VAT group in Poland – when should you set one up and what are the benefits?

A VAT group in Poland allows related entities to account for VAT as a single taxable person. Transactions between members are outside the scope of VAT, while output and input VAT are settled jointly. This may reduce irrecoverable VAT and improve cash flow, but the benefit depends on VAT flows, deduction rights and continuous compliance with the linkage requirements.

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What is a VAT group in Poland and who can form one?

VAT groups have been available under Polish VAT law since 1 January 2023. Once registered, the group is treated as one taxable person, while its members remain legally separate. Members must continuously maintain three types of links:

• financial – one member directly holds more than 50% of the shares, voting rights or profit participation rights in each other member;
• economic – activities are similar, complementary or interdependent, or one member’s activities substantially benefit the others;
• organisational – the entities are under common management or coordinate their activities.

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When can a VAT group deliver a business benefit?

The strongest case usually arises where there is a high volume of intra-group services, restricted input VAT deduction rights or opposite VAT positions.

Supplies between members are outside the scope of VAT, not VAT-exempt. This can reduce irrecoverable VAT where internal IT, financial or administrative services would otherwise carry VAT that the recipient cannot fully deduct. The effect on input VAT deduction for external purchases must also be assessed.

Joint settlement can also improve liquidity. If one company reports a VAT surplus from an investment while another has VAT payable, both positions are included in one settlement, reducing cash tied up while one entity waits for a refund.

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What are the main obligations and risks?

A VAT group is a settlement mechanism, not an automatic tax relief. Its benefits should be compared with accounting, systems and monitoring costs.

Key restrictions include:

• existing membership cannot be expanded or reduced;
• members are jointly and severally liable for the group’s VAT liabilities, including after the group loses its status;
• if the required links cease to exist, the representative has 14 days to notify the competent tax office;
• each member must keep electronic records of intra-group transactions in the JPK_GV structure and submit them monthly by the 25th day of the following month.

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How should a VAT group be prepared and registered?

Businesses should review the previous 12–24 months of VAT settlements, including intra-group flows, output and input VAT, refunds, refund timing and irrecoverable VAT. They should then verify the required links and model the VAT impact.

The written agreement must run for at least 3 years. After appointing a representative, the group applies for a Polish Tax Identification Number (NIP) and the representative submits the VAT-R registration form with the agreement. Taxable-person status starts on the date stated in the agreement, but not before registration is completed.

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If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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