From 1 January 2025, a special scheme for small enterprises (the SME scheme) allows enterprises established in the territory of one of the Member States to benefit from the VAT exemption in any other Member State, in which they are not established. In order to apply for the VAT exemption in such other Member State a taxable person gives a notification to the Member State of establishment of the intention to benefit from the VAT exemption in the other Member States (the prior notification). In the prior notification the taxable person reports the turnover in the current calendar year and the preceding year. This will allow to verify whether the taxable person’s annual turnover meets the limit qualifying for the VAT exemption in every other Member State. Some Member States may require reporting the turnover in two calendar years preceding the year of submission of the prior notification. The taxable person will subsequently quarterly report their turnover in each Member State for each calendar quarter.
Benefitting from the SME scheme is not mandatory. The taxable person may choose to comply with general VAT obligations set forth in any Member State. The taxable person may also choose to apply the SME scheme in some Member States and at the same time apply general VAT rules in other Member States. The registration for the cross-border SME scheme does not prevent a taxable person to act as an active VAT taxpayer in the Member State of establishment.
Benefits for taxable persons from the sme scheme
Until 1 January 2025 the taxable person who carried out transactions in Member States, which were not the Member State of establishment, had to register for VAT purposes and fulfil VAT obligations (such as filing VAT returns, settling of VAT) in each of those Member States. Starting from 1 January 2025 small enterprises from the EU may benefit from cross-border VAT exemptions and all matters regarding the SME scheme are handled in the Member State of establishment. A taxable person submits prior notification and quarterly reports the turnover in the Member State of establishment. The SME scheme simplifies administrative obligation and aims to prevent the competition disruptions and to support the growth and development of cross-border trade. From 1 January 2025 small enterprises may develop and expand their business activity in other Member States incurring lower administrative burden.
From 1 January 2025 the Head of the Second Tax Office Warszawa-Śródmieście is competent for the SME scheme with regards to cases of the Polish taxable persons (regardless of the fact that some other tax office is competent for handling other VAT obligations). The Head of Tax Office Łódź-Śródmieście is competent for the SME scheme with regards to cases of taxable persons from other Member States, who would like to benefit from the VAT exemption in Poland.
Legal basis:
- Council Directive (EU) 2020/285 of 18 February 2020 amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises (OJ L 62, 2.3.2020, p. 13–23)
- Council Directive (EU) 2022/542 of 5 April 2022 amending Directives 2006/112/EC and (EU) 2020/285 as regards rates of value added tax (OJ L 107, 6.4.2022, p. 1–12)
- The Act of 8 November 2024 on the amendment of the Value Added Tax Act and some other acts , Journal of Laws from 2024 item 1721Dz.U. z 2024 r. poz. 1721