Within the European Union there is a single customs territory. Transactions with entrepreneurs from outside of the European Union are a different case. In which cases may exports be taxed at a nil VAT rate?
The VAT Act defines export as the delivery of goods dispatched or transported from a territory outside of the European Union by:
- a supplier or on their behalf (direct export), or
- a buyer established outside the country or on their behalf, with the exception of goods exported by the buyer himself for the purpose of equipping or supplying recreational ships and tourist aircraft, or other means of transport for private purposes (indirect export)
- if the export of goods outside the European Union is confirmed by the appropriate customs authority specified in the customs regulations.
Export of goods under the VAT regulations
As opposed to import, the recognition of taxable activity within the meaning of Art. 5 sec. 1 point 4 of the VAT Act, i.e. the export of goods, the transfer of goods from Poland outside the EU must take place as a result of the delivery of goods, in that the right to dispose of the goods as an owner is transferred as a result of this transaction. At the same time, unlike in intra-Community transactions, the transfer of own goods is not classified as an activity subject to VAT.
According to the resolution of the Supreme Administrative Court of 25 June 2012 I FPS 3/12, the conditions of export from a country outside the European Union may be met both when the procedure for exporting goods referred to in Art. 269 of the EU Customs Code will commence at the Polish customs office, as well as at a European Union country other than Poland.
According to the Court of Justice of the European Union verdict reached on March 28, 2019, C-275/18, for the recognition of a given activity as an export of goods that may benefit from an exemption or a preferential VAT rate, it cannot be made subject to the condition of placing the export under a customs procedure in a situation where it is undisputed that the substantive conditions for exemption have been met, including, in particular, the condition of an actual removal of the goods in question from the territory of the European Union.
In view of this, the decisive factor for the recognition of a given activity as an export of goods within the meaning of VAT regulations is not the compliance with customs procedures, but the factual circumstance, i.e., the export of goods from EU territory outside of EU territory. Undoubtedly, the confirmation of the export of goods by the customs office is the most desirable situation, however, if for some reason such a situation did not occur, it does not mean that we cannot prove this fact in any other way, and it is a necessary condition for applying the preferential 0% VAT rate.
The most desirable documents, and in principle not questioned by tax offices, is:
- IE-599 - "Confirmation of export" in the electronic ECS system or the original card 3 of the SAD document or their copies, in the case of indirect export
However, taxpayers do not possess the aforementioned documents in every single case, therefore they face the problem and risk of taxation with the rate appropriate for a given commodity of such transactions. This uncertainty causes a growing number of taxpayers to ask the Director of National Tax Information (DKIS) to confirm whether their documents entitle them to a 0% VAT rate.
DIKS also accepts customs documents from customs authorities of other countries. For example, in the individual interpretation of December 31, 2020, applying 0 % VAT taxation on exports based on the EX-1 documents with the "Ausgangs-vermerk" watermark, with the assigned MRN number, confirms the export of goods from Poland outside the territory of the EU. In addition, DIKS stated in a different interpretation of September 20, 2021, reference number 0114-KDIP1-2.4012.389.2021.2.RM that the PDF document titled "Declaration EU A JS Etat de la declaration BAE ENF ECS Non finalise" and the PDF document titled "Declaration EU A JS Etat de la declaration BAE ENF ECS Sortie ", which are document printouts from a computer program, do not have signatures or stamps, contain information about the sender (name, address and tax identification number), indicate the applicant's data (name, address and tax identification number), codes of the country of dispatch and destination, means of transport, office of exit, location of goods, currency and invoice value, number of packages, description and code of goods, gross and net weight in kg, supplementary unit of measurement, country of origin code, procedure, summary declaration, item value, code, additional N380 information, statistical value, and place and date edited.
It seems that the jurisprudence of both the CJEU and Polish administrative courts has also liberalized the approach to this issue taken by tax authorities. DKIS not only confirms that customs documents from other countries are sufficient to confirm the export of goods outside the EU, but also accepts other documents. For example, in the individual ruling of February 18, 2022, ref. 0113-KDIPT1-2.4012.9.2022.1.JSZ DKIS decided that, although the documents from the Electronic System of the Sender with the status of "delivery", "the parcel arrived at the country of destination", "parcel sent from Poland", are not explicitly mentioned in the regulations the VAT Act, but they confirm the export of goods outside the territory of the European Union. The director of KIS also confirmed that in the event of sending the goods, as part of export, via a courier company, the company has the right to apply a 0% VAT rate to the total value of the delivery, including the shipping cost.
On the other hand, in the actual state in which a Company supplies goods transported from Poland outside the European Union ("EU") by a carrier acting on behalf of the Company or the buyer of the goods, and does not have a customs document issued by Polish customs authorities confirming the completion of the export procedure (e.g. with the so-called IE 599), but apart from the invoice containing, among others, the names and quantities of the goods sold, is under the possession of at least one of the following documents:
- consignment note (e.g. CMR document) bearing the signature or stamp of the carrier and the person collecting the goods outside the EU;
- a declaration by the purchaser of the goods that the goods to be delivered have been delivered to a place outside the EU;
- a declaration by the carrier responsible for the transport of the goods that the goods delivered have been delivered to a place outside the EU;
- a document issued by the customs administration of a country other than Poland, confirming the export of goods outside the customs territory of the EU;
- a document (or a copy thereof) issued by the customs administration of a third (non-EU) country in connection with the import and clearance in that country of the goods that are the subject of the delivery.
The company is able to identify the goods to which the above documents relate and link them to the invoice (or invoices) issued by it based on the description of the goods or invoice numbers.
In addition, the above documents are provided to the Company in paper or electronic form (as the content of an e-mail message or a scanned document attached thereto).
The authority in the tax interpretation with the Director of the National Tax Information in the individual interpretation of July 20, 2022. no .: 0113-KDIPT1-2.4012.386.2022.1.JS, confirmed that in the above circumstances, the documents held by the Company entitle it to apply the 0% VAT rate.
The Director of the National Tax Information 0112-KDIL1-3.4012.144.2022.1.KK expressed a similar opinion in the letter of 19 April 2022, in which he indicated the document or its copy issued by the customs administration of a third country (not belonging to the EU ) in connection with the import and clearance of goods in that country.
As can be seen, the position of the tax authorities has been significantly liberalized over the years. The most important conclusion from the aforementioned judgments of courts and administration is that export always takes place when the goods are moved from the territory of the EU to a third country as a result of delivery. It is not important for VAT purposes whether this delivery is certified by the apt customs office. It is equally important that if we comply with the customs procedures, the customs office before which the export procedure has commenced does not have to be the customs office of the country where the transport of goods began. However, the most important issue seems to be that the export of goods for the application of the preferential VAT rate may be confirmed by a number of reliable documents, and not only by customs documents.
Due to the high tax risk, we recommend that in each case in which we have doubts as to the right to apply the preferential VAT rate in export, based on the documentation we have, we should ask DKIS to issue an individual interpretation in this regard.