VAT exemption – special scheme for small entrepreneurs (SME)
Introduced as of 1 January 2025, the SME special procedure allows small entrepreneurs established in the European Union to benefit from a subjective exemption from VAT in other EU Member States in whose territory they sell.
With the SME procedure:
– taxpayers with a seat of business activity in Poland can benefit from the subjective exemption from VAT in other EU countries;
– taxpayers with the seat of their business activity in an EU country other than Poland may use the entity exemption from VAT in Poland.
The condition for using the SME procedure is that the taxpayer meets:
– on the one hand, the ‘local conditions’ defined by the EU country in question for national taxpayers (e.g. with regard to the quota threshold or the types of activities excluded from the exemption);
– on the other hand, the ‘EU condition’ according to which the total annual value of supplies of goods and/or services whose place of taxation is the territory of the EU (including Poland) did not exceed EUR 100,000 (or its equivalent) in the preceding or current tax year (excluding VAT).
Use of the SME procedure is optional – the taxpayer decides for itself whether and in which countries to use it (provided that it meets the conditions for its use in a given country).
The SME procedure is handled by the EU Member State in which the taxpayer has its registered office (notification to the procedure and assignment of an identification number with the ‘EX’ prefix, quarterly information on turnover). The competent authority for taxpayers with their registered office in Poland is the Head of the 2nd Tax Office Warsaw-Śródmieście.
Should you have any doubts or questions regarding this topic, please do not hesitate to contact our specialists.