Poland – Zero VAT rate on exports is still problematic

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Accounting and operations departments must work closely together, and the effects of exports and triangular transactions must be analyzed in every respect. The latest position of the Supreme Administrative Court confirms that situations in which it is not the supplier who is responsible for the transport of goods outside Poland are particularly problematic. The seller cannot then apply a zero VAT rate.

Case examined a few days ago by the Supreme Administrative Court (NSA), file ref. I FSK 2062/17, is another one which shows that not only the proof of export, but – above all – the actual terms of the transaction are important for the application of a zero VAT rate. It concerned a situation in which the contractor (the recipient of the goods who used the carrier’s services) was responsible for the export of goods from the Polish factory to the EU and third countries. Importantly, the transport actually took place, and the seller could obtain evidence of export (including CMR, IE-599). However, the supplier concluded with the contractors additional agreements to the “Transfer of Title” agreement, under which the ownership of the goods (and probably the possibility of disposing of them) was transferred to the contractor before the goods were picked up from the warehouse. After the transfer of ownership, the goods may have been in Poland for a certain (indefinite) time before the contractor or its carrier picked it up. Although ultimately the goods left Poland, from the perspective of the authorities and the Supreme Administrative Court, there were domestic sales, since the transaction under which the contractor purchases the goods did not involve its direct export outside Poland.

Check in LEX: What documents to have to be able to apply the 0% VAT rate, if a Polish company organizes transport directly to the destination, outside the EU and issues an invoice with a 0% rate for a French company as export? 

The export of goods may not continue indefinitely

Aleksandra Plichta, a tax advisor, manager at Crido, points out that in similar situations, the lack of knowledge by the accounting or tax department of the details of the transaction execution model (often determined by sales departments on an ongoing basis, also outside the contract), or failure to notice in the documentation confirming the export or verifying how long it takes to export goods abroad, counting from the moment of sale, may generate a risk for Polish suppliers .

How will the taxpayer exempt from VAT show the export of goods? 

The Crido expert explains that if we hand over the transport issues to the contractor (his carrier), generally speaking, we must “entrust” the buyer that the goods will leave Poland, and possible further, even direct resale of the goods, will not take place in Poland yet. How can this be done?

The export of goods for zero VAT is the most important

The provisions of the VAT Act only show that the application of the 0% rate. in the export of goods, it is possible provided that the taxpayer, before the deadline for submitting a tax declaration for a given tax period, has received a document that unequivocally and unequivocally confirms the export of goods outside the territory of the European Union, and in the case of indirect export, a document confirming the export of goods outside the territory European Union, and from which the identity of the goods being the subject of delivery and export results. With art. 41 paragraph. 6a of the VAT Act, it follows that it may be in particular:

an electronic document received from the electronic system used to handle export declarations or a printout of this document confirmed by the competent customs authority;
an electronic document from the electronic system for handling export declarations, received outside this system, if its authenticity is ensured;
the paper-based export declaration submitted outside the electronic system used to handle export declarations or its copy certified by the competent customs authority.

Is selling goods to an online store based outside the EU that ships goods outside the EU export goods? 

– The practical difficulty in this regard is, of course, checking (preferably at the time of concluding the contract) what happens with the goods after they are handed over to the contractor . So what if the contractor declares its export, when it finally turns out that the next entity in the chain still takes over the goods in Poland – points out Aleksander Plichta.

A cumbersome solution will help with VAT settlement
The practice of tax advisors shows one solution. Unfortunately – as the expert points out – it is often perceived as quite burdensome for business. Nevertheless, it is undoubtedly recommended for implementation.The point is that, in addition to indicating in the contract the prohibition of direct resale in Poland, to conduct a substantive conversation with the contractor aimed at learning about the further fate of the goods, without unnecessary details that may violate a trade secret, focusing on the 0% rate, which is key to apply. items. These arrangements, summarized in a signed statement or questionnaire, will certainly increase the comfort of VAT accounting departments and company managers. The effectiveness of such action is confirmed by the tax authorities, among others in the latest tax interpretation (of August 17, 2018 , No. 0114-KDIP1-2.4012.239.2020.1.RM).

See the procedure in LEX: Taxation of VAT on advance payments for exports at 0%

Patrycja Kubiesa, a tax advisor at KiB, confirms that VAT regulations in the field of documenting export transactions are an increasing problem for taxpayers who, apart from completing a number of documents, should also conduct questionnaires analyzing for what purpose, when and where the goods will be used . – As a result, taxpayers more and more often prefer to use the domestic rate, because they are afraid of problems with tax authorities in terms of documenting exports. However, this is neither the correct nor rational approach, he notes.

Arkadiusz Łagowski, a tax advisor at Martini i Wspólnicy, points out that the administrative courts point out that it is crucial to determine the territory in which he moves to the last entity in the chain, the risk of damage or loss of goods. The analysis of Incoterms rules is helpful in this respect. In his opinion, however, it is worth pointing to the changes in force from July 1, 2020, the so-called quick fixes , which introduce certain presumptions limiting the role of delivery conditions. However, the new regulations in this respect apply only to intra-Community transactions, while the old rules apply to extra-EU transactions.

Soon new rules for settling exports

Finally, let us add that the package of amendments to the VAT Act, the so-called Slim VAT provides for the extension of the deadline for the export of goods to maintain the 0% rate. when taxing advance payments for the export of goods for two to six months . As the Ministry of Finance explains, the proposed amendment to Art. 41 paragraph. 9aof the VAT Act introduces a solution according to which the receipt of an advance payment (in whole or in part) before the delivery of goods will allow the application of the 0% rate. for the export of goods in relation to the advance payment received, provided that the export of goods will take place within six months (and not as it is currently within two months), counting from the end of the month in which the taxpayer received this advance, and including within the deadline, he received a document confirming the export of the goods outside the territory of the European Union. The Ministry of Finance emphasizes that extending the deadline for exporting goods to six months is beneficial for taxpayers who receive advance payments for the export of goods.

Source – VATupdate.com


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