Poland’s Ministry of Finance announced that it has approved a draft bill aimed at simplifying and modifying VAT regulations for small businesses on 10 September 2024.

The legislation aims to simplify administrative obligations by introducing the possibility of using the VAT exemption in EU Member States other than the country of establishment. For instance, a taxable person from another EU Member State can use the VAT exemption in Poland if their annual turnover in Poland is under PLN 200,000 and their total EU turnover is below EUR 100,000.

The proposed bill enables small businesses in Poland to apply for tax exemptions in other EU Member States, provided their annual turnover in the EU is below EUR 100,000 and their turnover in the respective state does not exceed the local threshold.

Currently, small businesses operating in EU countries, where they lack physical premises, are generally required to register to meet their VAT obligations.

The draft legislation also adapts Polish law to EU regulations, introducing new rules for determining the place of supply of services. This includes various services, such as access to cultural, artistic, sporting, scientific, educational, and entertainment events. It is said that new solutions will promote fair competition and increase VAT revenues in countries where service consumption takes place.

In addition, the draft bill excludes the special margin procedure for works of art, collectors’ items, and antiques that have been acquired at a reduced VAT rate.

The bill is proposed to take effect on 1 January 2025.