VAT Deregistration 2026 — When Is It Worth It

Legal basis — subjective VAT exemption

The right to VAT exemption derives from Article 113(1) of the Act of 11 March 2004 on Tax on Goods and Services (Journal of Laws 2024, item 361, as amended). Under this provision, sales made by taxpayers whose total sales value did not exceed PLN 200,000 in the preceding tax year are exempt from tax. However, as of 1 January 2025, following the implementation of the EU SME Directive (2020/285), Poland raised the subjective exemption threshold to PLN 240,000 per year (net, excluding VAT).

The threshold change results from Article 284a of Directive 2006/112/EC, as amended by Directive 2020/285 — member states may set an exemption threshold of up to EUR 85,000 equivalent. Poland exercised this option, raising the amount from PLN 200,000 to PLN 240,000, which corresponds to approximately EUR 55,000 (below the EU limit).

It is worth noting that the following are not included in the threshold calculation:

• WDT (intra-Community supply of goods),
• sales of fixed assets and intangible assets subject to depreciation,
• paid supply of VAT-exempt goods (e.g., financial and medical services),
• import of services and supply of goods where the buyer is the taxpayer (Article 113(2)(2)).

A taxpayer who was an active VAT payer and wishes to return to the exemption may do so under Article 113(11) of the VAT Act — provided they meet the exemption conditions and do not perform activities excluded from the exemption (Article 113(13)). It is also worth remembering that there is a subject-matter exemption (Article 43 of the VAT Act) — this applies to specific types of activities (e.g., educational and medical services) and operates independently of the turnover threshold. A taxpayer may benefit from both exemptions simultaneously, but the subjective exemption under Article 113 is the subject of this article.

Who is eligible — who can deregister

VAT deregistration is available to taxpayers who simultaneously meet the following conditions:

1. Turnover in the preceding tax year did not exceed PLN 240,000 net (or proportionally — if the business operated for only part of the year).
2. They do not perform activities excluded from the exemption under Article 113(13) of the VAT Act.
3. At least one year has passed since the end of the year in which they lost the right to the exemption or voluntarily waived it (Article 113(11)).

Activities excluded from the exemption (you cannot deregister if you perform these):

• supply of goods listed in Annex 12 to the Act (including precious metals and jewellery products),
• supply of excise-taxed goods (except electricity, tobacco products, and non-new passenger cars),
• supply of buildings, structures, or parts thereof in specified cases,
• legal services, advisory services (except agricultural advisory),
• jewellery services,
• debt collection and factoring services.

Note: If you operate a law firm, consulting office, or offer factoring services — you cannot benefit from the subjective exemption regardless of your turnover level.

Additionally, deregistration is not available to taxpayers who do not have their business seat in Poland (Article 113(13)(3)). This applies, for example, to foreign entrepreneurs registered in Poland solely for VAT purposes.

When is it worth it

Deregistration makes sense when: most of your clients are individuals (who do not deduct VAT), you have few purchases with VAT (low input VAT to deduct), your turnover does not exceed PLN 240,000 per year, and you run a simple service business without significant costs. It allows you to simplify record-keeping and discontinue JPK_V7M (a mandatory VAT reporting file submitted monthly to the tax office).

In detail — deregistration is beneficial when all of the following circumstances apply:

• B2C client structure above 70% — individuals who do not run a business cannot deduct VAT, so the gross price is their final price. After deregistration, you can offer the same price, but the entire amount goes to you.
• Low costs with VAT — if your monthly purchases with the right to deduction are below PLN 1,500–2,000 net, the savings on input VAT are marginal.
• Savings on accounting services — maintaining VAT registers, generating JPK_V7M, and filing returns costs on average PLN 200–400 per month at an accounting firm. After deregistration, these costs disappear.
• No plans for rapid growth — if your turnover is stable and not approaching the PLN 240,000 threshold.

Practical example — profitability calculation

Let us consider two scenarios for a freelancer running a sole proprietorship (graphic design services):

Item	Scenario A — active VAT	Scenario B — VAT-exempt
Annual revenue (net)	PLN 180,000	PLN 180,000
Output VAT (23%)	PLN 41,400	PLN 0 (no VAT invoices)
Purchases with VAT (net/year)	PLN 18,000	PLN 18,000
Input VAT deductible	PLN 4,140	PLN 0 (no right to deduct)
VAT payable to the tax office	PLN 37,260	PLN 0
VAT accounting cost (annually)	PLN 3,600 (PLN 300/month)	PLN 0
Loss of right to deduct input VAT	PLN 0	PLN 4,140
Actual benefit of deregistration	PLN 3,600 – PLN 4,140 = –PLN 540 (slight loss)

In this case, deregistration is neutral or slightly unfavorable. However, if the designer has purchases with VAT of only PLN 6,000 net per year (input VAT = PLN 1,380), the balance changes:

PLN 3,600 in accounting savings – PLN 1,380 lost VAT = +PLN 2,220 net benefit per year plus time savings on record-keeping.

Conclusion: the lower your purchases with VAT, the more profitable deregistration becomes.

Practical example 2 — a tutor with a cash register

Anna runs a JDG (jednoosobowa działalność gospodarcza — sole proprietorship) — she provides mathematics tutoring (PKD 85.59.B). Annual revenue: PLN 96,000 (PLN 8,000/month). Her clients are exclusively individuals (B2C 100%). Purchases with VAT: textbooks and materials for approx. PLN 2,400 net per year (VAT PLN 552). Anna is an active VAT taxpayer because she voluntarily registered 2 years ago — she pays an accounting firm PLN 350/month for VAT services.

Annual calculation after deregistration:

• Savings on VAT accounting: PLN 4,200 (PLN 350 × 12)
• Lost input VAT: PLN 552
• Savings on KSeF (Krajowy System e-Faktur — National e-Invoice System) software: PLN 600
• Balance: +PLN 4,248 per year

Additionally, Anna recovers approximately 3–4 hours per month that she previously spent on VAT record-keeping. At her tutoring rate of PLN 120/hour, this represents potential additional revenue of PLN 4,320–5,760 per year. Deregistration is clearly beneficial in this case.

Note on cash registers: Anna benefits from an exemption from the cash register requirement based on item 30 of the Annex to the Regulation of the Minister of Finance on exemptions from the obligation to maintain sales records using cash registers (educational services, PKWiU ex 85). VAT deregistration does not change the cash register status — the obligation (or exemption) depends on separate regulations.

When it is not worth it

When your clients are businesses that deduct VAT — they will need to pay you more net to maintain their gross price. Also when you have large purchases with VAT (at 23%) that you lose the right to deduct. Also check: are you planning to exceed PLN 240,000 — in that case you will return to VAT with a mandatory registration anyway.

Additional situations where deregistration is unfavorable:

• B2B clients account for over 50% of turnover — business clients prefer to receive a VAT invoice because they deduct input tax. Your invoice without VAT means a higher net cost for them at the same price.
• Planned investments — purchasing equipment, a vehicle, or renovating premises. Input VAT on these expenses (e.g., 23% on a vehicle costing PLN 120,000 gross = over PLN 22,000 VAT deductible) is lost irreversibly.
• Trading business with low margins — if you buy goods at 23% VAT and sell with a small markup, losing the right to deduct VAT may consume the entire profit.
• Exports and WDT — export sales or intra-EU sales at 0% rate give the right to an input VAT refund. This is actual income you are giving up.
• Turnover close to the threshold — if your revenue is, for example, PLN 210,000–230,000 and growing, you risk exceeding the threshold during the year, which means a mandatory return to VAT with immediate effect.

Deregistration procedure — step by step

A VAT-Z form submitted to the tax office — deregistration is effective from the first day of the month following submission. After deregistration: conduct a VAT inventory, file the final JPK_V7M, retain documentation for 5 years. Return to VAT is possible at any time (VAT-R form).

Detailed procedure below:

1. Step 1 — Verify conditions. Make sure you meet the conditions under Articles 113(1) and 113(11) of the VAT Act (turnover threshold, type of activity, one year has passed since waiving the exemption). Check that you do not perform any activities listed in Article 113(13).
2. Step 2 — Submit the VAT-Z form. The VAT-Z form (notification of cessation of activities subject to VAT) is submitted to the tax office competent for your place of residence (JDG) or registered office (company). You may submit it electronically via e-Deklaracje (electronic tax filing system) or in person/by mail. You specify the date from which you cease to be an active VAT taxpayer.
3. Step 3 — VAT inventory. On the date of deregistration, you prepare an inventory of goods (including fixed assets) for which the right to deduct VAT applied upon acquisition (Article 14(5) of the VAT Act). The VAT value of these goods is reported in your final VAT return as output tax.
4. Step 4 — Final JPK_V7M. You file the final JPK_V7M for the last settlement period as an active taxpayer. You include the VAT from the inventory in it. Deadline: by the 25th day of the month following the last settlement period.
5. Step 5 — VAT adjustment for fixed assets. If you deregister before the end of the adjustment period (5 years for movable assets, 10 years for real estate — Article 91(2) of the VAT Act), you must adjust the deducted VAT proportionally to the remaining period.
6. Step 6 — Document archiving. Retain invoices, VAT registers, JPK files, and the inventory for 5 years from the end of the year in which the tax payment deadline expired (Article 112 of the VAT Act).

VAT adjustment for fixed assets — what to watch out for

One of the most commonly overlooked aspects of deregistration is the obligation to adjust input VAT on fixed assets and intangible assets. Under Article 91(7) of the VAT Act, a change in the purpose of goods (from taxable to exempt activity) requires an adjustment:

Type of asset	Adjustment period	Example
Fixed assets with initial value ≤ PLN 15,000	One-time adjustment in the year of change	Laptop for PLN 8,000 net — full VAT adjustment (PLN 1,840)
Fixed assets with initial value > PLN 15,000 (movable)	5 years (1/5 per year)	Vehicle for PLN 80,000 net purchased in 2024, deregistration in 2026 — adjustment of 3/5 of deducted VAT
Real estate	10 years (1/10 per year)	Premises for PLN 400,000 net purchased in 2022, deregistration in 2026 — adjustment of 6/10 of VAT

Practical example: You purchased a company vehicle in January 2024 for PLN 100,000 net (VAT PLN 23,000, 50% deducted = PLN 11,500). You deregister from VAT in July 2026. The adjustment period is 5 years (2024–2028), 2 full years have passed → the adjustment covers 3/5 of the deducted amount: 11,500 × 3/5 = PLN 6,900 to be returned in the final VAT return.

Most common mistakes during deregistration

1. Failure to prepare an inventory — taxpayers forget about the obligation to prepare an inventory on the date of deregistration. The absence of an inventory does not release the obligation to pay VAT on goods remaining in the business.
2. Omitting the fixed asset adjustment — deregistering from VAT while holding high-value fixed assets (vehicle, machinery) without making an adjustment may result in tax arrears and interest.
3. Deregistering before one year has passed — Article 113(11) requires that at least 1 year has passed since the end of the year in which the exemption was lost or waived. Deregistering earlier is ineffective.
4. Continuing to issue invoices with VAT — after deregistration, you issue invoices without VAT (with the "zw" — exempt — rate). Issuing an invoice with VAT as an exempt taxpayer creates an obligation to pay the stated tax (Article 108 of the VAT Act).
5. Failure to account for excluded activities — even occasional provision of advisory or legal services disqualifies you from the subjective exemption.
6. Failure to monitor the threshold during the year — after deregistration, you must track the PLN 240,000 threshold. Exceeding it during the year means an immediate obligation to register and tax sales from the amount exceeding the threshold (Article 113(5)).

Penalties for errors

Irregularities during deregistration can lead to serious consequences:

• Tax arrears + interest — failure to adjust VAT on fixed assets or failure to account for the inventory constitutes tax arrears. Late payment interest in 2026 is 14.5% per annum (dependent on the NBP reference rate).
• Penalty under the Fiscal Penal Code — unreliable maintenance of tax records (Article 61 § 1 of the Fiscal Penal Code) is punishable by a fine of up to 720 daily rates. In 2026, the minimum daily rate is approx. PLN 156, and the maximum is approx. PLN 62,400.
• Additional liability (VAT sanction) — under Article 112b of the VAT Act, the tax authority may impose an additional obligation of 30% of the understated amount (or 20% in the case of a voluntary correction before an audit).
• Obligation to pay VAT under Article 108 — if after deregistration you issue an invoice showing VAT, you must pay that VAT to the tax office — regardless of whether you are an active taxpayer.

2026 deadlines — taxpayer calendar

Deadline / date	Action
Any day of the month	Submit VAT-Z — deregistration effective from the 1st day of the following month
25th day of the month after the last period	File the final JPK_V7M with the inventory settlement
On the date of deregistration	Prepare an inventory of goods and fixed assets
Entire year after deregistration	Monitor the PLN 240,000 turnover threshold
31 December 2026	Verify whether annual turnover exceeded the threshold — decision on status for 2027
5 years from the end of the tax year	Minimum document retention period for VAT documentation

Returning to VAT — what you should know

If after deregistration you determine that it is worth returning to active VAT taxpayer status (e.g., B2B clients have appeared or you are planning a major investment), the procedure is straightforward:

• You submit a VAT-R form to the tax office — registration from the date indicated in the filing (earliest from the date of submission).
• You do not need to wait any waiting period if you are returning voluntarily — the one-year restriction applies only to transitioning to the exemption, not the reverse.
• From the moment of registration, you regain the right to deduct input VAT on purchases.
• Input VAT on goods purchased during the exemption period (before re-registration) — is not deductible, unless the goods were acquired within 12 months before registration and have not been consumed (Articles 113(5)–(7) in conjunction with Article 86).

Deregistration and KSeF

As of 1 February 2026, KSeF (Krajowy System e-Faktur — the National e-Invoice System) became mandatory for active VAT taxpayers. This is an additional argument for deregistration for B2C micro-businesses — after deregistration, you are not required to use KSeF. Taxpayers with subjective exemption may issue invoices (or receipts) outside the KSeF system, which means:

• No need to implement KSeF software.
• No obligation to assign a KSeF number to invoices.
• No risk of penalties for late submission of invoices to KSeF.

For a sole proprietorship providing services to B2C clients, this represents real savings — both financial (cost of software or accounting firm services) and in terms of time.

Deregistration and ZUS contributions

VAT deregistration has no direct impact on ZUS (Zakład Ubezpieczeń Społecznych — Social Insurance Institution) contributions. The obligation to pay social and health insurance contributions derives from the Act of 13 October 1998 on the Social Insurance System and the Act of 27 August 2004 on Healthcare Services — and is linked to the fact of running a business, not to VAT status.

However, there is an indirect effect: after VAT deregistration, the health insurance contribution base may change. Since 2022, the health insurance contribution depends on the form of taxation and income:

Form of taxation	Health contribution 2026	Impact of VAT deregistration
Tax scale (12%/32%)	9% of income	VAT on purchases becomes a cost → lower income → lower health contribution
Flat tax (19%)	4.9% of income	Similarly — VAT as a cost reduces income and the contribution
Ryczałt (lump-sum tax on recorded revenue)	Rate dependent on revenue (approx. PLN 376–1,258/month in 2026)	No impact — the contribution depends on revenue, not costs

Example: A freelancer on flat tax with income of PLN 120,000 per year. After VAT deregistration, the non-deductible VAT on purchases (e.g., PLN 3,000) becomes a tax-deductible cost. Income decreases to PLN 117,000, and the annual health contribution is reduced by: PLN 3,000 × 4.9% = PLN 147. The effect is small but worth including in the calculation.

Deregistration and cash registers

VAT status and the obligation to use a cash register are two separate issues. VAT deregistration does not automatically exempt you from the cash register, and conversely — exemption from the cash register does not exempt you from VAT.

After VAT deregistration, you must still record sales to individuals who do not run a business on a cash register, unless you benefit from an exemption from this obligation. Cash register exemptions in 2026 are regulated by the Regulation of the Minister of Finance of 24 November 2023 (Journal of Laws 2023, item 2605) and include:

• Exemption based on turnover — up to PLN 20,000 in sales to individuals in the preceding year (§ 3(1)(1) of the Regulation).
• Subject-matter exemptions — specific types of services listed in the Annex to the Regulation (e.g., educational services, certain IT services provided remotely with payment to a bank account).

Important: If you had an online cash register before VAT deregistration, after deregistration you continue to record sales on it — but with the "zw" (exempt) rate designation instead of VAT rates. You do not need to replace or decommission the register.

Deregistration and PIT taxation form

VAT deregistration is compatible with every form of PIT (personal income tax) taxation: the tax scale, flat tax, and Ryczałt (lump-sum tax on recorded revenue). However, the financial effect differs depending on the chosen form:

• Tax scale (12%/32%) — non-deductible VAT on purchases becomes a tax-deductible cost. At the 12% rate, every PLN 100 of lost VAT "returns" as PLN 12 lower PIT. At the 32% rate (income above PLN 120,000) — PLN 32.
• Flat tax (19%) — similarly, compensation amounts to PLN 19 for every PLN 100 of VAT classified as costs.
• Ryczałt (lump-sum tax on recorded revenue) — there are no tax-deductible costs here, so non-deductible VAT on purchases cannot be recovered in any way. This makes VAT deregistration less favorable for Ryczałt taxpayers with significant purchases.

Conclusion: Ryczałt taxpayers should approach VAT deregistration with particular caution, as they lose twice — both the right to deduct VAT and the ability to classify it as a cost.

Summary

Perform a calculation for the last 12 months: output VAT – input VAT = actual savings or cost. If the savings exceed PLN 2,000 per year and your clients are primarily B2C — deregistration will pay off.

Before making a decision, remember the checklist:

• ☐ Turnover in 2025 did not exceed PLN 240,000 net.
• ☐ You do not perform activities excluded from the exemption (Article 113(13)).
• ☐ One year has passed since waiving the exemption or losing the right to it.
• ☐ You have calculated the VAT adjustment for fixed assets.
• ☐ Most of your clients are individuals (B2C).
• ☐ You do not plan major investments with VAT in the next 12 months.
• ☐ Turnover in 2026 will not exceed PLN 240,000.

If all points check out — deregistration will bring you real savings. Otherwise, remain an active VAT taxpayer and exercise your right to deduction.

FAQ — frequently asked questions

Can I deregister from VAT during the year?

Yes. You can submit the VAT-Z form at any time during the year. Deregistration is effective from the first day of the month following submission. It is important to prepare an inventory on the date of deregistration and file the final JPK_V7M.

What happens if I exceed the PLN 240,000 threshold during the year?

Under Article 113(5) of the VAT Act, the exemption ceases to apply starting from the transaction that caused the threshold to be exceeded. From that transaction, you must charge VAT and promptly file VAT-R. You do not wait until the end of the month or year — the obligation arises immediately.

Can I issue invoices after deregistration?

Yes, but invoices without VAT — with the "zw" (exempt) rate. You still have the right (and upon client request — the obligation) to issue invoices. You do not show any VAT amount on them. Alternatively, you may issue receipts.

How long does deregistration take?

The process itself is quick — submitting VAT-Z takes a few minutes (electronically) or one visit to the tax office. The office does not issue a decision — deregistration occurs by operation of law. The head of the tax office removes the taxpayer from the VAT register.

Does VAT deregistration affect income tax?

Not directly — VAT and PIT/CIT (personal/corporate income tax) are separate taxes. Indirectly, however: after deregistration, VAT from purchase invoices becomes your cost (because you cannot deduct it). You can, however, classify it as a tax-deductible cost in PIT/CIT, which partially compensates for the loss of the right to deduct VAT (savings depend on the income tax rate — 12%, 19%, or 32%).

Can a Sp. z o.o. (limited liability company) benefit from the subjective exemption?

Yes, the legal form does not matter. The subjective exemption under Article 113 applies to "taxpayers" — both JDG and companies, provided they meet the conditions (turnover threshold, no excluded activities). In practice, however, Sp. z o.o. rarely uses this option, as it typically serves B2B clients.

Does VAT deregistration exempt me from the cash register?

No. The obligation to use a cash register is independent of VAT status. If you sell to individuals who do not run a business and do not benefit from a cash register exemption (e.g., the PLN 20,000 B2C turnover threshold or a subject-matter exemption), you must continue recording sales on the register — with the "zw" rate instead of VAT rates.

Can I deregister from VAT while on Ryczałt?

Yes, the PIT taxation form does not affect eligibility for the subjective VAT exemption. However, it should be noted that Ryczałt taxpayers do not account for tax-deductible costs — meaning non-deductible VAT on purchases cannot be compensated as a tax cost. This makes VAT deregistration less profitable for Ryczałt taxpayers with significant purchases.

What about VAT on a vehicle bought out from a lease?

If you buy out a vehicle from a lease after VAT deregistration, you cannot deduct VAT from the buyout invoice. If the buyout occurred before deregistration — the deducted VAT is subject to adjustment as a change of purpose of the fixed asset (from taxable to exempt activity), proportionally to the remaining adjustment period (5 years for vehicles with an initial value above PLN 15,000).

Do I need to inform my business partners about deregistration?

There is no legal obligation to inform business partners. However, from a practical standpoint, it is worth notifying regular B2B clients — the change in VAT status affects their settlements (no input VAT to deduct from your invoices). B2C clients will not notice a difference, as long as you maintain your current price level.