The government is cutting VAT on fuel - what exactly is changing?
Prime Minister Donald Tusk has announced a decision to reduce the VAT rate on fuel from 23% to 8%, one of the most far-reaching tax interventions of recent years. In addition to reducing value added tax, the government has also decided on an excise duty cut - by 29 grosze per litre of petrol and 28 grosze per litre of diesel. The decision is a direct response to the sharp rise in fuel prices, which in March 2025 pushed the average price of diesel to PLN 8.30 per litre.
The bills reducing excise duty and VAT are to be processed on a fast-track basis. This means the changes could take effect as early as April 2025. For business owners, hauliers and ordinary drivers this is potentially good news, but from a legal and tax perspective the situation raises numerous questions - both about VAT settlements and about the impact on commercial contracts containing price clauses linked to tax rates.
It is worth stressing that a similar VAT reduction on fuel already took place under Prime Minister Morawiecki in 2022. That experience showed that temporary changes to tax rates create a number of legal challenges for businesses, particularly in relation to invoicing, correcting returns and applying the correct rates during transitional periods.
Budgetary impact - the scale of the shortfall in tax revenue
A financial analysis of the fuel VAT reduction reveals the scale of the burden on the state budget. According to the available data for 2024, monthly revenue from VAT on liquid fuels was around PLN 27 billion. Cutting the rate by 15 percentage points theoretically means losing as much as 65% of that revenue. In practice, however, owing to higher base fuel prices, the actual shortfall is estimated at around PLN 9 billion per month from VAT alone.
The impact of the excise duty cut must be added to this. Poland consumes around 23 billion litres of diesel and 8.2 billion litres of petrol a year. With an excise reduction of 28-29 grosze per litre, this means an additional revenue shortfall of around PLN 9 billion a year, or about PLN 0.7 billion per month. In total, the state budget could lose almost PLN 10 billion a month compared with the existing plan.
The context of these figures matters - the planned 2025 budget deficit is a record PLN 289 billion. Each additional month of reduced rates widens this gap by a further PLN 10 billion. This raises questions about the stability of public finances and possible future increases in other taxes or spending cuts, which could affect both businesses and individuals.
Legal consequences for businesses and haulage companies
Changing the VAT rate on fuel from 23% to 8% brings specific legal and accounting obligations for business owners. Below we set out the key areas that need attention:
- Invoicing and corrections - businesses must promptly adjust their accounting systems to the new VAT rate. Invoices issued after the reduction takes effect must show the 8% rate, and any corrections to invoices from the transitional period require particular care.
- Commercial contracts with fuel price clauses - many contracts in the transport and logistics sector contain price indexation mechanisms tied to fuel costs. The VAT reduction may require such contracts to be renegotiated or amended.
- Deduction of input VAT - companies entitled to deduct VAT on fuel must take the changed rate into account. Lower input VAT means a smaller amount to deduct, which affects the actual tax cost of running the business.
- Records and JPK_VAT - JPK files must reflect the correct rates. Errors in this area may result in sanctions from the tax authorities.
- Fuel cards and VAT - entities that settle fuel through fleet cards should check whether card operators apply the correct rates from the date the rules take effect.
Haulage and logistics companies, for which fuel is one of the main operating costs, should be especially cautious. Any doubts about the transitional period and the correct settlement of transactions spanning the change of month should be discussed with a lawyer or tax adviser.
The temporary nature of the reduction - the risk of higher rates returning
Experience from 2022-2023 shows that VAT reductions on fuel are temporary. Prime Minister Morawiecki's government introduced a similar reduction and then withdrew it, which caused a sudden rise in prices at petrol stations and legal complications for many businesses. The current reduction is directly linked to the price crisis caused by the geopolitical situation, in particular the conflict in Iran and its impact on global oil prices.
The longer the price crisis lasts, the longer the government will be forced to maintain reduced rates - and thereby deepen the budget deficit. At the same time, the longer the lower rates are in force, the more politically difficult it becomes to return to the 23% rate. Businesses should therefore plan their budgets and pricing strategies with both scenarios in mind - the reduction being maintained and its swift withdrawal.
From a legal perspective, it is also important that changing the VAT rate requires an amendment to the act, not merely a regulation. This means that any change - whether a reduction or a return to the higher rate - must go through the full legislative process. Companies therefore have some time to prepare, but should not delay analysing their contractual and tax obligations.
How to prepare for the changes - practical tips
The fuel VAT reduction is not just a change on the receipt at the pump. For many businesses it means reviewing and adjusting internal procedures. Correct tax settlement during a period of rate changes requires professional legal support.
First of all, it is worth auditing existing commercial contracts for price and tax clauses. Companies in the TSL sector (transport, forwarding and logistics) should check how the change in the VAT rate affects their margins and contractual obligations. It is equally important to make sure that ERP systems and accounting software are ready to handle the new rate from the first day it applies.
Nor should we forget employees who use company cars and claim fuel costs. The change in the VAT rate affects the flat-rate settlement of private use of company vehicles and the amount of deductions for cars used for mixed purposes (50% VAT deduction).
Need legal support in connection with the tax changes?
Changes to VAT and excise duty rates on fuel may have a significant impact on your business. If you have doubts about settling taxes correctly, renegotiating contracts or adjusting internal procedures - contact our firm. Our tax law specialists will help you get safely through the period of change and avoid costly mistakes. Book a consultation today - do not wait for problems to appear.
Have a question about this?
The first consultation is free - let us talk about your situation.
