Private rental is a trap for Polish companies. They may lose their VAT exemption

The tax office requires entrepreneurs in Poland to add up the turnover from business and private rental. As a result, they easily exceed the limit and lose their exemption.

Although the mere renting of an apartment for residential purposes is exempt from VAT, it may result in taxation of the basic activity.

Private rental is a trap for Polish firms

One of the readers of a Polish newspaper fell into such a trap. He runs a company and enjoys a subjective exemption from VAT, which is available to those who have up to  200,000 PLN turnover per year. 

He also rents a flat for housing purposes, he does not pay tax on the rent pursuant to Art. 43 sec. 1 point 36 of the VAT Act. He asked the National Tax Information how the exemption limit should be calculated.

It turns out that he has to add up the turnover from business and rental. “All transactions related to real estate (including turnover from renting apartments for housing purposes) should be included in the limit of the subjective exemption” – reads the position of the KIS.

The consequences of falling into such a trap are very unpleasant. – If it turns out that the entrepreneur should settle VAT earlier, he must first of all pay the overdue tax. He will not recover it from contractors, he must bear its burden himself, deducting it from the amounts he received from them. In addition, there is interest for late payment – explains Grzegorz Gębka, tax advisor at the GTA law firm.

It’s not everything

– This involves the correction of all settlements, including PIT. There are also administrative duties: the need to keep records of sales and purchases, submit declarations, prepare a Standard Audit File – lists Cezary Szymaś, co-owner of the ASCS-Consulting accounting office.

Source: Rzeczpospolita

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I am from Denmark but have lived and done business in Poland since the Spring in 2008. I have had a webshop with Scandinavian designed products, and event company in Poland. Today I am a business consultant and b2b IT consultant plus sales agent on the Polish market. I have lived/done business in 3 different cities and in 3 different regions (voivodeships) in Poland. My business network and knowledge about doing business in Poland and about Poland are therefore very big.

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