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22 December 2025

VAT or not? When is it worth switching to VAT and what are the consequences?

The decision to register for VAT is one of the key issues when running a business. For some entrepreneurs, it is a legal obligation, while for others, it is a choice that can bring tax benefits or increase formalities. Therefore, it is crucial to distinguish between situationsin which VAT is a necessity, and those in which it may simply be a beneficial choice.

When do you need to be a VAT payer?

According to the regulations, in 2025, an entrepreneur can take advantage of VAT exemption if theirannual turnover does not exceed 200,000 PLN. From 2026, this limit will increase to240,000 PLN, allowing more micro-entrepreneurs to avoid the obligation of VAT accounting.

However, the exemption does not apply to everyone. The VAT Act listsindustries, whichcannot benefit from the exemption, regardless of revenue.

Mandatory VAT payers must include among others. entrepreneurs providing:

consulting, legal, jewelry, advertising services,
debt collection or recovery services,
selling excise goods (e.g., alcohol, cigarettes, fuels),
selling new means of transport or construction land.

If your business falls into this group, registration for VAT ismandatory from the first sale.

When is it worth becoming a VAT payer voluntarily?

There are situations where voluntary registration for VAT simply pays off. This particularly applies to companies that cooperate with other entrepreneurs, incur high investment expenses, or sell goods with low margins.

Registering for VAT can be beneficial when:

your clients are VAT payers – they can deduct VAT from your invoice, so the net price is more important to them than the gross.
You plan investments – purchasing a car, equipment, machines, or office supplies means the right to deduct VAT from purchase invoices.
You buy goods or services with a higher VAT rate than the one you apply to sales – you can then request arefund of the tax surplus from the tax office.
You want to improve your company's image – contractors often perceive VAT payers as more reliable and experienced business partners.

On the other hand, if your customers are mainly private individuals for whom the final gross price matters, registering for VAT may make your services less competitive.

What obligations are associated with VAT registration?

Becoming a VAT payer means a greater number of formalities. An entrepreneur is requiredamong others. to:

keeprecords of VAT sales and purchases, and
submit aJPK_V7 file (monthly or quarterly),
issue invoices in accordance with VAT regulations,
control the timing of thetax obligation.

FromApril 1, 2026, most invoices will be issued exclusively in theNational e-Invoice System (KSeF), which will replace the existing paper and electronic circulation. From January 1, 2027, all entrepreneurs will be required to use KSeF. For VAT payers, this means the need to adapt accounting programs and procedures.

Example

Ms. Anna runs a small cosmetics business. Her annual revenue is about 180,000 PLN, so she can benefit from VAT exemption. However, she is considering purchasing new equipment worth 60,000 PLN gross (including 11,220 PLN VAT). After registering as a VAT payer, she couldrecover VAT from the equipment purchase, thus reducing the real cost of the investment. In her case, switching to VAT is beneficial – even though it will increase her accounting obligations.

Summary

Being a VAT payer is not only an obligation but often areal opportunity for savings and greater credibility in the eyes of contractors. However, it is worth analyzing each decision with a financial analysis and checking how your settlement and the final price of services will change.

AtFinestro, in cooperation with tax advisors and lawyers, we help entrepreneurs choose the most advantageous solution. We analyze the sales structure, purchase costs, and the impact of VAT on margin, and then provide comprehensive support in registration and settlements.