When do I have to pay VAT?

VAT tax is a topic that brings up a lot of questions for beginner e-commerce sellers:

• Do I need to worry about it right away?

• Does every online store have to be on VAT?

• And what if I'm just getting started?

In this article, we'll explain in a simple way when you really need to register as a VAT taxpayer and what exactly that means.

VAT exemption – when can you use it?

Here’s some good news to start:

If during the year (from January to December) your turnover doesn’t go over 200,000 PLN, then you can use the VAT exemption.

What does it mean?

• You don't have to register as a VAT taxpayer,

• You don't issue VAT invoices,

• You don't settle with the tax office for VAT.

This solution is perfect for beginners – less paperwork, fewer obligations, much simpler.

But heads up – the 200k limit applies to turnover, not profit!

So it's all about the total sales, not what actually stays "clean" in your pocket.

When do you have to be a VAT payer right away?

But there's a catch...

Even if you're under the 200k limit – some industries and products exclude you from this exemption.

If you sell products that are normally subject to VAT, you have to register as a VAT taxpayer right from the start.

Example products with mandatory VAT (rate 23%):

• Electronics – phones, laptops, home appliances, audio & video

• Cosmetics and perfumes

• Clothing and footwear

• Toys and games

• Furniture and home decor

• Tools, building materials

• Jewelry (except investment gold)

• Digital products – e-books, online courses, software

If you sell these things – you have to be a VAT payer, no matter your turnover.

Products with reduced VAT rate – 5% and 8%

There are also categories of products that are subject to a lower VAT rate – depending on their type.

8% rate – for example.:

• Medicines and medical devices (some of them)

• Diapers, hygiene products

• Processed food

• Catering and transport

• Products for people with disabilities

5% rate – e.g..:

• Fresh meat, bread, milk

• Fruits and vegetables

• Paperback books, magazines

• Selected kids’ and school products

If your shop is based on these kinds of products – you need to charge the right (lowered) VAT rate.

What if I don't sell these things?

If you sell products that aren’t covered by mandatory VAT and you don’t go over the 200,000 PLN yearly limit, you can use the VAT exemption.

That means:

• Less paperwork with accounting

• Simpler invoices (no VAT)

• No need to file VAT returns

IMPORTANT: Always keep an eye on your revenue – if you go over the limit, you have 7 days to register for VAT.

Summary

You don't have to pay VAT if you make under 200k PLN a year and don't sell products that require VAT by law.

You have to be a VAT payer if you go above the 200,000 PLN yearly limit or sell stuff like electronics, cosmetics, clothes, e-books, online courses, etc. (list of VATable products).

It's a good idea from the start:

• Check the category of products you're selling

• Get a sense of the rate requirements for specific categories

• Check in with your accountant (especially if you're planning to scale up your sales)