VAT Exemption in JDG — the 200,000 zł Threshold and What Comes Next

If your turnover does not exceed 200,000 zł per year, you can take advantage of the subject-matter VAT exemption. This means you don't add VAT to invoices, you don't file JPK_V7, and you don't deduct VAT on purchases. It sounds simple — but there are catches.

This guide explains when it's worth using and when it's better to give it up and become a VAT payer.

The 200,000 zł Threshold — How to Calculate It

The exemption applies if the value of taxable sales did not exceed 200,000 zł in the previous tax year.

What Counts Toward the 200,000 zł Threshold?

• Revenue from the sale of goods and services in Poland
• Revenue from VAT-exempt sales (e.g., care services, insurance)
• Revenue from intra-community services (intra-community acquisition of goods [WNT], intra-community supply of services [WŚU])

What Does NOT Count Toward the Threshold?

• Amounts received as deposits or advance payments (until the service is rendered)
• Revenue from activities not subject to VAT (e.g., dividends, compensation)
• Supplies of used means of transport (in certain cases)

Who Cannot Use the Exemption?

Even below 200,000 zł, you must be a VAT payer if:

• You provide consulting, jewelry, or legal services — these services are excluded from the exemption regardless of turnover
• You are an agent acting in your own name (e.g., insurance agent)
• You issue invoices with VAT and didn't opt out in time (if you accidentally charged VAT, you must pay it)
• Electronic services for individuals within the EU (mini One Stop Shop — MOSS)
• You supply goods in returnable packaging (certain cases)

Subject-Matter vs Personal Exemption — What's the Difference?

| Type | Basis | For whom | |-----|----------|----------| | Personal | Turnover < 200,000 zł | Anyone below the threshold (with exclusions) | | Subject-matter | Type of service | Regardless of turnover (e.g., care, medical services, insurance) |

Example: If you provide senior care services, you are exempt from VAT on subject-matter grounds — regardless of turnover, even above 200,000 zł.

When Is It Worth Being a VAT Payer?

The VAT exemption isn't always the best deal. Consider registering if:

1. You Have High VAT-Bearing Costs

If you buy equipment, materials, or services with VAT and you're exempt — you can't deduct that VAT. With large purchases (computers, tools, car leasing), it's better to be a VAT payer.

2. Your Clients Are Other Businesses (B2B)

Businesses often prefer to work with VAT payers because they can deduct VAT from your invoice. If you're exempt, your client can't deduct VAT — which makes your services more expensive for them.

3. You Export or Provide Services in the EU

If you work with foreign contractors, EU VAT registration (VAT-UE) is often necessary — even if you're personally exempt.

How to Register for VAT or Opt Out?

VAT Registration

1. Submit the VAT-R form to the tax office (no later than the day before you become a VAT payer)
2. You receive confirmation and a NIP with a PL prefix
3. From the next day, you add VAT to invoices and file JPK_V7

Exemption Registration

If you don't register as a VAT payer, you automatically benefit from the exemption (if turnover < 200,000 zł). You don't need to file anything.

Giving Up the Exemption

You can give up the exemption by filing VAT-R. Giving up is possible at the earliest from the beginning of the next settlement period (month or quarter) and applies for a minimum of 2 years.

Exceeding the 200,000 zł Threshold — What Happens?

If your turnover exceeds 200,000 zł during the year, you must:

1. Become a VAT payer from the 1st day of the month following the threshold crossing
2. Add VAT to invoices issued after that date
3. File JPK_V7 starting from that month

Important: The threshold is tracked on a rolling basis — based on turnover from the beginning of the year. You must monitor your revenue and react quickly.

Example: Crossing in August

Anna has been running her sole proprietorship (JDG) since January 2026. In August, her turnover reaches 205,000 zł (she crossed the threshold in July).

• From September 1, she must be a VAT payer
• She must add VAT to invoices from September 1
• Her first JPK_V7 is due by October 25 (for September)

Frequently Asked Questions

Can I be exempt from VAT on lump sum tax (ryczałt)?

Yes. Lump sum tax (ryczałt) and VAT are two independent systems. You can be on lump sum tax (ryczałt) and exempt from VAT at the same time.

Does the VAT exemption apply to KSeF?

No. KSeF applies to everyone from April 1, 2026 — including those exempt from VAT. You issue invoices in the system, but as "exempt" (without VAT rates).

What if I accidentally charged VAT?

If you issued an invoice with VAT while exempt, you must remit that VAT to the tax office. You can correct the invoice, but the tax must be paid.