According to the sentence of the Supreme Administrative Court (NSA) of 4 August 2020 (signature I FSK 1848/17), regular supplies from the warehouse are continuous if the agreement concluded by the parties shows that they will be repetitive on predetermined dates. The tax liability will arises at the end of the settlement period to which the payments relates and the VAT return itself can be made in joint manner.
Definition of continuous supply
The company applied for individual tax interpretation and stated that it was an active VAT payer and entered into a contract with the counterparty for logistics services. The counterparty rented a separate part of the warehouse to the Company. The remuneration for the rental agreement became part of the receivables for logistics services. The products stored in the separate part of the warehouse are the property of the Company and the counterparty of the Company is obliged to keep records of the stored products and send them to the Company on a monthly basis. Ownership of the products and the right to dispose of them as owner shall pass to the Counterparty at the time of collection from the warehouse.
The Parties have agreed that the settlement of deliveries and payments shall be made in total, at the end of a given settlement period. In the application for the individual tax interpretation, the company took the position that the VAT liability for the supply of products in the warehouse arises at the end of each accounting period to which the payment relates.
The Director of the Tax Chamber in Poznań considered the Company’s position to be incorrect, against which the Company appealed to the Administrative Court (WSA) in Poznań. WSA indicated in the decision that the complaint should be considered, which resulted in the Director of the National Tax Administration filing a cassation appeal with the Supreme Administrative Court (NSA) and challenged the entirety of the sentence. The Supreme Administrative Court (NSA) ruled in favour of the company, stating that the term “continuous supply” should be understood as a supply that is “(…) carried out continuously in the form of partial services for which successive payment or settlement periods are established and the essence of the concept of continuous supply is not the nature of the supply but the manner in which it is carried out, i.e. the regularity”, which is intended to express the continuity of services with regard to supplies.
What does this mean in practice for taxpayers?
The above sentence is a favourable solution for taxpayers, as regular supplies to their counterparties under a single contract enable them to settle the VAT relating to the supply together in fixed settlement periods. If you have any questions regarding the above-mentioned problem, we recommend that you contact the VAT department of our law firm. We are at your disposal.