Explanations of the Ministry of Finance regarding the intra-Community supply of goods issued on 17 December 2020 systematize the current practice of applying the provisions regarding the intra-Community supply of goods. It should be reminded that the explanations do not apply to all conditions for applying the 0% VAT rate, but only to one of them. MF referred to the situation when goods have been dispatched or transported by the supplier from an EU Member State to the purchaser in the territory of another EU Member State.
Choice of legal basis for documenting the delivery of goods
A taxpayer who performs the intra-Community supply of goods on the territory of another EU member state may, in order to document the delivery of goods to the purchaser, choose and apply:
- the provisions of Regulation 282/2011 (hereinafter: the Regulation), which were added by Regulation 2018/1912, or
- the provisions of the Polish Act on tax on goods and services (hereinafter: the VAT Act).
The possession of the documents indicated in the Regulation or in the VAT Act creates a presumption that the taxpayer has supplied goods to a contractor in the territory of another EU member state. On the other hand, in the absence of their possession, there can be no reverse presumption that the taxpayer has not supplied the goods to a contractor in another EU member state.
The chosen legal basis will force the possession of the relevant evidence
The tax explanations with respect to the intra-Community supply of goods confirm the position of the Minister of Finance in individual tax rulings, e.g. in the tax ruling of the Head of the National Revenue Administration Information Centre, dated on 9 September 2020, case file 0112-KDIL1-3.4012.230.2020.2.AKS. According to them, a taxpayer after 1 January 2020 still has a choice between applying the provisions of the Regulation and the VAT Act.
This position is particularly beneficial for those taxpayers who have proofs of delivery of goods to contractors in accordance with the rules in force before 1 January 2020.
Types of evidence of export of goods included in the Regulation
The provisions of the Regulation include two groups of evidence that confirm the delivery of goods by a taxpayer to a contractor in the territory of another EU Member State.
The first is group A of evidence, i.e. documents relating to the dispatch or transport of goods, such as:
- signed CMR waybill;
- bill of lading;
- air freight invoice or invoice from the goods transporter.
The second group is group B of evidence, namely:
- an insurance policy for the shipment or transportation of goods;
- bank documents proving payment for the shipment or transport;
- official documents issued by a public authority, such as a notary, attesting the arrival of the goods in the Member State of destination;
- a receipt issued by the warehouse keeper in the Member State of destination certifying storage of the products in that Member State.
The seller must have two proofs of Group A, or a single proof of Group A and a single proof of Group B. Where the goods are supplied by the buyer (or a third party on behalf of the buyer), the seller must possess a declaration from the buyer that the goods have been dispatched or transported by the buyer or a third party acting on behalf of the buyer. The buyer of the goods is required to provide the taxpayer with the statement by the 10th day of the month, following the month in which the supply was made. As explained by the Minister of Finance, this deadline is instructional, so in case of a delay in its delivery, the taxpayer is still entitled to apply the 0% rate.
The buyer and the seller should be independent entities
Group A and B proofs issued by the seller and the buyer must be independent of each other. Two parties are not considered “independent” if they have the same legal personality or there is between them:
- a family relationship;
- a personal relationship;
- a relationship based on ownership;
- a relationship based on membership;
- an organizational relationship;
- a financial relationship;
- a legal relationship.
Evidence in electronic and paper form
Group A and B evidence listed in the Regulation may be held by the taxpayer in any form. It can be a paper printout, but also a document made available electronically (e.g., e-mail, scan or fax of the document).
Export of goods with own means of transport
The explanations also contain a tip for taxpayers who supply goods using their own means of transport. In such case it will be impossible to obtain two independent proofs from the seller and from the purchaser. Therefore, the taxpayer should apply the provisions of the VAT Act.
Types of proof of export of goods included in the VAT Act
Article 42(3) of the VAT Act contains two groups of evidence that a taxpayer must have in order to prove the delivery of goods to a purchaser in another Member State.
The first group consists of transport documents received from the carrier, as:
- International Railway Bill of Lading (CIM) or International Railway Waybill (SMGS);
- Bill of Lading, which is the waybill for sea transport of goods;
- International Consignment Note (CMR) for carriage by road;
- International Air Waybill (AWB), which is a contract of carriage in air transport.
The second group is the specification of the individual pieces of cargo. This is an enumeration that the taxpayer may prepare as a separate document or may have it available as part of the invoice issued. It should be remembered that in each case the key objective is to be able to identify the goods which are the subject of the intra-Community supply.
Supply of goods with own means of transport under the VAT Act
In case of supply of goods with own means of transport according to the rules regulated by the VAT Act, the taxpayer, in addition to the specification of the individual pieces of goods, should have additional evidence. This may be a document containing at least:
- name and surname or name and address of the seat of business activity or place of residence of the taxpayer making the intra-Community supply of goods and of the purchaser of these goods;
- the address to which the goods are transported, if different from the address of the place of business or residence of the customer;
- the identification of the goods and their quantity;
- the acknowledgment of receipt of the goods by the purchaser in the territory of a Member State other than that of the supplier;
- the type and registration number of the means of transport by which the goods are exported or the flight number, where the goods are transported by air.
Supporting documents referred to in Article 42(11) of the VAT Act
The provisions of the VAT Act in Article 42(11) also provide an illustrative list of supporting documents. The taxpayer should have these if the evidence specified above does not clearly indicate that the goods have been delivered to the purchaser. These include:
- business correspondence with the purchaser, including his purchase order;
- documents concerning insurance or freight costs;
- a document confirming payment for the goods (except in cases where the delivery is free of charge or the obligation is fulfilled in another form, in which case – another document stating the end of the obligation);
- Proof of acceptance of the goods by the buyer in a Member State other than that of the supplier.
Rebuttable presumption of exportation
The tax authorities may rebut the presumption that the taxpayer has supplied the goods to the purchaser in the territory of another Member State. The burden of proving that although the taxpayer has the evidence specified in the Regulation or the VAT Act, but in fact the goods have not been dispatched or transported to the purchaser lies with the tax authority.
Therefore, the presumption can be rebutted when the tax authorities prove, under the necessary conditions, that the goods have not in fact been dispatched or transported from a member state to a destination outside its territory but within the EU. This could be the case, for example, if the tax authorities discover during an audit that the goods are still in the supplier’s warehouse. The same could happen if the tax authorities become aware of an incident during transport whereby the goods were destroyed before leaving the territory of the country.
However, in order to successfully rebut the presumption, it is not sufficient to state that the above transport shortcomings are suspected. The presumption can only be rebutted if the tax authorities are in possession of evidence which shows that the dispatch or transport of the goods did not take place.
The intra-Community Trade requires constant monitoring of the practice of application of the regulations
The issues of intra-Community supplies of goods and possibility to apply 0% VAT rate require constant analysis of the jurisprudence and new interpretations. We will continuously monitor the practice of applying the provisions on documenting intra-Community deliveries of goods in order for taxpayers to apply the 0% VAT rate. As soon as new interesting conclusions in this respect become available, we will inform you about it immediately.
Should you have any additional questions or doubts, please do not hesitate to contact us.
Maciej Kozub, VAT specialist, Poznań