VAT Invoice vs Non-VAT Invoice — What You Need to Know

One of the most common questions from new entrepreneurs in Poland is: "Should I issue a VAT invoice or a non-VAT invoice?" The answer depends on whether you are an active VAT taxpayer or benefit from an exemption. This guide explains the differences, mandatory elements of both documents, and typical situations where each applies.

For invoicing basics, see What is an Invoice?, and for a practical guide, read How to Issue an Invoice.

Who Issues Which Type?

VAT Invoice — Active VAT Taxpayer

A VAT invoice (with rates of 23%, 8%, 5%, or 0%) is issued by an entrepreneur who:

  • Has registered as an active VAT taxpayer (form VAT-R)
  • Has exceeded the subjective exemption limit or voluntarily opted out of the exemption

Every sale of goods or services to another business must be documented with a VAT invoice.

Non-VAT Invoice — Exempt Taxpayer

A non-VAT invoice (with the rate "zw" — exempt) is issued by an entrepreneur who:

  • Benefits from the subjective exemption — annual turnover below PLN 240,000 (threshold effective from 2025)
  • Benefits from the objective exemption — performs activities exempt from VAT by law (e.g., medical, educational, or financial services)

An exempt taxpayer does not charge VAT but also cannot deduct input VAT from purchases.

Mandatory Elements — Comparison

| Element | VAT Invoice | Non-VAT Invoice (zw) | |---------|------------|---------------------| | Issue date | Yes | Yes | | Sequential number | Yes | Yes | | Seller details (name, address, NIP) | Yes | Yes | | Buyer details (name, address, NIP) | Yes | Yes | | Description of goods/services | Yes | Yes | | Quantity and unit | Yes | Yes | | Net unit price | Yes | Yes (= gross price) | | VAT rate | Yes (23%, 8%, 5%, 0%) | "zw" | | VAT amount | Yes | None | | Gross amount | Yes | Yes (= net amount) | | Legal basis for exemption | No | Yes |

On a non-VAT invoice, instead of a tax rate you enter "zw" (zwolniony — exempt). You must also state the legal basis for the exemption:

  • Subjective exemption (turnover limit): Art. 113(1) of the VAT Act
  • Objective exemption (type of activity): Art. 43(1) point [relevant number] of the VAT Act — e.g., point 19 for medical services, point 26 for educational services

When Should You Voluntarily Register for VAT?

Even if you have not exceeded the PLN 240,000 limit, voluntary VAT registration may be worthwhile when:

  • You buy expensive equipment or goods — you can deduct input VAT
  • Your clients are businesses (B2B) — VAT on your invoice is neutral for them (they deduct it)
  • You run a low-margin, high-cost business — deducting input VAT improves cash flow
  • You plan rapid growth — you will exceed the limit within the year anyway

Read more in When to Switch to VAT.

Mixed Situations

Partially Exempt Sales

If some of your services are VAT-exempt (e.g., training) while others are taxable (e.g., consulting), you must:

  • Issue VAT invoices with the appropriate rate for each service
  • A single invoice can contain items at 23% and "zw"
  • Maintain records that allow correct calculation of the input VAT proportion

Exceeding the Limit Mid-Year

When your turnover exceeds PLN 240,000:

  • You lose the exemption starting from the transaction that pushed you over the limit
  • You must register as an active VAT taxpayer (VAT-R)
  • From that point on, you issue VAT invoices
  • Previously issued "zw" invoices remain valid

Reverse Charge and Import of Services

Even as a VAT-exempt taxpayer, you must account for VAT in certain situations:

  • Import of services from the EU (e.g., Google Ads, software licences) — file VAT-9M
  • Intra-Community acquisition of goods above PLN 50,000 — VAT-EU registration required

Common Mistakes

  1. Issuing VAT invoices without registration — issuing an invoice with a 23% rate as an exempt taxpayer means you must pay that VAT to the tax office, but you cannot deduct any input VAT
  2. Missing legal basis on "zw" invoices — the document is incomplete
  3. Not invoicing at all — an exempt taxpayer must also issue an invoice upon the buyer's request (within 3 months of the transaction)
  4. Not monitoring turnover — failing to track revenue leads to unexpectedly exceeding the threshold
  5. Confusing "zw" with "np" — "zw" means VAT-exempt, while "np" (nie podlega — not subject to) refers to activities entirely outside the scope of the VAT Act

KSeF Impact on Invoicing

With the rollout of the National e-Invoice System (KSeF), the obligation to issue structured invoices applies to both active VAT taxpayers and exempt taxpayers. This means that regardless of your VAT status, your invoices will need to be issued and transmitted through KSeF in a structured XML format.

Summary

| Situation | Invoice Type | |-----------|-------------| | Active VAT taxpayer | VAT invoice (rate: 23%, 8%, 5%, 0%) | | Subjective exemption (turnover < PLN 240,000) | Invoice with "zw" rate + legal basis | | Objective exemption (e.g., medical services) | Invoice with "zw" rate + legal basis | | Sales to individuals (without request) | Receipt or invoice |

If you are unsure which VAT status to choose, test different scenarios with our tax calculators. Need help with VAT registration or invoicing? Contact LinTax Wrocław — we will help you choose the optimal tax setup.