The preferential 9% CIT rate is available only to taxpayers who meet specific statutory conditions, including qualifying as a small taxpayer. In practice, doubts may arise as to how the sales revenue threshold should be calculated where transactions are settled under the reverse charge mechanism. This issue was addressed by the Director of the National Revenue Information Service (KIS) in an individual tax ruling of 19 June 2026 (ref. 0111-KDIB2-1.4010.218.2026.1.ED).
The case concerned a taxpayer subject to unlimited tax liability in Poland who intended to expand its business by providing services to foreign entities. Under the Polish VAT Act, these services were to be settled under the reverse charge mechanism, meaning that the obligation to account for output VAT would rest with the customer, while the invoices issued by the taxpayer would not include VAT.
Against this background, the taxpayer sought clarification as to whether, for the purposes of determining the revenue threshold required to qualify as a small taxpayer under Article 4a(10) of the Corporate Income Tax (CIT) Act, the sales revenue should be taken into account inclusive of VAT or net of VAT, given that the reverse charge mechanism would apply.
The taxpayer argued that only the net value should be included. It pointed out that the CIT Act refers to the concept of sales revenue, which is not expressly defined in that Act. Based on a literal interpretation of the provision, the taxpayer maintained that all sales revenue should be taken into account, including income exempt from income tax. According to the taxpayer, this interpretation was also consistent with the definition contained in Article 2(25) of the VAT Act.
The taxpayer further argued that not every transaction subject to VAT constitutes a sale within the meaning of the VAT Act. This applies, among others, to transactions settled under the reverse charge mechanism. In addition, the taxpayer noted that the CIT Act refers to the value of sales revenue including the amount of output VAT, which, in its view, means VAT payable by the taxpayer itself. Consequently, where services are settled under the reverse charge mechanism, only the net value of the sale should be taken into account because no output VAT arises on the supplier’s side.
The tax authority disagreed with the taxpayer’s position. First, it emphasized that the term “value of sales revenue” referred to in Article 4a(10) of the CIT Act is not defined in the Act and should not be equated with the concept of taxable income. At the same time, it confirmed that, when determining small taxpayer status, all sales revenue should be taken into account, including income exempt from income tax, while excluding revenue derived from sources other than sales.
The authority further noted that referring to the definition of “sale” contained in the VAT Act is not always appropriate. In its view, the CIT Act and the VAT Act serve different purposes and may apply differently to the same transaction. Consequently, a transaction may fall within the scope of one tax while remaining outside the scope of the other.
With regard to the reverse charge mechanism, the Director of KIS explained that its application merely shifts the obligation to account for VAT to the purchaser of the goods or services. However, this does not mean that the output VAT ceases to exist or loses its connection with the transaction itself. According to the authority, the output VAT remains linked to the sale carried out by the supplier and continues to be attributable to that transaction. The reverse charge mechanism changes only the entity responsible for accounting for the tax.
Consequently, the Director of KIS concluded that, for the purposes of determining small taxpayer status under Article 4a(10) of the CIT Act, the amount of output VAT relating to transactions settled under the reverse charge mechanism must also be taken into account, even though the obligation to account for that VAT rests with the purchaser. The authority emphasized that the VAT is associated with the transaction itself rather than with the entity responsible for reporting it. As a result, the taxpayer’s position was found to be incorrect.
The ruling confirms that, in the tax authority’s view, the mere transfer of the VAT accounting obligation to the purchaser does not affect the method of calculating the threshold for small taxpayer status under the CIT Act. Consequently, taxpayers providing services settled under the reverse charge mechanism should carefully verify how they calculate this threshold when assessing their eligibility for the preferential 9% CIT rate. The ruling may have significant practical implications for taxpayers who have so far excluded the amount of output VAT relating to reverse charge transactions when determining the relevant threshold.