Poland Cuts Fuel VAT to 8% Amid Record Diesel Prices

Prime Minister Donald Tusk announced on March 26, 2026, a government package called "Lower Fuel Prices" (CPN), designed to bring relief to millions of Polish drivers. The key element is a reduction in the VAT rate on fuel from 23% to 8% and a reduction in excise duty by 0.29 zł per liter of gasoline and 0.28 zł per liter of diesel – down to the minimum level required by the European Union.

The government's decision is a direct response to the unprecedented price crisis at gas stations. On March 25, the national average price of diesel reached 8.69 zł per liter (approx. EUR 2.04), breaking the previous historical record from October 2022. Gasoline Pb95 cost an average of 7.14 zł per liter that day.

Strait of Hormuz — Epicenter of the Crisis

The direct cause of the sharp price increase is the armed conflict in the Middle East involving the United States and Israel against Iran, ongoing since the end of February 2026. In retaliation, Iran has blocked the Strait of Hormuz, through which, under normal conditions, about 20% of the world's oil supplies pass.

The effects were immediate — the price of Brent crude has risen by almost 60% since the beginning of March, its largest monthly jump in history. Poland, as a country heavily dependent on oil imports, has felt this shock particularly acutely.

How Much Will Drivers Save?

According to government calculations, the combination of VAT reduction and excise duty cut should lower the price of a liter of gasoline by about 1.20 zł, and diesel by as much as 1.35 zł. The first effects are already visible — from March 31, the Minister of Energy has set maximum retail prices: gasoline Pb95 — 6.16 zł/l, gasoline Pb98 — 6.76 zł/l, diesel — 7.60 zł/l.

This is a significant change, although prices still remain much higher than at the beginning of the year. The introduction of official maximum prices — the first such step in years — is intended to prevent speculative overpricing by gas stations.

Cost to the State Budget

The CPN package is not cheap. The VAT reduction will cost the budget approximately 900 million zł per month, and the excise duty reduction — an additional 700 million zł. In total, this amounts to over 1.6 billion zł in monthly losses for the state treasury.

Votes in the Sejm and Senate on the package of laws are scheduled for Friday, after which they will go to the desk of President Karol Nawrocki. Prime Minister Tusk expressed hope that the new regulations will come into force before Easter.

Doubts of the European Commission

The position of the European Commission is causing controversy, as it has signaled that EU law may not allow the reduction of VAT rates on motor fuels below the standard level. However, the Polish government argues that the crisis situation justifies exceptional measures, and cites precedents from the COVID-19 pandemic and the energy crisis in 2022.

Experts emphasize that the further development of the situation depends primarily on the conflict in the Middle East. If the Strait of Hormuz is reopened, oil prices may return below USD 80 per barrel, which would translate into further price drops at Polish gas stations.