accounting department verifies the PKD codes of each client to ensure compliance with the VAT Act.
List of exclusions from exemption (examples):
- Legal services and management consultancy.
- Jewelry services.
- Debt collection (factoring).
- Sale of excise goods (alcohol, cigarettes, electricity).
- Sale of car parts and motorcycles.
- Online sale of cosmetic and toilet preparations.
- Sale of computers and electronic products (in online sales).
Which is more profitable: being a VAT payer or exemption?
The decision mainly depends on who your customers are. VAT exemption is beneficial for B2C sales (to consumers), while active VAT payer status pays off in B2B relations (between companies).
| Feature | VAT exempt company | Active VAT payer |
|---|---|---|
| Price for a “walk-in” customer | Lower (no added VAT) | Higher by 23% (standard) |
| Deducting VAT from purchases | Not possible | Full deduction (e.g., from fuel, laptop) |
| Bureaucratic duties | Simplified sales records | JPK_V7 file monthly/quarterly |
How does it look in practice? Progress Holding experience
Based on the analysis of over 500 registration processes that we carried out at Progress Holding, we notice one critical error among new entrepreneurs. It is ignoring the “December trap”.
An entrepreneur sets up a company, for example, on December 15th. Their VAT exemption limit for this year is only about 9,300 PLN (proportion for 17 days). It is enough to issue one invoice for 10,000 PLN to lose the exemption by law. They enter the new year as a mandatory VAT payer, often unknowingly. Our experts always warn about this mechanism when planning the business launch date.
When is the exemption lost and what to do?
You lose the exemption the moment you exceed the sales limit (200,000 PLN or the proportional limit). The surplus over this amount is subject to taxation, and you are obliged to submit a VAT-R application.
You must register as an active VAT payer within 7 days from the date of losing the right to exemption. If you do not do this, you risk fiscal penal sanctions. As part of our ongoing accounting services, we monitor this limit for you on an ongoing basis.
Frequently Asked Questions (FAQ)
Does the export of services count towards the 200,000 PLN limit?
No, the limit of sales value does not include the paid supply of goods and paid provision of services exempt from tax, as well as goods that are classified as fixed assets and intangible assets subject to depreciation.
Can I return to VAT exemption?
Yes, return is possible after a full year has passed (counting from the end of the year in which you lost the exemption). You must also meet the condition of not exceeding the turnover limit in the previous year.
Does VAT exemption apply to foreigners running a company in Poland?
Yes, the rules are identical for Polish citizens and foreigners conducting business here. The key is the place of taxation of sales, which is Poland.
Choosing between being a VAT payer and using the exemption is a strategic business decision. Bad calculation can cost your company a loss of competitiveness or problems with the tax office. Tax law changes dynamically, so it is worth relying on expert knowledge.
Do you need professional support? Contact us at Progress Holding at +48 603 232 418 or via email at office@progressholding.pl.
