As of January 1, 2025, new VAT invoicing rules will come into effect due to amendments to the VAT Act. These changes introduce the SME procedure (Small and Medium Enterprises), allowing small businesses to benefit from VAT exemption across the entire European Union. Find out what conditions must be met to use this simplified procedure and what information must be included on a simplified invoice.
Simplified Invoices for Small Businesses – SME procedure
The new regulations allow small businesses to benefit from VAT exemption throughout the EU via the SME procedure. Entrepreneurs who meet the specified criteria may issue simplified invoices. What must a simplified invoice include?
- Date of issuance
- Sequential invoice number
- Names (or full names) and addresses of both the taxpayer and the buyer
- Description (type) of goods or services
- Unit of measure and quantity of goods delivered or scope of services performed
- Unit price of goods or services
- Total amount due
- EX identification number
What is the EX number on a simplified invoice?
The EX number is an individual identification number assigned by the country of establishment of the business. It entitles the business to use the exemption within Poland, according to Article 113a(2)(2) of the VAT Act. To obtain it, an SME must submit a registration request for the SME procedure to the tax authority, attaching documents confirming its small business status. Failure to provide the EX number may render the invoice non-compliant with the law.
Conditions for using the SME procedure
To benefit from the SME procedure, a business must:
- Implement the procedure’s rules in its country of establishment
- Not exceed the EU turnover limit – a maximum of €100,000 excluding VAT
- Possess an EX identification number
- Submit an appropriate application to the tax office
- Meet the requirements for small business status
The status of a small business in the context of VAT (so-called small VAT taxpayer) is primarily regulated by Article 2(25) of the Act of March 11, 2004, on Goods and Services Tax (consolidated version: Journal of Laws 2024, item 361, as amended).
VAT invoices issued by member states
According to Article 1(5) of Directive 2020/285, which amended the VAT Directive (Council Directive 2006/112/EC), a new point (c) was added to Article 220a(1), stating that EU Member States are required to allow taxpayers to issue simplified invoices when using the small business exemption, even if business activity is conducted outside the taxpayer’s country of establishment. The invoice or note considered as an invoice must refer to the original invoice and specify the amended data.
In summary, the 2025 VAT invoicing changes introduce the SME procedure, enabling small businesses to benefit from VAT exemption throughout the EU. This requires meeting specific conditions and obtaining an EX identification number in order to issue simplified invoices in compliance with the new regulations.
