Many entrepreneurs running a sole proprietorship may lawfully not charge VAT by using the so-called subjective exemption (zwolnienie podmiotowe). From 1 January 2026 the threshold that determines the right to this exemption changed — the annual sales limit rose from PLN 200,000 to PLN 240,000. This is a significant change for small firms that had been balancing on the edge of mandatory VAT registration. Below we explain what the exemption involves, how to calculate the limit, and what to keep in mind so as not to lose the right through oversight.
What the subjective VAT exemption involves
The subjective exemption means that, as a rule, you do not charge VAT on your sales, you do not regularly file the JPK_VAT return file, and you do not deduct input VAT on purchases. In practice you issue invoices without a VAT amount, and the firm's day-to-day bookkeeping is simpler. The exemption is granted on the basis of turnover size rather than the type of activity — which is why it is called subjective. Importantly, it is a right and not an obligation: even when you are within the limit, you can voluntarily register as an active VAT payer if it is beneficial, for example when the firm invests heavily and wants to deduct input VAT on purchases.
The new PLN 240,000 threshold from 2026
The most important change in 2026 is the increase of the sales threshold entitling you to the exemption. Until the end of 2025 it was PLN 200,000, and from 1 January 2026 it is PLN 240,000 per year. The exemption is used by an entrepreneur whose sales value did not exceed this amount either in the previous or the current year. The legislator also provided a transitional solution for firms that in 2025 exceeded PLN 200,000 but stayed within PLN 240,000 — they may return to the exemption from 1 January 2026 without having to observe the usual waiting period.
How to calculate the limit when starting mid-year
If you set up your firm during the year, your limit is not the full PLN 240,000 but is calculated in proportion to the number of days of activity in that year. The later in the year you start, the lower your individual threshold. The limit includes the value of taxable sales, but it does not include certain activities listed in the VAT Act, for example some ancillary transactions. It is worth tracking cumulative sales throughout the year, because it is the total from the beginning of the year — not the result of a single month — that determines whether the threshold has been exceeded.
Who cannot use the exemption
Simply being within the limit is not always enough. The VAT Act lists a catalogue of goods and services whose sale excludes the right to the subjective exemption regardless of turnover. This concerns, among others, the sale of certain goods (for example some excise goods or precious metals) as well as the provision of legal, advisory or jewellery services. If your activity includes such transactions, registration as an active VAT payer is mandatory from the very first sale. Entrepreneurs without a business seat in Poland also cannot use the exemption — for firms based in another EU country a separate SME procedure is provided.
Exceeding the limit and the entrepreneur's obligations
If during the year your sales exceed PLN 240,000, the exemption loses effect starting from the very transaction that exceeded the limit. From that activity you must charge and settle VAT, and beforehand submit the VAT-R registration notification. Even while using the exemption, you are obliged to keep a sales record so as to monitor on an ongoing basis whether you are approaching the threshold. After losing the right to the exemption or voluntarily resigning from it, returning is possible no earlier than after one year, counting from the end of the year in which this occurred. That is why the decision to register or remain under the exemption is worth considering well in advance.