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Legislation passed on 24 June 2025 and signed on 3 July 2025 increased Poland’s turnover-based VAT exemption threshold from 1 January 2026. What does the PLN 240,000 limit mean for smaller businesses, and when is exemption worthwhile?
The previous turnover-based VAT exemption
Article 113 of the VAT Act of 11 March 2004 governs the turnover-based exemption. Until the end of 2025, the general limit was PLN 200,000 of sales excluding VAT, assessed under the statutory rules for the previous and current tax years.
Eligible businesses established in Poland could choose the exemption, subject to the exclusions in Article 113(13). The relief was not available for every type of sale or service. The 2026 amendment raised the general limit for the first time in nine years.
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The PLN 240,000 limit from 1 January 2026
The new annual threshold is PLN 240,000. Transitional provisions also allow eligible businesses whose 2025 sales exceeded PLN 200,000 but did not exceed PLN 240,000 to return to the exemption in 2026, subject to the applicable conditions.
This does not retrospectively cancel VAT obligations that arose when the old threshold was exceeded in 2025. A business starting during a year must consider the proportionate limit, and excluded activities remain excluded.
Benefits of the higher threshold
For many small businesses, exemption can simplify administration by reducing ordinary output-VAT settlement, related records and routine JPK_VAT filing obligations. It can also reduce the opportunity for errors in those settlements, lower accounting costs and leave more time for business development.
Exemption does not remove all records or tax duties. For example, particular cross-border transactions can require separate VAT treatment, and VAT-exempt status does not by itself exclude a business from applicable KSeF requirements.
Is exemption always the best option?
No. The exemption is voluntary, and its administrative advantages must be compared with the loss of the usual right to deduct input VAT on purchases used for exempt sales.
An active VAT taxpayer can, under the relevant conditions, offset deductible input VAT on business purchases against output VAT on sales. A business with substantial costs or planned investment may therefore benefit from remaining registered even if its turnover is below the threshold.
Customer preferences also matter. Business customers entitled to deduct VAT may prefer buying from active VAT taxpayers, while the pricing implications can differ in consumer markets.
Before choosing or returning to exemption
Compare expected sales, planned investment, customer structure and the applicable registration procedure. TaxCoach can help with VAT registration and ongoing settlement so the choice reflects your actual business.
Interested in this article? Explore our tax advisory services and see how we can help:
Summary
The higher threshold gives more eligible businesses a choice; it does not make exemption automatically profitable. Assess the administration saved against input VAT you would lose, and check the transition rules if you exceeded PLN 200,000 in 2025. The best decision depends on costs, investment and customers.
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