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. Intra-group transactions are outside the scope of VAT, while input and output VAT are settled jointly. For investors and corporate groups, this can reduce irrecoverable VAT and release cash tied up in separate settlements, but the result depends on VAT flows, deduction rights and the stability of the group structure.

How does a VAT group change VAT settlements in Poland?

A VAT group in Poland has been available since 1 January 2023. Members retain their separate legal identity, but for VAT purposes they are treated as one taxable person. Supplies between members are outside the scope of VAT, while transactions with external counterparties are attributed to the VAT group.

This can be particularly relevant where internal IT, financial, management or administrative services are provided to entities with restricted input VAT deduction rights. Removing VAT from those internal supplies may reduce a genuine tax cost, although the impact on deduction of VAT incurred on external purchases must also be assessed.

When can a VAT group improve investment cash flow?

The model can support liquidity where group companies regularly report opposite VAT positions. For example, a company developing a logistics centre may generate substantial deductible input VAT while another operating company reports VAT payable.

Once both are members of a VAT group, these amounts are included in one settlement. This can reduce the need to finance one company’s VAT liability while another waits for a refund, lowering the amount of cash temporarily tied up in the tax cycle.

What conditions must VAT group members meet?

Members must continuously maintain financial, economic and organisational links. The financial-link test includes a requirement for one member to directly hold more than 50% of the shares, voting rights or rights to participate in the profits of each other member.

Membership of an existing VAT group cannot be expanded or reduced. Planned acquisitions, disposals and reorganisations should therefore be assessed before the structure is implemented.

What obligations and risks should businesses consider?

VAT group members are jointly and severally liable for the group’s VAT liabilities. If the required links cease to exist, the representative has 14 days to notify the competent Polish 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. The VAT group agreement must be concluded for at least 3 years.

Before implementation, businesses should review the previous 12–24 months of VAT settlements, including input and output VAT, refunds, refund timing, intra-group flows and irrecoverable VAT. For corporate groups doing business in Poland, a VAT group is a settlement mechanism rather than an automatic tax relief, so its value depends on the business model as a whole.

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