24 May 2024

Small taxpayer in income tax and VAT – limits, benefits

A small taxpayer is a tax privilege that allows to reduce the tax liability due to the indicated limits of income for a given accounting period (income tax). In other words – the status of a small taxpayer is determined only by the amounts specified in the relevant provisions of the Law.

The PIT Law defines a small taxpayer as a taxpayer in which the value of revenue from sales (including the amount of goods and services tax due) did not exceed in the previous tax year the amount expressed in zlotys equivalent to the equivalent of EUR 2,000,000; amounts expressed in euros are converted according to the average exchange rate of the euro announced by the National Bank of Poland on the first working day of October of the previous tax year, rounded up to PLN 1,000.

PIT small taxpayer status – benefits in income tax

The ability to settle accounts with the tax authorities on a cash basis is one of the biggest benefits for small taxpayers. Tax liability does not arise until payment for goods or services has been made, although not earlier than the date of receipt of the invoice. Note that the expense in question must be related to taxable activities. This means:

  • receipt of all or part of the payment – if it involves the delivery of goods or provision of services to a taxpayer registered as an active VAT taxpayer,
  • receipt of all or part of the payment, no later than the 180th day, counting from the day on which the goods were issued or the service was rendered, if the supply of goods or provision of services to an entity other than those listed in item 1 is involved.

As a rule, small taxpayers can also take advantage of one-time depreciation regardless of how long they have been in business. The only restriction is the sum of depreciation allowances in a tax year, which cannot exceed 50,000 euros.

A small-income taxpayer may use the quarterly method of paying advance income tax payments, Advance payments for small taxpayer limits are paid quarterly: by April 20 for the first quarter, by July 20 for the second quarter, by October 20 for the third quarter, by January 20 for the fourth quarter.

Tax limit: PIT

Under the new provisions of the PIT Law, the limit that defines a small taxpayer is increased compared to last year. As of 2024, a small taxpayer is a person whose sales revenue in the previous year (including VAT, if he is an active VAT taxpayer) did not exceed the equivalent of €2,000,000 in PLN.

This means that to get a specific amount, the above euro amount must be converted using the exchange rate on the first working day of October 2023. Assuming this exchange rate of 4.6091, the limit in zlotys will be exactly PLN 9,218,200. Then apply rounding to the thousands, which gives us the amount of PLN 9,218,000. Last year, the limit was PLN 9,654,000.

Small taxpayer in VAT

In the domain of VAT, the term “small taxpayer” we can call, among others, taxpayers-intermediaries, if the amount of commissions or other forms of remuneration for services rendered (including the amount of tax) in 2023 did not exceed PLN 207,000. Also other taxpayers, where the value of sales (including the amount of tax) in 2023 did not exceed PLN 9,218,000; this is 436,000 less than the amount applicable in the second half of 2023, i.e. PLN 9,654,000.


As of January 1, 2024, a taxpayer whose gross sales value in 2023 did not exceed PLN 9,218,000 may switch to the cash method of accounting for VAT, provided that a VAT-R form is submitted by the end of December 2023.

In the cash method of accounting for VAT, output tax is not settled until payment is received from the purchaser of goods or services, which means that the taxpayer is not required to settle the sales invoice in JPK earlier. In contrast, input tax deductions from purchase invoices can be made in the period in which the invoice is paid.

However, output VAT must be accounted for regardless of the payment when two conditions are met at the same time: the transaction is made to individuals or companies that are not active VAT taxpayers, and 180 days have passed from the date the goods were issued or the service was performed (Article 21 of the VAT Law).

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ARPI Accounting is a part of ARPI Group, a Norwegian holding which started to operate in Poland in 2001.