Anna Kościelny

Senior Associate
Phone: + 48 71 60 60 407

The Supreme Administrative Court (SAC) issued a judgement on 11 April 2017 refining the concept of "continuous supplies of services" in terms of VAT (file no. I FSK 1104/15).

In that judgement the Supreme Administrative Court turned its approach upside down and decided that not only those services that are rendered uninterruptedly should be regarded as continuous supplies of services. 

The judgement was issued in the case of an advance tax ruling applied for by a supplier of paints and printing inks. The contracts for supplies of those products were signed for an indeterminate period and the company made supplies in ten-day or monthly cycles and billed for such periods.

The application for the advance tax ruling read as follows: the company issues an invoice to the supplier for all supplies made in a certain accounting period after that period. The company was not sure how to account for such transactions following the legislative changes effective since 1 January 2014. The company claimed that it made continuous, repeated supplies of goods to one supplier. Therefore, the billing should be for the sum of supplies in an accounting period. As a consequence, the tax became chargeable on the last day of that period (the tax point).

The tax authorities issued their advance tax ruling saying that the tax became chargeable on the date of each supply. The company appealed against that ruling but the Provincial Administrative Court in Łódź rejected the appeal. The court claimed that the continuous supplies of services were only such services where the individual components could not be singled out.

The case went all the way up to the Supreme Administrative Court which found the company's approach correct. The SAC pointed out that Article 19a(4) read together with Article 19a(3) of the VAT had been ruled upon before. In the first judgement the cassation court claimed that we could speak of continuous supplies of services only where it was impossible to tell where certain supplies ended and other began (IFSK 425/15). The panel of judges in this case did not share that view. They decided that the term "continuous supplies of services" could not be narrowed down to services that are rendered without breaks, uninterruptedly. The SAC explained that continuous supplies of services (goods) included also repeatable transactions with set accounting periods. The view is also supported by the pro-Community interpretation of Article 64 of Directive 112, as well as the economic context, i.e. the principle of making the taxpayer's life easier. All this is, of course, on condition that the supplies are not meant to circumvent the law.

The SAC's judgement marks a breakthrough. The administrative courts used to back the tax authorities and claimed that repeated supplies of goods charged in accounting periods were not the continuous supplies. The SAC's interpretation can make the documentation of repeated supplies easier. 

If you are interested in detailed information on the issue presented here, please feel free to contact Rödl & Partner experts in Cracow, Gdansk, Gliwice, Poznan, Warsaw and Wroclaw. We would be glad to share more information on this subject with you and provide comprehensive CIT, PIT, VAT advisory in Poland.