VAT exemption. The government is preparing an important change

The government intends to raise the limit of annual turnover entitling to exemption from VAT – from 200,000. PLN up to 240 thousand zloty. This proposal was included in the bill introducing the national e-invoice system (KSEF). This is the first such change in eight years, which is to partially compensate for inflation and support small entrepreneurs

New VAT exemption limit

As the expert explains, an elevated threshold can have a positive impact on the competitiveness of small companies and the services market for consumers.

– The current limit of subjective exemption from VAT (PLN 200,000) has been in force since 2017 and was not valorized at that time. As a result, with accumulated inflation in 2017-2024, the real value of this threshold significantly dropped. Raising the limit to 240 thousand PLN is an attempt to realize the threshold and adapt it to today’s economic conditions – explains Piotr Juszczyk, the main tax advisor of Infakt.

According to the expert, the current limit has become a barrier to microfirm – the smallest enterprises bear relatively the highest service costs, even an accountant. The status of a VAT taxpayer is also administrative obligations. Increasing the threshold is to relieve small entrepreneurs, reducing the number of obligations and costs related to VAT settlement.

EU Limit of VAT exemption – up to 85,000 euro

The European context definitely favors the further raising of the VAT exemption limit – both from the point of view of entrepreneurs and compliance with EU regulations.

– At the beginning of 2025, changed VAT regulations entered into force throughout the European Union, which allow the Member States to determine the maximum release threshold even at the level of EUR 85,000 annual trading. Calculating into Polish zlotys, it is about 350 thousand. zloty. Currently planned 240,000 PLN is therefore still below the permissible maximum of the EU – says Juszczyk.

He adds that the new EU regulations also have a practical dimension for companies operating in several markets:

– For example, a company from Poland may benefit from VAT exemption when selling in another EU country, and an EU entrepreneur can benefit from a Polish exemption (up to the amount of our national limit). The exception is Spain, where in this case, unfortunately, you have to go through VAT formalizations and pay tax – without the possibility of taking advantage of the exemption – he explains.

Expert: “For a consumer it’s real saving”

According to the expert, increasing the limit of VAT exemption to 240 thousand. PLN will be particularly felt for entrepreneurs providing services to consumers, i.e. individual clients (B2C).

– If the company does not exceed the threshold and is out of VAT, it does not have to add 23 percent. tax to the price of its services or goods, thanks to which it can offer lower, more competitive prices for retail customers. For the end consumer who has no right to deduct VAT, the lack of this tax at a price is real saving – explains Juszczyk.

The expert indicates that already at a monthly sales of approx. 16.7 thousand. PLN net entrepreneur loses the right to exemption from VAT, which forces him to add 23 percent. tax for invoices – and this often means the need to raise prices.

– higher threshold – 240 thousand PLN – will allow you to maintain lower prices for longer for people conducting, e.g. sole proprietorships and serving natural persons. In practice, including Freelancers, small service providers (e.g. instructors, IT specialists, marketers) or craftsmen directing the offer to private clients – says tax advisor.