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Considering expanding your business to other EU countries but concerned about VAT on sales outside Poland? This guide answers the question of the VAT-free EU sales limit.
The SME procedure: EU VAT exemption for small businesses
We wrote about the SME procedure on our blog at the start of this year, when it came into force. What exactly is it?
The SME procedure is voluntary and lets small EU businesses use the VAT exemption for small taxpayers in all member states. This facilitates cross-border supplies of goods and services by the smallest European firms with an exemption like that applying to domestic transactions.
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What is the VAT-free EU sales limit under the SME procedure?
The SME procedure is only for small businesses. What conditions must be met?
- Total sales of goods and services in all EU member states, including Poland, must not have exceeded EUR 100,000 in the previous tax year;
- Total sales in all EU member states, including Poland, must not exceed EUR 100,000 in the current tax year;
- The local conditions for the VAT exemption for small taxpayers must be met in the member state where it is sought. In Poland the 2025 sales limit is PLN 200,000;
- Goods or services subject to mandatory VAT registration cannot be sold or provided.
Using the SME procedure's exemption does not require you to use the domestic VAT exemption.
To join, notify the competent tax office of the intention to use the exemption in specified member states. For Polish entities it is the Head of the Second Warsaw-Śródmieście Tax Office.
Intra-Community distance sales: VAT-free EU sales limit outside the SME procedure (EU VAT limit)
The SME procedure is completely voluntary and limited to certain small businesses.
Thus VAT can be settled outside the SME procedure even when an exemption is desired.
Here the key limit is the value of goods supplied and services provided to customers in other EU member states, outside Poland, under Article 22a(1)(3) of the VAT Act: EUR 10,000 (PLN 42,000) per year. This must not be exceeded in either the current or previous tax year.
Within this limit, three VAT settlement options are available:
- Treat cross-border sales like domestic sales;
- Register for VAT in the country of supply and settle there;
- Register for VAT OSS and settle through it.
The first method means selling VAT-free under the exemption. Like the SME procedure, it requires steps: registration as an EU VAT taxpayer and regular special reports on cross-border sales.
If this article interested you, explore our e-commerce accounting services and see how we can help:
Summary
Want to sell goods or services in Poland and other EU countries? If you need help with VAT on cross-border sales, including VAT OSS and VAT IOSS, contact the TaxCoach accounting firm. We will prepare the best proposal for you!
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