CJEU ruling regarding intra-Community acquisition rules in Poland

The Court of Justice of the European Union in the case C 895/19 on March 18, 2021 announced the judgement concerning delayed reporting of intra-Community acquisition. The court concluded that the Polish provisions of the VAT Act resulting in the need to pay interest due to the delayed reporting is inconsistent with the EU Directive.

The decision concerns the VAT provisions in the case of intra-Community acquisition of goods which were introduced in Poland in 2017. Pursuant to these regulations, if a taxpayer shows intra-Community acquisition only after three months following the month in which tax point for this transaction arouse, he should settle the VAT due in the VAT report for the period in which the tax obligation took place, and the input VAT should only be shown in the current VAT report. This situation resulted in obligation to pay interest as the VAT due is shown earlier than the input VAT.

CJEU ruled that the VAT provisions may result in the fact that regardless of the circumstances of a given case, good faith and the reasons for the delay in reporting this regulation limits, due to the breach of the formal condition itself, the exercise of the right to deduct the VAT due on the intra-Community acquisition of goods. Consequently it temporarily places the burden of VAT on the taxpayers – they are forced to pay interest.

The issue of compliance of Polish VAT regulations with EU law has been the subject of a dispute for several years. There have been many proceedings between the tax authorities and taxpayers. But even the courts in Poland have not developed a uniform position. Now, following the judgement, the taxpayers should consider possible corrections or resume proceedings in which unfavorable decisions were issued for them.

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Poland – bilateral cross-border agreements

The Polish tax authorities have concluded bilateral cross-border agreements organizing cooperation to combat VAT fraud with a number of other EU member States such as, at this time : Czech Republic, Estonia, Germany, Hungary, Lithuania and, Slovakia.

These agreements are meant to increase the exchange of tax related information, in particular the data necessary to detect missing trader fraud (so-called “carrousel”).

Trader fraud is, Indeed, one of the biggest reason to the EU VAT Gap (i.e. difference between expected VAT collection and actual VAT collection).

The data exchanged will be analysed by teams of VAT specialists set up by each participating country to undercover potential fraudulent operations.

Poland seems to have signed agreements with EU member States that appear to be closest. As the fight against VAT fraud is high on the agenda of all EU Member States, Poland might still want to sign agreements with countries beyong this immediade circle, and the latter might want to imitate Poland and sign their own agreements with other EU member States, in particular those with whom they are trading most.

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GTU codes in new JPK_VAT7

From October 1, 2020 VAT payers in Poland are required to mark their sales invoices with the new GTU marking, i.e. codes for selected groups of goods and services in the new SAT-T called JPK_VAT7. 

It is not obligatory to indicate the new GTU codes on the sales invoices, however, the taxpayers can decide to do that and it will not be seen as a mistake. 

There are 13 GTU codes which can be divided into the following general groups: 

– supply of alcohol – GTU code 1 
– supply of fuel and oil – GTU code 2 
– supply of heating oil – GTU code 3 
– supply of tobacco products – GTU code 4 
– trade in waste, recyclable materials etc. – GTU code 5 
– supply of electronic devices – GTU code 6 
– sales of vehicles and car parts – GTU code 7 
– sales of precious and base metal products – GTU code 8 
– sales of medicines – GTU code 9 
– supply of buildings and structures – GTU code 10 
– greenhouse gas emission – GTU code 11 
– supply of intangible services, including advisory, accounting, legal, management, training, marketing, head offices, advertising, market research and public opinion research, in the field of research and development works – GTU code 12 
– transport and storage management services – GTU code 13  

The final decision as to whether or not to mark the sold goods or services with the above GTU codes is left to the sellers. They have to decide whether the goods and services they sell should fall into one of the thirteen groups or not. 

What is important if there is at least one item from the “risk group” on the sales invoice, it must be marked with the GTU code. It does not matter that the other goods or services do not fall into this group.  

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Fiscal representative for a company with a fixed establishment in Poland

According to the Polish VAT law provisions a taxpayer not having a registered office or a fixed establishment in the territory of a Member State, subject to the obligation to register as an active VAT taxpayer, is required to appoint a fiscal representative.

This rule applies generally to all non-EU taxpayers and will refer to the UK companies as from 01.01.2021 as well. There are however situations which exclude the obligatory appointment of fiscal representative.

A British company selling goods online from Poland, buys comprehensive warehouse services from a company in Poland. They include: warehouse management, services administration related to the movement of goods, customer service, provision goods of adequate quality and collection of goods in the warehouse, as well as delivery of goods from warehouse (i.e. logistics services). The entire warehouse is dedicated to the needs of this British taxpayer.

Tax office in the official tax ruling stated that to have a fixed establishment it is not necessary for a taxpayer to have its own personnel and technical resources. The taxpayer must, however, be entitled to comparable control over personnel and technical facilities. The tax administration ruled that this British company has therefore a fixed establishment in Poland.

The ruling has numerous consequences for the taxpayer and among them there is one which can be considered definitely as an advantage. Since this taxpayer has a FE in Poland, it is not required to appoint a fiscal representative in Poland as from the 1st January 2021. The same conclusion applies to all non-EU companies so tax analysis regarding the fixed establishment is strongly recommended.

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Tax point for the movement of own goods inside the UE

If the goods are transferred between two UE countries and the owner of the goods is not changed, the transaction is generally VAT neutral, however it must be declared in the VAT reports. Such transaction is considered to be equal to intra-Community delivery in the country where the transport begins and to intra-Community acquisition in the destination country.  The tax point for transaction in which goods are moved from UE country to Poland is determined to be either on the 15th day of the month following the month of delivery or on the date of issuing an invoice for this movement. The second option is applicable just in case when an invoice is created before 15th day of the month following the month of delivery. 

Example : own goods are transferred by a company from the territory of Germany to Poland. German law requires to create a proforma invoice (Proformarechnung) to document the goods have been transferred and this document has to include all data which are typical for an invoice. The main question is if this document can be considered to be an invoice, as it will determine the tax point for this transaction in Poland. Tax law interpretation announced by the tax administration in Poland says that a Polish VAT payer who has to declare movement of his own goods from one UE member state to Poland is obligated to analyze documents which confirm this transfer of goods and determine if it is an invoice within the meaning of the law of the country of shipment – in our example Germany.

This will be necessary for placing the transaction in a right tax period. If the proforma invoice shall be considered an invoice the tax point arises at the day of issuing such document.  If such document cannot be considered to be an invoice the tax point arises at the 15th day of the month following the delivery.

Obligation imposed by the Polish law, forces Polish VAT payers to have the knowledge about foreign law systems in terms of invoice requirements. Without this knowledge it may be difficult to determine the correct tax point for the intra-Community movement of own goods.

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What are conditions for the call-off stock procedure (concerns movements of goods from the territory of Poland to a territory of another Member State)

The procedure of the call-off stock takes place if the total is fulfilled are the following conditions:  

  1. goods are dispatched or transported by a taxable person registered as an EU VAT taxable person or by a third party acting on his behalf, from the territory of Poland to the territory of a Member State other than Poland, for their deliveries at a later stage and after their entry into the warehouse in the procedure a call-off stock to a VAT taxable person entitled to acquire the right to dispose of these goods as the owner, in accordance with a previously concluded agreement between these taxable persons; 
  2. the taxable person dispatching or transporting the goods has no registered office or permanent establishment in the territory of the Member State to which he transfers the goods from Poland; 
  3. a VAT taxable person whom the goods are shipped or transported is registered as an EU VAT taxable person in the territory of a Member State other than Poland, and his company name or first and last name and identification number for EU transactions assigned to him by that Member State are known to the taxable person referred to in point 2 at the time shipment or transport begins; 
  4. the VAT taxable person referred to in point 2, registers the movement of goods in the records referred to in Article 109 paragraph. 11c, and provides in the summary information referred to in article 100 (1)(5), the identification number referred to in point 3. 

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