The authority interpreted the provision that does not exist and decided that the company cannot apply 0%. VAT rates

The entrepreneur made intra-Community supplies of goods to foreign contractors. He had documents confirming these deliveries: warehouse documents, payment confirmations, invoices and printouts of placed orders. But the tax office interpreting the provision of Art. 42 sec. 3 of the VAT Act, he denied him the right to apply 0 percent. tax rate, because, in his opinion, none of these documents clearly indicated that the goods were delivered to their destination in the territory of a Member State other than the territory of the country of the goods.

The company referred to Art. 42 sec. 11 of this Act, which indicates that it is essential that the documents simply confirm the intra-Community supply. The court was on the side of the company, admitting it was right and stating at the same time that: “the authority interpreted the provision that does not exist” (judgment of the Provincial Administrative Court in Łódź of 17 July 2020, file reference number I SA / Łd 178/20).

According to the regulation of art. 42 sec. 1 point 2 of the VAT Act, the intra-Community supply of goods is subject to taxation at the rate of 0%, provided that the taxpayer, before the deadline for submitting a tax declaration for a given tax period, has evidence in his documentation that the goods being the subject of this supply were exported from the territory country and delivered to the buyer on the territory of another Member State. Paragraph 3 of this article specifies that the evidence includes the shipping documents received from the carrier (forwarder) responsible for the export of goods from the territory of the country, which clearly show that the goods were delivered to their destination in the territory of a Member State other than the territory of the country of the goods. – in the event that the carriage of goods is entrusted to a carrier (freight forwarder). This proof is also the specification of individual items of cargo.

However, if the goods are exported using their own means by the supplier or the buyer himself, then apart from the above-mentioned cargo specification, for the possibility of using 0 percent. VAT rates for intra-Community supply of goods, they should also have documents confirming: the name and surname and address of the registered office of the business or the place of residence of the taxpayer making the intra-Community supply of goods and the buyer of these goods, the address to which they are transported, determination of the goods and their quantity, confirmation of the place of acceptance of the buyer, type and registration number of the means of transport with which the goods are exported, or the flight number.

The entrepreneur who is an active VAT payer is a producer of plastics. It sells them to both domestic and foreign customers. In 2018, he traded his products with European companies from various countries, from one group of Lidl. It consisted in the sale and delivery of these products to Lidl’s warehouse located in Germany, from where they were distributed to individual contractors. In connection with these transactions, the entrepreneur has in his documentation:
1) a transaction order;
2) copies of invoices issued to contractors, containing information on the terms of delivery (Delivered Duty Paid – DDP), and the content of each invoice includes the number of the warehouse document (WZ);
3) warehouse documents (WZ), which were attached to each of the invoices, which mainly indicate the type and quantity of goods delivered to the customer;
4) original invoices issued by shipping companies in connection with the forwarding service of goods shipped to contractors along with CMR documents (international car consignment notes), which show that the goods have been collected by the forwarder (carrier);
5) confirmation of payment for the invoices described above;
6) original invoices issued by transport companies, along with an indication of the numbers of warehouse documents, the date of loading the goods from the central warehouse of the Lidl group in Germany and the date of delivery of the goods directly to the contractor.

The entrepreneur applied to the tax authority for an interpretation as to whether the intra-Community supply of goods documented in this way will benefit from a 0% VAT rate. In his opinion, the answer is yes, because it is allowed by Art. 42 sec. 11 of the VAT Act, which states that if the documents referred to, inter alia, in art. 42 sec. 3, do not unequivocally confirm the delivery to the buyer located in the territory of a Member State other than the territory of the country of the goods, evidence of this may also be other documents indicating that there has been an intra-Community delivery.

In the individual interpretation issued on February 11, 2020, the Director of the National Tax Information stated that the entrepreneur was wrong. He pointed to the existence of two basic conditions, the fulfillment of which allows the delivery to be classified as intra-Community supply and thus the 0% VAT rate for this delivery. The first is the legal aspect, the second is factual. The factual aspect was specified directly in Art. 42 sec. 1 point 2 of the VAT Act, and the documents held by the taxpayer, referred to in this provision, must clearly indicate that the goods were actually delivered to the buyer to the territory of an EU country other than Poland, and in the opinion of the authority, this does not result from any from the documents submitted by the company.

The Provincial Administrative Court in Łódź took the side of the company. It ruled that the tax authority misinterpreted Art. 42 sec. 3 sentence 1 in connection with from paragraph 11 of the Act on tax on goods and services. In this regulation, the legislator concluded that the evidence entitling to apply the 0% VAT rate for intra-Community supply of goods are documents that jointly confirm the delivery of goods to the buyer in the territory of another EU country. It is therefore clear from those provisions that the point is not that each of the items of evidence referred to therein should confirm that submission. Repealing the challenged interpretation of the director of the National Tax Information, he stated: “… the authority interpreted the provision that does not exist, as there is no provision that requires it to be considered whether each separate evidence confirms the delivery of the goods to the recipient, and has refrained from interpreting the provision requested the applicant “(judgment of the Provincial Administrative Court in Łódź of 17 July 2020, file reference number I SA / Łd 178/20).

In tax law, as well as in the law of entrepreneurs, created for entrepreneurs, there are fundamental principles that are subject to the highest protection, such as the rule of legal certainty or resolving doubts in favor of the taxpayer. The case described above brings the breach of these rules by tax authorities against entrepreneurs to an even higher level. Generally, the authorities interpret the existing regulations to the disadvantage of taxpayers. It turns out, however, that they also interpret to their disadvantage the provisions that do not exist. It is good that entrepreneurs can defend themselves against such actions with the help of law firms, advisers and tax advisers, and as a last resort find protection of their arguments in court.

legal counsel Robert Nogacki

Skarbiec Law Firm specializes in property protection, strategic consulting for entrepreneurs and crisis management

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