Intra-community delivery of goods

Intra-community delivery of goods
Marek Cieślak

Marek Cieślak

CEO CGO Finance

Intra-community delivery of goods refers to the export of goods from Poland to other European Union member states. Certain requirements must be met to qualify transactions as intra-community delivery. The VAT Act specifies these conditions. Moreover, In some cases, the seller may apply a 0% VAT rate for the intra-community delivery of goods. What are the conditions for the occurrence of this kind delivery of goods? When does the tax obligation arise? What is the basis for taxation? We present answers to these questions below.

Table of contents

Intra-community delivery of goods – conditions of occurrence

The VAT Act specifies the conditions for the purchaser that must be met for the export of goods to qualify as an intra-community delivery of goods.

It states that an intra-community delivery occurs if the acquirer of goods is:

  1. a taxable person liable for the value added tax identified for the purposes of intra-community transactions in the territory of a Member State other than Poland;
  2. a legal person who is not a taxable person liable for the value added tax and who is identified for the purposes of intra-community transactions in the territory of a Member State other than Poland;
  3. a taxable person liable for the value added tax or a legal person who is not a taxable person liable for the value added tax, acting in such a character in the territory of a Member State other than Poland, not listed in subparagraphs 1 and 2, if the object of the supply is excisable products which, according to regulation on the excise duty, are subject to a procedure for suspending the collection of the excise duty or a procedure for transferring excisable products from the excise duty paid;
  4. an entity other than the entities listed in subparagraphs 1 and 2, acting (residing) in a Member State other than the Republic of Poland, if the new means of transport are the object of the supply.

Furthermore, this kind of delivery of goods occurs when the person making the delivery is:

• a business operator

• an active VAT taxpayer

• registered as a VAT-EU taxpayer before the day of the first intra-community supply.

Intra-community delivery of goods – obligation to register as a VAT-EU taxpayer

Polish taxpayer making an intra-community delivery of goods must register as VAT-EU taxpayer. The registration obligation applies to both active and exempt VAT taxpayers. From the moment of registration, the taxpayer must use a tax identification number preceded by the ‘PL’ code to settle intra-community transactions.

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Intra-community delivery of goods – exceptions

The legislator defined cases in which the movement of goods by a VAT taxpayer or on his behalf doesn’t qualify as an intra-community supply of goods.

It does not constitute an intra-community delivery of goods, e.g. when:

  1. the goods are installed or assembled, with or without a trial run, if they are moved by or on behalf of the taxpayer supplying them,
  2. the movement of goods is within the framework of intra-community sales of goods at a distance,
  3. the goods are moved on ships, airplanes or trains during passenger transport within the European Union with the intention to deliver them on board of these vehicles,
  4. the goods are to be exported by that taxable person.

Intra-community delivery of goods – conditions for applying the 0% rate

According to the VAT Act, this kind of delivery of goods is taxable at a 0% tax rate, if:

  1. The taxpayer has made a delivery to the buyer who has a valid identification number for intra-community transactions. It is assigned by the Member State competent for the buyer. It has the two-letter code used for value-added tax, which was provided by the taxpayer.
  2. Before the deadline for submitting a tax declaration for a given reporting period expires, the taxpayer has documentary evidence that the goods subject to intra-community delivery were exported from Poland and delivered to the buyer in another member state.
  3. The taxpayer, submitting a declaration in which he shows this delivery of goods, is a registered VAT-EU taxpayer.

According to the VAT Act, documents that confirm the export of goods can include:

  • transport documents from the carrier (shipper) responsible for exporting the goods from Poland. They must clearly state that the goods were delivered to destination in another member state.
  • specification of individual cargo items,
  • commercial correspondence with the buyer, including his order,
  • documents related to insurance or freight costs,
  • documents confirming payment for the goods,
  • evidence confirming the reception of goods on the territory of another member state.

Intra-community delivery of goods – tax obligation

As a rule, the tax liability in an intra-community delivery of goods arises when the taxpayer issues an invoice. However, no later than the 15th day of the month following the month in which the supply was made. An exception is an intra-community delivery of goods made continuously. It must last for more than a month. In this case, the delivery is considered to have been made at the end of each month until the supply of these goods is completed.

Intra-community delivery of goods – tax base

According to VAT act, the basis for taxation is any payment received or to be received by the supplier of goods or services from the buyer, recipient, or third party. Payment includes grants, subsidies, and other similar contributions having a direct influence on the price of goods or services provided by the taxpayer.

In the case of this kind of delivery of goods, the tax base is the purchase price of the goods. If there is no purchase price, the basis for taxation is the cost of production.

One must increase the basis for taxation by:

  • taxes, custom duties, fees, and other similar charges, except for the amount of tax,
  • additional costs such as commissions, packaging costs, transport and insurance costs received by the supplier or provider from the buyer or recipient.

If you operate a company, you may be interested in our article on the taxation of companies in Poland.

Summary

Intra-community delivery of goods is a transaction carried out within commercial exchange between entities from different EU states. But, it is important to remember that there are also statutory requirements. They must be met in order to qualify the trade exchange as intra-community delivery of goods.

If you are interested in the tax and accounting in Poland related topics, we invite you to contact our accounting firm in Warsaw. Our accountants in Poland are at your disposal. Contact us today and let us help you!

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