Filing VAT returns

One of the key responsibilities for businesses regarding VAT is the submission of VAT returns, which form the basis for settlements with tax authorities. These returns must include detailed information about sales and purchase transactions, allowing for the calculation of VAT due for payment or refund. The deadlines and formats for submitting returns can vary by country, though in the European Union, the standard practice is to file them monthly or quarterly. This article will focus on the process of filing VAT returns, the requirements, and the implications for companies operating both locally and internationally.

What is a VAT return?

A VAT return is a document that a business submits to the tax office to account for value-added tax (VAT). In the VAT return, the business must report all sales and purchase transactions made during the accounting period, including the VAT due (which the company must pay to the tax office), and the VAT incurred (which the company paid on purchases and can reclaim). Based on these figures, it is determined whether the company needs to pay additional tax or is entitled to a VAT refund. The VAT return is a fundamental tool for proper tax settlement and must be submitted by set deadlines, typically monthly or quarterly, depending on the country’s regulations.

Who must submit VAT returns?

A VAT taxpayer is any individual, legal entity, or organizational unit without legal personality that engages in economic activities involving the supply of goods or services within the country. This means that any company or individual conducting business whose turnover exceeds a certain threshold must calculate, collect, and pay VAT to the tax office.

VAT taxpayers are divided into two main categories: active VAT taxpayers and exempt VAT taxpayers.

An active VAT taxpayer is an individual, legal entity, or organizational unit that is required to calculate, collect, and pay VAT on goods and services sold to tax offices.

An exempt VAT taxpayer is someone who benefits from VAT exemption. This exemption can result from two main types:

1. Subjective exemption – This applies to businesses whose annual net turnover does not exceed a certain limit. In Poland, in 2024, this limit is PLN 200,000. Businesses below this threshold can choose to be VAT-exempt, meaning they do not need to charge VAT on sales, but they also cannot reclaim VAT on purchases. This exemption is especially beneficial for small businesses, allowing them to offer lower prices to their customers.
2. Objective exemption – This applies to certain types of goods or services, regardless of the business’s turnover. Examples include medical services, educational services, or certain types of food. These services are VAT-exempt for social, cultural, or health reasons, meaning that even large companies providing these services do not have to charge VAT.

Who can benefit from double VAT exemption?

Businesses can benefit from both subjective and objective VAT exemptions simultaneously if they meet all the criteria for each type of exemption. For example, a company offering services that are VAT-exempt (such as medical services) and subject to taxation may benefit from both types of exemption. It is crucial, however, that the business regularly monitors its annual turnover to ensure it does not exceed the threshold for subjective exemption (PLN 200,000 in Poland for 2024). Additionally, the business must carefully analyze the type of services or goods it offers to determine if they fall within the objective exemption categories.

What is voluntary VAT and when should you opt for it?

Voluntary VAT refers to the option for businesses to forgo subjective VAT exemption, even if their annual turnover does not exceed the PLN 200,000 threshold. Opting for voluntary VAT registration can be beneficial, especially if you plan to make large purchases that allow for VAT deduction.

If you are already registered for VAT, you must inform the head of the tax office before the accounting period (month or quarter) in which you intend to waive the subjective exemption. If you are just starting a business, you must submit a notification before making your first taxable transaction.

Filing monthly vs. quarterly VAT returns

In the Polish tax system, businesses can choose between monthly and quarterly VAT filings.

Monthly filing involves submitting a VAT return by the 25th day of the month following each business month. At the same time, the business is required to pay the declared tax to the appropriate tax office.

Quarterly filing is available to so-called small taxpayers, i.e., businesses that meet specific conditions regarding annual sales or the type of business they run, qualifying for special VAT accounting rules.

According to regulations, a small taxpayer is:

1. A business whose annual sales value (including VAT) does not exceed PLN 9,654,000 (EUR 2,000,000) in 2024.
2. A person conducting activities such as brokerage services, investment fund management, or other business types where total commissions or fees did not exceed PLN 217,000 (EUR 45,000) in the previous year.

In practice, this means a small taxpayer can file quarterly VAT returns if they stay within these limits and meet additional conditions. Otherwise, they are required to file monthly returns.

New VAT filing procedures in Poland

Since September 30, 2020, new VAT filing rules have been in place in Poland, introducing a simplified system for submitting VAT returns and JPK VAT in a single file. Previously, active VAT taxpayers had to submit JPK VAT files separately on a monthly basis and VAT-7 or VAT-7K returns, depending on their chosen accounting period. Currently, both forms have been replaced by a single file: JPK V7M for monthly filings and JPK V7K for quarterly filings. This new structure allows for the consolidation of data from both documents and adds additional information to enable tax offices to more thoroughly analyze and verify transactions.

The JPK file now consists of two parts:

1. The registry part – Includes data from the former JPK VAT, enhanced with additional information, such as document labels or product group codes.
2. The declaration part – Corresponds to the old VAT-7 and VAT-7K returns.

JPK V7M is intended for taxpayers who file VAT returns monthly. In this case, both the registry and declaration parts must be submitted monthly by the 25th day of the following month for the previous month.

JPK V7K applies to taxpayers who file quarterly. These taxpayers submit the registry part monthly but only submit the declaration part once a quarter – by the 25th day of the month following the quarter’s end. In practice, for the first two months of the quarter, only the registry part is filed, while for the third month, both the registry and declaration parts are submitted.

The entire JPK V7M or JPK V7K file must be submitted in XML format, regardless of the filing frequency.

Filing zero VAT returns

In most EU countries, businesses are required to file VAT returns even during periods when no taxable transactions have taken place. These returns, known as zero returns, serve to confirm that there has been no activity during the reporting period. Even if a business has not generated any income but holds an active VAT number, it must submit the appropriate return.

During a suspension of business activity, entrepreneurs may still be required to file JPK_V7 reports, depending on the transactions conducted. This applies particularly to those involved in intra-community acquisitions of goods (WNT), importing services, or purchasing goods for which they are VAT liable, as well as those engaged in VAT-eligible activities. This obligation also arises if the suspension does not cover the entire reporting period or if the taxpayer needs to settle VAT or correct previously filed returns.

If a business is completely suspended with no VAT-eligible transactions, there is no requirement to file JPK_V7 reports. However, if the business activities during the suspension are limited to VAT-exempt sales, the filing of JPK_V7 returns for that period can be skipped and reported only after resuming operations.

It is important to note that requirements for filing zero returns and their frequency (e.g., monthly or quarterly) vary by country and local regulations. Therefore, it is crucial for each entrepreneur operating in the EU to familiarize themselves with the regulations in the country where they conduct their business.

Where to file VAT returns

Filing VAT returns, including JPK_V7M and JPK_V7K, requires submitting documents to the appropriate tax office depending on the taxpayer’s status and place of business. Since October 1, 2020, these returns should be submitted to:

• The tax office responsible for the taxpayer’s registered address – if you are a legal entity or an organizational unit without legal personality.
• The tax office responsible for the taxpayer’s place of residence – if you are an individual conducting business.
• The tax office responsible for the fixed place of business – if you do not have a business address in Poland but have a fixed place of business in the country.
• The Second Tax Office Warsaw-Śródmieście – if you do not have a business address or fixed place of business in Poland.

VAT-8, VAT-9M, VAT-10, VAT-11, and VAT-12 returns should be filed with the tax office responsible for the registered address (if you are a legal entity or an organizational unit without legal personality) or the place of residence of the taxpayer (if you are an individual). VAT-14 should be filed with the tax office responsible for excise tax, and VAT-26 with the tax office appropriate for the taxpayer.

If your business involves dealings with the tax offices for large entities, returns should be filed with:

• A specialized regional tax office – if your net revenues amount to at least 3 million euros.
• The Mazowieckie Tax Office in Warsaw – if your net revenues exceed 50 million euros.

How to properly submit JPK_VAT

Preparing and submitting the JPK_VAT file can be done in several ways, depending on the available tools and taxpayer preferences. Options include:

• Using free solutions offered by the Ministry of Finance, such as the e-mikrofirma program, accessible by logging into the Ministry’s portal: https://www.gov.pl/web/login or via the mObywatel app.
• Using the JPK WEB Client tool: https://e-mikrofirma.mf.gov.pl/jpk-client/send, which allows for both signing and sending JPK_VAT files.
• Completing the simplified form: https://e-mikrofirma.mf.gov.pl/jpk-form/, also provided by the Ministry of Finance, which allows for generating files in JPK_V7M and JPK_V7K formats.

If you use commercial accounting software, check if it supports direct preparation and submission of JPK_VAT files or if you can download data to the JPK WEB Client app.

To sign the JPK_VAT file, you have three methods:

• Trusted Profile: https://pz.gov.pl/pz/index, a free electronic signature available at offices and through online banking.
• Qualified electronic signature, which is paid and issued by certified providers.
• Authorizing data, requiring the provision of basic personal information and income from the previous year.

Upon submitting a correct JPK_VAT file, you will receive an Official Receipt Confirmation (UPO), confirming the proper submission of the declaration.

Consequences of late VAT returns

Failure to submit VAT returns on time has serious financial and legal consequences for the taxpayer. The lack of submission results in the obligation to pay the due tax along with interest for each day of delay. Additionally, under Article 54 § 1 of the Tax Penal Code, a taxpayer who avoids taxation by failing to file VAT returns risks a fine up to 720 daily rates, imprisonment, or both penalties concurrently.

The taxpayer has the option to mitigate consequences by using the so-called voluntary disclosure. This is a formal notification to the tax authorities about committing an offense, which can protect the taxpayer from fiscal criminal sanctions, provided it is submitted before the initiation of proceedings by the tax authorities. In practice, this means that if the taxpayer self-reports their negligence and settles the dues, they may avoid the penalty. However, voluntary disclosure will not be effective if the tax authorities already have evidence of the offense or have started an investigation related to the offense.

Summary – Filing VAT returns

VAT is a key component of the tax system in both Poland and the entire European Union. VAT is most commonly reported on a monthly or quarterly basis, but the rules for filing and reporting vary across countries. In Poland, quarterly VAT reporting is available only for so-called small taxpayers, who meet specific criteria such as annual sales below a set limit and no engagement in certain activities listed in Annex 15 of the VAT Act. It is also important to remember that to qualify for quarterly reporting, the business must be registered as an active VAT taxpayer for at least 12 months.

According to the new procedures effective from October 1, 2020, every VAT return in Poland is submitted electronically via JPK_V7 (monthly JPK_V7M or quarterly JPK_V7K). Depending on the type of business, these returns should be filed with the tax office responsible for the taxpayer’s registered address, place of residence, or fixed place of business. Those without a business address in Poland submit their returns to the Second Tax Office Warsaw-Śródmieście.

To correctly file VAT returns, businesses can use free tools provided by the Ministry of Finance, such as the e-mikrofirma program, the JPK WEB Client tool, or the simplified form for generating and sending JPK files. These returns must be signed using a trusted profile, qualified electronic signature, or authorizing data.

However, it is important to note that VAT filing procedures and rules differ across EU countries, which can further complicate reporting, especially for businesses operating in multiple markets. Each member state has its own VAT regulations, and their complexity can pose a challenge for entrepreneurs. If you encounter difficulties understanding VAT regulations or have questions about reporting in different countries, amavat® offers comprehensive assistance in this process. We provide a dedicated Customer Manager and professional support from local tax advisors across Europe, helping businesses accurately and timely manage VAT across all markets in which they operate.

To learn more or inquire about your individual offer, please visit our dedicated website and use the contact form: Contact us – amavat®.