Lower VAT rates in Poland

As of 1 February 2022, the so-called Anti-Inflation Shield 2.0 came into effect, as a further measure, following the so-called Anti-Inflation Shield 1.0, in force since 1 January 2022, taken to mitigate the effects associated with rising inflation. Both acts introduce a temporary reduction of VAT rates on certain goods.

Details of the VAT reduction are below:

The Anti-inflation shield 1.0. (concerning the reduction of VAT rates in January 2022) provides in particular:

• Reduction of VAT rate for natural gas from 23% to 8%
• Reduction of VAT rate on electricity from 23% to 5%
• Reduction of VAT rate for system heat from 23% to 8%
• Shield subsidies for households
• Reduction of the price of fuel through maximum reduction of excise duty
• Extension of special gas tariffs to multi-apartment buildings of cooperatives and housing communities, as well as hospitals, schools, kindergartens, nurseries, and cultural institutions.

The Anti-inflation Shield 2.0. provides in particular:

• Reduction of the VAT rate on fuel from 23% to 8%
• 0% VAT rate for basic food products currently subject to 5% VAT rate
• 0% VAT rate for gas
• Prolongation of application of the 5% rate for electric energy
• Reduction of the VAT rate on heat from 8% to 5%
• 0% VAT rate for agricultural fertilizers

Temporary reduction of VAT rates under the Anti-Inflation Shield 2.0. is applicable for the period from 1 February 2022 to 31 July 2022.

The reduction of VAT rates gives rise to numerous doubts, among others, with respect to the taxation of utilities that are passed on to tenants (or, for example, are a component of the rental price). It may also cause difficulties in the case of sales of goods for periods when different rates were in force.

If you are interested in our support in correct VAT settlements after the changes resulting from the so-called Anti-inflation Shields, please contact our expert: