As of 1st July 2020, Poland is introducing a new VAT rate matrix which will change the classification of goods and services for VAT purposes. This change will aim to simplify the VAT rate system in Poland and make it easier for taxpayers to determine what rate to apply.
From that date, goods and services will no longer be classified according to the Polish Classification of Goods and Services (PKWiU). Instead, taxpayers will need to apply the VAT treatment in accordance with the two following classification tools:
- Combined Nomenclature (CN) for goods and
- Polish Classification of Products and Services (PKWiU 2015) in the field of services
Why is the new VAT matrix being introduced?
The Polish Government is introducing this new matrix with the intention of applying, as much as possible, a single VAT rate to an entire CN category of products. This means that a significant number of goods will have their VAT rates reduced from 8% to 5%. To balance the effect on the general reduction of rates, the new matrix will increase the rates on a few selected items.
Examples of VAT rate changes as part of the new matrix
The following items will have their VAT rate modified as of 1 July 2020:
- some food products – tropical fruits and citruses (from 8% to 5%)
- some breads and pastries (from 23% and 8% to 5%), soups, broths, homogenised and dietetic food (from 8% to 5%)
- some spices – mustard, ground pepper (from 23% to 8%)
- products for babies and children – food, pacifiers, nappies, car seats (from 8% to 5%),
- some hygiene items such as sanitary pads (from 8% to 5%).
Binding Rate Information (WIS)
In order to support taxpayers in determining which VAT rate to apply, the Polish government introduced in November 2019 a new scheme available for taxpayers.
The Binding Rate information (Wprowadzenie wiążącej informacji stawkowej or WIS) is an administration decision to help taxpayers follow the correct VAT rules to their products and services by giving them a clear confirmation on the VAT treatment.
Upon application, a decision should be given by the Director of the National Treasury Information within three months.
What to think about
The Combined Nomenclature is updated each year, which means that as a taxpayer, you will need to monitor on an annual basis any updates that impact your product categories.