About the new tax on retail sales in Poland

The tax on retail sales coming into force on September 1, 2016 will not contribute to the decrease in the number of shopping centers in Poland. The tax will increase the competitiveness of small- and medium-sized businesses in comparison to large entities operating in the commercial sector and will increase the state’s revenues.



In its final version, the tax-free amount was set at PLN 17 million (€4 million) monthly, which is PLN 204 million annually. Above this amount, chains will be obliged pay 0.8% up to a revenue of PLN 170 million monthly, while those with sales exceeding this amount shall pay 1.4%. The tax shall not be payable on online sales.

It is also important to mention that, since April 2016, there has been an additional child benefit in Poland—“Program 500+”. Each family is to receive a monthly benefit of PLN 500 for the second, and each consecutive, child. Families with particularly low incomes will receive the benefit for the first child as well.

The overall amount of benefits related to this program is estimated to equal PLN 22 billion per year and it is expected that this very amount will be injected into the market. Thus, virtually all retail chains are now experiencing a significant increase in their turnover as internal demand increases—a fact well observed in the financial results of publicly-traded companies listed on the Warsaw Stock Exchange. Thus, although the state is taking away some of the profits generated by retailers, it is now also releasing new funds into the market, allowing retailers to increase their sales.

The tax on retail sales will be paid mostly by large retail chains and, thus, the level of their competitiveness will inevitably fall. Retail chains will therefore begin to effect various optimizing processes in their companies and try to negotiate new terms of trade with their partners/suppliers in order to reduce the costs of this new tax elsewhere.

It seems that, in most cases, retailers will be able to negotiate lower purchase prices, as selling their goods through retail chains is the key to survival for many companies. It seems unlikely that smaller business units, not paying the tax due to the introduced limit, would be able to bridge the gap in demand on their own, so suppliers will not be forced to reduce margins for the big players.

The impact of the tax on profits generated by particular retail chains relies on the legal form of organization of a given business activity. For example, conducting business activity through separate entities for each shop may result in the threshold not being exceeded, meaning no tax liability would arise.

Of course, the Ministry of Finance has announced that it shall take steps to battle such optimization practices, however that does not seem to be a serious threat. The overall impact of the tax on negotiating the terms of lease of retail space will thus remain insignificant. Some retail chains will be forced to renegotiate, while others may even capitalize on their new arrangements.

The growth in retail space has recently been much slower. Although the vacancy rate amounts to 3%, there are vast swaths of structural vacancies in many shopping centers. These shopping centers will struggle to survive and bankruptcies are likely to follow. The tax on retail sales will be, however, only a small step on their way to a final downfall.


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