Our accounting office, PRWT Accounting and Business Service, often receives inquiries regarding VAT exemption pursuant to Art. 43 of the VAT Act.

Below we present an example of a situation that may be encountered by some associations that make use of this exemption on the basis of the cited article.

As part of its activities, the association provides services related to sport and physical education. It conducts activities related to the promotion and dissemination of sport. This is the statutory goal of the association. These services are necessary for organizing and practicing sports, they are provided to people who practice sports, and are not profit-making. Therefore, the association meets the conditions for VAT exemption pursuant to Art. 43 of the VAT Act. However, promotional and marketing activities are excluded from the scope of these services. So, should the association charge VAT when issuing an invoice for the promotional and marketing services it provides, or should it be for the amount reduced by the VAT rate?

The association benefits from VAT exemption due to turnover. If the sales value did not exceed the total amount of PLN 200,000 in the previous or current tax year, the association issues invoices without VAT pursuant to Art. 113.1 of the VAT Act, which says that:
“Sales by taxpayers whose sales value did not exceed the total amount of PLN 200,000 in the previous tax year are exempt from tax. The amount of tax is not included in the value of the sale. “

If the association did not obtain PLN 200,000 from the sale in the previous or current tax year, it is entitled to issue an invoice with the “zw” rate, ie exempt.
In order to dispel the doubts of your contractors as to the legitimacy of applying the VAT exemption, the invoices issued by you can include an annotation in which the legal basis for using the VAT exemption will be indicated. An example of the content of such an annotation is presented below:

Provision of services exempt from VAT pursuant to Art. 113 paragraph. 1. of the VAT Act.