Service-Tax

Export - 0% VAT rate and the export procedure

In the course of their business, entrepreneurs conclude transactions with buyers from Poland and abroad - contractors from other EU countries or from outside the EU, i.e. with the so-called third countries. There is a free movement of goods in the EU, as the member states belong to one customs territory. Brexit changed the current way of settling the sale of goods between Poland and Great Britain, as it has become a country outside the EU. Let's check what conditions must be met for the export to be taxed with 0% VAT!

When does the export of goods occur?

Export is the export of goods from the territory of Poland outside the customs territory, i.e. outside the territory of the European Union. There are two types of export:

direct export - delivery of goods is carried out directly by the seller or a transport company that provides services to the seller;
indirect export - the delivery of goods is carried out by the buyer or a transport company that provides services to the buyer of the goods.

The export of goods outside the customs territory of the European Union, regardless of which party to the transaction is responsible for the organization of transport, must be confirmed by the customs office.

Example 1.

Mr. Jan sells goods to a contractor from Great Britain. On February 15, 2021, he issued an invoice for the sale of 1,000 products. Mr. Jan cleared the customs and delivered the goods directly to the buyer's premises in London. What kind of export did Mr. Jan do?

As the goods were delivered to the buyer directly by Mr Jan, who is acting as seller, and the delivery took place outside the EU, the transaction is a direct export.

It is worth noting that the export of goods takes place when the goods are physically exported outside the territory of the EU. The mere fact of purchasing goods by a third country contractor is not sufficient to speak of an export. Moreover, if, at the time of sale, the goods become the property of the buyer who undertook to collect them from the seller, but the actual date of such receipt was not specified, the goods cannot be exported either. Therefore, in the case of indirect export, apart from the very fact of concluding a transaction, additional arrangements are important for the conditions for exporting goods outside the EU.

Such a position was presented by the Supreme Administrative Court in its judgment of August 25, 2020, file ref. act I FSK 2062/17, in which we read that:

“(...) although the right to dispose of the goods as the owner will be transferred to the foreign contractor, the condition of exporting the goods from the territory of Poland to the territory of a third country will not be met. Therefore, it was correct to find the authority, which stated in the challenged interpretation that in such a situation the cited provisions do not give the taxpayer the right to apply the 0% rate, because the goods have not physically left the territory of the country, and their buyer only intends to collect them from the company's warehouses, in an indefinite manner. time limit. For this reason, the authority must be right that the applicant, at the moment of making a sale, which will not be accompanied by the movement of goods outside the territory of the European Union, should consider that sale as a domestic transaction and tax it at the tax rate applicable to the domestic supply. '

Such a position has been presented by the authorities for many years, because also in the judgment of 5 April 2011, ref. No. I FSK 640/10, Supreme Administrative Court indicates that:

"(...) when the delivery of goods is not immediately accompanied by their export abroad under the ICS or export, the taxpayer - having no relevant export documents - correctly recognizes the domestic delivery (...)".

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Export - 0% VAT rate available thanks to confirmation of export outside the EU

The customs procedure consists of several stages. Only after passing each of them, the entrepreneur can apply the 0% VAT rate. The most important document entitling to 0% VAT rate is obtaining a confirmation of exporting goods outside the EU.

Pursuant to Art. 41 sec. 6a of the VAT Act, the export declaration may take three forms:

electronic, coming from the ICT system used to handle export declarations, or a printout of this document confirmed by the customs office, i.e. the IE-599 message;
electronic, coming from the electronic system for handling export declarations, obtained outside this system with the authenticity of such a document ensured;
paper - submitted outside the IT system used to handle export declarations or a paper copy certified by the competent customs authority, i.e. the SAD document.

The 0% rate may be used in the JPK_V7 declaration part for the period in which the sale took place, provided that the taxpayer has confirmation of the export of goods outside the EU before the date of shipment of the JPK_V7 file for this period.

Example 2.

Mr. Aleksander runs the company XYZ and on February 15, 2021 he sold goods to a company from the USA. On March 20, 2021, he obtained the IE-599 message. Can Mr. Aleksander tax sales with 0% VAT?

Yes, due to the fact that the date of sending the JPK_V7 file for the period in which the sale took place, i.e. for February 2021, expires on March 25, 2021 and before this date, Mr. Aleksander obtained the confirmation of the export of goods, i.e. the IE-599 message, may tax the transaction with 0% VAT in February.

In order to obtain the IE-599 message entitling you to the 0% VAT rate, you must first submit a customs declaration, i.e. obtain the IE-515 message. The AES system, i.e. the Automatic Export System, is used to make customs declarations. The confirmation of making the customs declaration is the document:

PZC, i.e. confirmation of the customs declaration from the electronic system;
SAD, i.e. a paper-based customs declaration certificate.

In the next step, the customs office accepts the export declaration and assigns the reference number of the export operation MNR, i.e. obtaining the IE-528 message.

After customs clearance, the goods are allowed to be exported outside the EU, which will be confirmed by the IE-529 message. Then the goods are exported outside the EU territory and the export procedure is discharged by the customs office, resulting in the issuance of the IE-599 message.

By when, at the latest, should the IE-599 message be obtained in order to apply the 0% VAT rate?

Pursuant to Art. 41 sec. 6 and 7 of the VAT Act, the export of goods may be taxed at the 0% VAT rate, provided that the taxpayer has received a document confirming the export of goods outside the EU, i.e. the IE-599 message, before the deadline for submitting a tax declaration for a given tax period. No communication before this date does not mean the loss of the right to apply the 0% rate. In this case, the transaction is not shown in the JPK_V7 file for a given settlement period and thus in the sales VAT register. In the case of VAT settlements, the taxpayer has an additional two months to receive the IE-599 message and can show the transaction in the JPK_V7 file submitted for the next month. When settling VAT quarterly, the taxpayer has as much as 9 months to obtain the IE-599 message, because the lack of this confirmation before the deadline for submitting the JPK_V7K file with the declaration part for the quarter in which the sale took place, makes it possible to apply the 0% rate in the JPK_V7K file for the next quarter .

When settling VAT monthly, the lack of the IE-599 message within two months from the month in which the sale took place means that the transaction should be taxed with the domestic VAT rate. When settling VAT on a quarterly basis, this period is extended to two consecutive quarters from the quarter in which the sale took place.

Example 3.

Mr. Łukasz sells goods to Great Britain. The sale took place on February 15, 2021. Until when does Mr. Łukasz have time to obtain the IE-599 message confirming the export of these goods?

When making a sale in February 2021, Mr. Łukasz can show the transaction in the JPK_V7 file for February, if he obtains the IE-599 message by March 25. If this does not happen, it does not show sales in JPK_V7 for February. You have until April 25 to obtain the IE-599 message entitling you to the 0% VAT rate, because then the deadline for submitting JPK_V7 for the next period, i.e. March, passes. If Mr. Łukasz does not receive the IE-599 message by April 25, 2021, in the JPK_V7 file for March, he will have to tax the transaction with the domestic VAT rate (usually 23%).

If the entrepreneur obtains a confirmation of the export of goods, i.e. the IE-599 message, after the date of submitting the JPK_V7 file, in which he could apply the 0% VAT rate and was forced to tax the transaction with the domestic VAT rate, he may correct the VAT due in the current month, i.e. in the period in which got the IE-599 message.

Example 4.

Mrs. Emilia sells goods to a company from Ukraine. The sale took place on February 15, 2021. Due to the prolonged customs procedure, the IE-599 message was not received until April 30, 2021. How should Emilia account for the sale of goods?

Due to the fact that Ms Emilia did not have the IE-599 message before the deadline authorizing the application of the 0% VAT rate, i.e. before April 25, she is required to show the transaction only in the JPK_V7 file for March and tax the domestic sales with the VAT rate. Obtaining the confirmation of the export of goods on April 30, 2021 entitles Ms Emilia to correct the due VAT from the sales invoice and apply the 0% VAT rate. Corrections should be made in the JPK_V7 file for the period in which the IE-599 message was obtained, i.e. for April, submitted by May 25, 2021.

Export and advance payment subject to 0% VAT

Pursuant to Art. 41 sec. 9a of the VAT Act, if the taxpayer has received all or part of the payment before the delivery of the goods, the 0% tax rate applies to the payment received, provided that:

the goods are exported within 6 months from the end of the month in which the advance was received;
the taxpayer has the IE-599 message.

From January 1, 2021, the time to obtain the IE-599 message in the case of advance payments for the export of goods has been extended from 2 months to 6 months.

Example 5.

On February 15, 2021, Ms. Danuta received an advance payment for the delivery of goods from a company from Great Britain. The order was completed on May 30, and only on June 27, Danuta received the IE-599 message. Does he have the right to tax transactions with 0% VAT?

Yes, because Ms Danuta received the IE-599 message, i.e. confirmation of the goods being exported outside the EU, within 6 months from the end of February, i.e. the month in which she received the advance payment. The deadline for applying the 0% VAT rate would expire on August 31, 2021.

How to issue an invoice for export in the wFirma.pl system?

To issue an export invoice, go to the tab: REVENUE »SALE» EXHIBITION »INVOICE. When entering the buyer's data in the field where NIP is set by default, select the OTHER option from the list. Select 0% EXP from the list as the VAT rate.