Aleksandra Majnusz

Steuerberaterin (Polen)
Senior Associate
Phone: + 48 32 330 12 27

A series of changes to VAT on cross-border supplies of goods are going to come into force on 1 January 2020. The changes follow from Council Directive (EU) 2018/1910 and the Implementing Regulation 2018/1912 (Quick Fixes) which aim at improving, harmonising and tightening up the current VAT system in the following areas:

  • call-off stocks in cross-border trade;
  • chain transactions;
  • intra-Community supplies – as regards substantive conditions for application of the exemption (0% rate) with the right to deduct.

The draft bill also allows all sellers to refund VAT to travellers. The new regulations implement the judgment of the Court of Justice of the European Union dated 28 February 2018 in case C-307/16 Stanisław Pieńkowski.

Call-off stock procedure

As a rule, movement of goods owned by an enterprise to another EU Member State is liable to VAT and requires registration in the countries where the dispatch starts and ends. 

The registration could be avoided e.g. in the case of consignment stocks. The consignment stock procedure allowed shifting the tax point in intra-Community acquisitions of goods until the goods were withdrawn from the stock for manufacturing. The rules of taxation of transactions involving consignment stocks were different in each EU Member State. Without harmonised regulations taxpayers each time had to check if they had to register for VAT in a given EU Member State. Regulations in each member state could provide for special restrictions and exceptions.  

In order to harmonise the regulations and avoid registration for VAT in the country where the dispatch ends, the rules concerning the call-off stock procedure will be harmonised across the EU. The prerequisites for the procedure are as follows:

  • the supplier has no registered office and no fixed establishment in the country where the dispatch ends;
  • the buyer is registered for VAT in the EU;
  • the moved goods are to be purchased by a specific taxpayer with whom the supplier has signed an agreement;
  • the supplier keeps records of movements of goods and discloses them in recapitulative statements.

The new regulations extend the availability of simplifications in movements of goods in the call-off stock procedure compared to the current regulations on consignment stocks. The most significant simplifications:

  • a call-off stock, may be kept by any taxpayer, who must only inform the tax authorities about keeping such a stock (while a consignment stock had to be kept by the customer);
  • the procedure will be available also for movement of goods intended for trade (it used to be available to manufacturing businesses only).  

If goods are not withdrawn within 12 months (formerly 24 months) after they were deposited in a call-off stock or after any of the conditions for the procedure dematerialised, the supplier will become liable to pay tax on the movement of own goods to another EU Member State.

Chain transactions

At present, the key for identifying the place of supply of goods in a chain transaction is the allocation of transport (dispatch) of the goods. To identify the place of taxation of a supply of goods, it is necessary to examine the transport terms set in a contract (e.g. INCOTERMS). The law does not allow choosing the place of taxation.

After 1 January 2020, the said rules for identification of the place of supply in the so-called chain transactions will apply only to imports and exports of goods.

In intra-Community chain transactions where goods are transported by an intermediary or an entity acting on behalf of an intermediary, the dispatch or transport of the goods will be allocated to the supply to the intermediary. However, if the intermediary provides the supplier with his EU VAT number assigned in the Member State from which the goods are dispatched or transported, the dispatch or transport of the goods will be allocated exclusively to the supply made by the intermediary.

In practice, this means that an intermediary who transports the goods and is registered in the country where the dispatch begins will be able to choose whether to tax his transactions in the country where the dispatch starts or ends.

The above will not apply if the transport is arranged by the first or last entity in the chain. Then, there are no factual doubts that the so-called moving supply should be allocated to the supply made either by the first entity or to the last entity.

Conditions for zero-rating ICS

In order to harmonise and tighten up the VAT system as regards intra-Community transactions, there will be new conditions to zero-rate intra-Community supplies of goods, namely:

  • the buyer has to provide his EU VAT number (at present, he just has to have it);
  • the intra-Community supply of goods must be disclosed in the recapitulative statement.

Moreover, regulation 2018/1912, which applies directly in all member states, provides for much more stringent requirements in respect of documenting the movement of goods to another EU Member State. According to the regulation, the taxpayer making the supply will be able to enjoy the 0% rate if he has at least two items of non-contradictory evidence issued by two different parties that are independent of each other, such as:

  • a CMR document;
  • proof of insurance of the goods;
  • a notarised document confirming the arrival of the goods abroad;
  • a receipt issued by a warehouse keeper in the Member State of destination.

Moreover, if transport is arranged by the buyer, then in addition to the above evidence, the seller will have to obtain from the buyer a written statement stating that the goods have been moved out of Poland. The statement will have to be obtained by the tenth day of the month following the supply.

VAT refunds for travellers to be allowed for all sellers

The current regulations stipulate that VAT may be refunded to travellers only by taxpayers who achieved turnover of more than PLN 400,000 in the previous year. Other sellers who want to let their customers recover the tax must sign an agreement with a taxpayer who provides tax refund services.

The Court of Justice of the European Union ruled (in judgement of 28/02/2018, case C-307/16) that the additional limitation for small sellers did not comply with EU laws. This means that all sellers will be entitled to refund VAT to travellers on the goods those travellers purchased from them.

If you have any questions or doubts about the new regulations, Rödl & Partner's experts are at your service.

Aleksandra Majnusz