Lump-sum tax (ryczałt) for construction services in Poland (2026): 5.5%, materials and VAT
Construction services on lump-sum tax (ryczałt) in 2026: the 5.5% rate, accounting for materials, VAT of 8% or 23%, and mandatory split payment for items from annex no. 15.
Revenue from construction works is, as a rule, taxed under lump-sum tax (ryczałt) at 5.5%. Materials built in as part of a single service do not automatically become a separate trading activity simply because you show them as a separate line item on the invoice.
In VAT there is no longer a domestic reverse charge (VAT) for construction services. Since 1 November 2019 it has been replaced by the mandatory split payment mechanism in the cases specified in the act.
Lump-sum tax for construction services — rates and materials
Construction services on lump-sum tax (ryczałt): specialized works (PKWiU 43) = 5.5%, general construction (PKWiU 41-42) = 5.5%. Materials: sold separately = 3%, included in service = service rate.
Lump-sum tax rates for construction
How to account for construction materials?
Example: bathroom renovation 6,500 zł net
Key rule: A separate invoice line does not turn a construction service into trade. The 3% rate can apply only to a genuinely separate sale of goods.
Running a construction business and want to optimize tax?
Let's check →Construction works are generally subject to the 5.5% lump-sum rate. A genuinely separate sale of goods may be taxed at 3%; invoice layout alone is not decisive. Domestic construction reverse charge no longer applies; mandatory split payment may apply when all statutory conditions are met.
The 5.5% rate for construction works
The lump-sum tax (ryczałt) act sets a 5.5% rate for revenue from construction works. In practice this covers works classified in the relevant Polish classification of goods and services (PKWiU) groupings of divisions 41–43, including:
- construction of buildings and civil engineering structures,
- electrical, water and sewage, gas, and heating installations,
- plastering, laying floors, and installing joinery,
- painting and glazing,
- demolition, earthworks, roofing, and finishing works.
However, the PKD business activity code entered in the business registry (CEIDG) alone is not enough. The rate depends on the activity actually performed and its PKWiU classification.
Materials included in the service price
If you undertake to carry out a renovation, supply the necessary materials, and are responsible for the final result, you usually settle a single construction service. In that case the entire revenue due — labor together with materials — is, as a rule, revenue from construction works taxed at 5.5%.
Example: you agree to paint an apartment for 8,000 zł, you buy the paint and tools yourself, and the client receives the finished result. Merely stating the value of the paint on the invoice does not yet mean that you are conducting a separate trading sale.
On the ryczałt you do not deduct the cost of materials from revenue.
When can a separate sale of materials qualify for 3%?
The 3% rate may apply if you actually make a separate sale of goods acquired for resale, independent of the construction service.
Separateness is not determined by:
- a separate line item on the invoice,
- any arbitrary split of the price between "materials" and "labor,"
- the share of materials in the total price.
What matters is the contract, the parties' responsibilities, how the price is set, the possibility of acquiring the materials without the service, and the economic sense of the transaction. Artificially splitting a single service solely to apply a lower rate is risky.
VAT of 23% or 8%
The standard VAT rate for construction services is 23%. The 8% rate may be applied to the supply, construction, renovation, modernization, thermal modernization, reconstruction, or maintenance works concerning buildings covered by the social housing program, if the conditions of the act are met.
For single-family residential buildings the usable floor area limit is 300 m², and for residential units it is 150 m². When the limit is exceeded, the 8% rate applies proportionally to the part of the tax base corresponding to the area within the limit; the remaining part is taxed at the standard rate.
Not every job "in an apartment" automatically qualifies for 8%. What matters is the type of building, the scope of works, and the place where they are performed.
Split payment instead of reverse charge
The domestic reverse charge for construction services has not been in force since 1 November 2019.
The mandatory split payment mechanism (MPP) applies when, cumulatively:
- the invoice documents a transaction between taxpayers,
- its total amount due exceeds 15,000 zł gross,
- the invoice includes at least one good or service from annex no. 15 to the VAT Act.
Annex no. 15 contains numerous construction services. In that case the invoice must bear the annotation "split payment mechanism," and the buyer pays using an MPP transfer message.
The 15,000 zł threshold alone is not enough. If the invoice does not contain an item from annex no. 15, split payment is not mandatory on that basis, although the buyer may apply it voluntarily.
Example of a lump-sum tax settlement
A company carries out a renovation for 20,000 zł net. The materials are part of a single service and cost the contractor 7,000 zł.
- revenue subject to the ryczałt: 20,000 zł,
- the cost of materials does not reduce revenue,
- lump-sum tax at 5.5%: 1,100 zł.
If the invoice is issued between VAT taxpayers, exceeds 15,000 zł gross, and includes a service from annex no. 15, the mandatory MPP must be applied.
Most common mistakes
1. Reverse charge on a domestic construction invoice
This is outdated. The domestic reverse charge for these services was abolished in 2019.
2. MPP for every invoice above 15,000 zł
The obligation also requires an item from annex no. 15 and the fulfillment of the remaining statutory conditions.
3. Automatic 3% for materials on a separate line item
The way the invoice is described does not create a separate sale if, economically, you perform a single construction service.
4. VAT of 8% for every service in a house or apartment
The 8% rate applies only after the conditions regarding the type of building and the works are met.
5. Deducting material purchases on the ryczałt
Lump-sum tax (ryczałt) does not allow you to account for deductible expenses (KUP). A large share of materials may argue for a comparison with the tax scale or flat tax.
FAQ
Does painting qualify for the 5.5% ryczałt?
If the activity performed is a construction work covered by the appropriate PKWiU grouping — as a rule, yes.
Do construction materials qualify for 3%?
Only when they are the subject of a genuinely separate trading activity. Materials that are part of a single construction service do not automatically switch to 3%.
Do B2B construction services have reverse charge?
Not in domestic transactions. Since November 2019, mandatory split payment has applied in certain cases.
Does every construction invoice above 15,000 zł require MPP?
No. It must also include an item from annex no. 15 and meet the remaining statutory conditions.
Sources
- Biznes.gov.pl — Lump-sum tax on recorded revenue, including the 5.5% rate for construction works and 3% for trading service activity
- Podatki.gov.pl — Split payment mechanism
Need help with construction?
I run sole proprietorship (JDG) accounting for construction companies — lump-sum tax (ryczałt), VAT, and MPP. From 49 zł + VAT per month.
Reply to [email protected] or visit oxyok.com/pl.
Note: The ryczałt for construction works is, as a rule, 5.5%. A separate sale of materials requires an actual separation of services, not just two line items on the invoice.