End of 0% VAT rate on food

April 12, 2024

The 0% VAT rate on food was introduced on 1 February 2022 as one of the main anti-inflation shields. The purpose of the shields was to protect Polish consumers against rising inflation. It ceased to apply at the end of March — the end of the 0% VAT rate on food means the obligation to reprogram cash registers, setting VAT rates for transactions made in the period that includes the change in rates, as well as updating binding rate information.  

What products have a 5% VAT rate? 

From 1 April, the increased rate will apply to: 

  • meat and fish and preparations thereof, 
  • milk and dairy products, 
  • eggs, 
  • vegetables and fruits and preparations thereof, 
  • natural honey, 
  • nuts 
  • cereals and cereal products such as bread, confectionery products 
  • dietary foods 
  • infant and child formulas and milk 

How to correctly establish the VAT rate? 

According to Article 41(14a) of the VAT Act when the VAT rate changes, the date on which the taxable transaction was performed is important, not when the obligation to pay the tax arose. Selling a product before the rate change is equivalent to applying the VAT rate to the transaction, which is in effect at the time of sale. This is the case even if the obligation to pay the tax arises later, after the rate has changed. 

Changes in VAT rates and binding rate information

As it is written in Article 42a of the VAT Act, binding rate information is a document issued before taxation of the supply of goods or the import of goods or the provision of services. 

The binding rate information includes: 

  • a detailed description of the goods or services offered, 
  • classification of goods by item, group, class, category or subcategory, needed to:  

a) determine the appropriate rate of tax for the goods or services 

b) application of the provisions of the Act and the implementing regulations issued on the basis thereof – Article 42b(4) of the VAT Act;

  • the appropriate tax rate for the goods or services offered, excluding the one described in Article 42b(4) of the VAT Act. 

What next?

Stores in Poland such as Biedronka, Lidl or Kaufland already have started to compete with each other for customers, offering products at reduced prices. Additionally, Jarosław Neneman from Ministry of Finance, informs that the restoration of the 5% rate on food will bring additional revenues to the budget in the amount of approx. PLN 7.18 billion in 2024. This enormous revenue is expected to happen from May to December. 

 

Text based on: https://www.inforlex.pl/dok/tresc,FOB0000000000006504944,Jak-zmienia-sie-stawki-VAT-od-1-kwietnia-2024-r.html; https://mycompanypolska.pl/artykul/powrot-stawki-vat-na-zywnosc-do-5-zwiekszy-dochody-panstwa-o-7-mld-zl/14475

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