The question often arises: can a taxpayer whose services are not subject to VAT in Poland deduct this tax from their purchases? Let’s take a closer look at the relationship between remote services and VAT deduction. Is it possible to deduct VAT on remote services?
When a Remote Service is Not Subject to VAT in Poland
We discussed the topic of VAT taxation for remotely provided services earlier:
Deduct VAT on Remote Services – regulations
The addressed issue has been regulated in art. 86 sec. 8 point 1 of the VAT Act.
Art. 86 sec. 8 point 1 of the VAT Act
8. The taxpayer also has the right to reduce the amount of tax due by the amount of VAT incurred, as mentioned in sec. 2 if the imported or acquired goods and services concern:
1)delivery of goods or provision of services by the taxpayer outside the country, if these amounts could be deducted if these activities were carried out within the country, and the taxpayer has documents proving the connection of the deducted tax with these activities (…)
VAT Deduction – how to prepare?
In this scope, the legislator has provided for a certain fiction: the taxpayer does not have to provide services taxed within the country, but other conditions must be met.
The right to reduce the amount of tax due by the amount of VAT incurred is granted, but two conditions must be met.
1) We assume “fictionally” that these services are provided within the country and check whether we then have the right to deduct VAT (e.g., whether the services are not exempt from VAT).
2) The taxpayer has documents proving the connection of the deducted tax with these activities.
Deduct VAT on Remote Services – summary
Taking the above into account, it should be stated that a taxpayer whose services are not subject to VAT in Poland can deduct this tax from their purchases, provided certain conditions are met.
If you have questions regarding your tax settlements or how to protect yourself in case of an audit, feel free to visit www.outsourced.pl.
