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Poland drops VAT cut to 22%


Poland drops VAT cut to 22%

Poland has quietly dropped plans to cut its standard VAT rate from 23% to 22% from 1 January 2016. The change of policy comes following the recent change in government to the Justice Party, and concerns about the continued growth of the country.

Summer plans to cut VAT

On 8th July 2015, Poland’s government announced  plans to cut the standard Polish VAT rate from 23% to 22% from 1 January 2016.  The decision to bring forward the cut came about as Poland left the EU’s excessive budget deficit procedure recently.  The cut will cost around €1.5 billion per annum.

Polish economy recovering

Poland has had a relatively good financial crisis, and was the only economy not to go into recession. Nevertheless, since it had signed-up to the Euro currency convergence criteria, it was required to keep its budget deficit below 3% of its GDP. As the European markets slowed following the 2007/8 credit crunch, this forced Poland to raise its VAT rate from 22% to 23% in 2010, and raise its reduced VAT rate to 8%. Poland’s deficit hit 10% of its Gross Domestic Product in 2010.

The latest deficit forecasts show that it can reach the Euro entry criteria comfortably.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.