Service-Tax

Export of goods - VAT rate and no customs documents

When selling goods to contractors from outside the EU as part of business activity, the most important issue is the use of the correct VAT rate. It is possible to tax transactions at a rate of 23% VAT, but entrepreneurs should not so easily give up their right to the 0% VAT rate. The lack of due tax means a lower selling price, which increases the competitiveness of the offer on the market. Let's check what conditions must be met to apply the 0% VAT rate in the export of goods and what is the impact of the lack of customs documents.

When is it possible to apply the 0% VAT rate?

Pursuant to Art. 41 sec. 4 of the VAT Act, when exporting goods, the taxpayer has the right to apply the 0% VAT rate. The 0% VAT rate applies to the export of goods understood as a supply of goods sent or transported from Poland outside the territory of the European Union by:

supplier or on his behalf;
a buyer established outside the country or on its behalf.

Moreover, the condition for applying the 0% VAT rate is to have a document confirming the exportation of the goods exported outside the EU before the deadline for submitting a tax declaration for a given tax period.

Example 1.

P.an Łukasz sold goods to a US contractor on February 15, 2021. On March 1, 2021, he received documents confirming the export of goods outside the EU. Does Mr. Łukasz have the right to tax transactions with a 0% VAT rate, if he is accountable for VAT on a monthly basis?

Yes, because the deadline for submitting the JPK_V7M file for February 2021, which includes the declaration part, expires on March 25, 2021 and before this date, Mr. Łukasz obtained a confirmation of the export of goods, he may tax the transaction with a 0% VAT rate.

Example 2.

Ms Katarzyna settles VAT on a quarterly basis. On February 15, 2021, it sold goods to a contractor from Russia. She obtained confirmation of the export of goods outside the EU on April 1, 2021. Does Ms Katarzyna have the right to apply the 0% VAT rate?

Yes, because when settling VAT quarterly, Katarzyna will be submitting the JPK_V7K file containing the declaration part for the first quarter by April 25. Due to the fact that before that date she received the confirmation of the export of the goods, she is entitled to apply the 0% VAT rate.

In a situation where the entrepreneur has received an advance payment for the export of goods, he may apply the 0% VAT rate provided that he has documentation confirming the export of goods within 6 months, counting from the end of the month in which the taxpayer received the payment.

Which customs documents entitle to the 0% VAT rate?

Pursuant to Art. 41 sec. 6a of the VAT Act, the customs document confirming the export of goods outside the EU is:

an electronic document received from the IT system used to handle export declarations or a printout of this document confirmed by the competent customs authority - IE-599 message;
an electronic document from the electronic system for handling export declarations received outside this system, if its authenticity is ensured;
a paper-based export declaration submitted outside the IT system used to handle export declarations or its copy certified by the competent customs authority - SAD document.

During the customs procedure, new message numbers are assigned at subsequent stages:

IE-515 message - declaration of goods for the export procedure;
IE-518 message - the result of the control performed by the Customs Office of Exit, i.e. the office from which the goods leave;
IE-529 message - release of goods for export procedure;
IE-599 message - confirmation of exit of goods or refusal to consent to exit of goods.

On the other hand, having only a positive IE-599 message entitles the taxpayer to tax transactions with the 0% VAT rate.

No customs documents and the right to apply the 0% VAT rate

Due to the fact that customs procedures may be prolonged, the legislator made it possible to postpone the deadline for the execution of the transaction on tax grounds by an additional month. Pursuant to Art. 41 sec. 7 of the VAT Act, if the taxpayer does not have documents confirming the export of goods, i.e. the IE-599 message, he does not show the transaction in the JPK_V7 file. He can do it for the next period, using the 0% VAT rate, provided that, before the submission of the JPK_V7 file for this period, he has the required customs documents. On the other hand, the lack of customs documents by that date requires the taxpayer to tax the transaction at the domestic VAT rate.

Postponing the date of showing a transaction with a 0% VAT rate is possible only if the taxpayer has a customs document confirming the export procedure.

Example 3.

Mr. Aleksander sells goods to a contractor from Great Britain. The sale of goods took place on February 15, 2021. On April 25, 2021, Mr. Aleksander received the IE-529 message, i.e. the release of goods for the export procedure. He received the IE-599 message on April 26, 2021. Is it eligible to apply the 0% VAT rate?

No, the lack of customs documents confirming the export of goods, i.e. the IE-599 message, obliges Mr. Aleksander to tax the transaction with the domestic VAT rate until April 25, 2021 and show it in the JPK_V7M file for March 2021.

The possession of the IE-529 message does not entitle you to apply the 0% VAT rate. Confirmation of such proceedings is the individual interpretation of the Director of the National Tax Information of September 12, 2018, ref. No. 0112-KDIL1-3.4012.486.2018.1.KB, in which we read that:

"(...) The company has the right not to show the delivery made in a given month (M) in the VAT register (and declaration) for that month (M) - in a situation where by the 25th day of that month (M + 1) it has only a document customs confirming the export procedure (IE-529), and has the right to recognize the export in the declaration for the month following the month of delivery (M + 1) with a 0% rate - provided that it receives a document confirming the export of goods outside the European Union (IE-599 ) before the deadline for submitting a tax return for the next month.

However, in a situation where the Company receives the IE-599 message after the 25th day of the month (M + 2), it is obliged to show the delivery (made in month M) in the VAT register and the declaration for the month (M + 1) as a supply taxed with the appropriate national rate ".

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Can the IE-599 message be issued by a customs office from another country?

If the goods are transported from Poland to a third country, and the goods do not immediately cross the border of the customs territory of the European Union, it may happen that the IE-599 message will be issued by a customs office from another country. Due to the fact that the IE-599 message has an electronic form and is generated from the Export Control System, the so-called ECS entitles the entrepreneur to tax transactions at 0% VAT rate. Confirmation of such proceedings is the interpretation of the Director of the National Tax Information of August 13, 2018, ref. No. 0112-KDIL1-3.4012.388.2018.2.PR, in which we read that:

"(...) in the case of the export of goods from Poland by the contractor, the IE-599 documents received by the Company:

by the electronic system used to handle export declarations, which indicate the identity of the goods being the subject of delivery and exportation and are issued by:

the customs office of another Member State of the European Union, when the goods have been exported from the territory of another Member State outside the territory of the European Union;
Polish customs office, when the goods have been exported directly from the territory of the country outside the territory of the European Union

(...) are sufficient to show the sale of goods as an export of goods using a tax rate of 0% ”.

Example 4.

On February 15, 2021, Mr. Artur made a sale to a company from Great Britain as part of indirect export. The buyer, using road transport, collected the goods from Mr. Artur's headquarters in Wrocław on February 20, 2021, and on March 15, he sent him a scan of the IE-599 message from the customs office in France. Does Mr. Artur have the right to tax transactions with a 0% VAT rate?

Yes, obtaining the IE-599 message before March 25, 2021 entitles Mr. Artur to show the transaction in the JPK_V7M file for February with a 0% VAT rate.

The lack of customs documents is a definitive loss of the right to the 0% VAT rate?

If the entrepreneur does not have the customs documents within the set deadline, he is obliged to tax the transaction with the domestic tax rate. It does not mean, however, that the lack of customs documents permanently excludes the right to apply the 0% VAT rate. Pursuant to Art. 41 sec. 9 of the VAT Act, if the taxpayer receives documents confirming the export of goods outside the EU after the applicable deadline, he has the right to correct the output VAT (from the sales invoice) in the settlement for the period in which he received the required documents.

Example 5.

Mr. Wiktor sold the goods on February 15, 2021 to a US contractor. Until April 25, 2021, he did not receive the IE-599 message, therefore in the JPK_V7M file for March he taxed the transaction with a VAT rate of 23%. On June 1, 2021, Mr. Wiktor obtained the required IE-599 message. Is it possible to correct the JPK_V7M file for March and recover the VAT paid?

Due to the fact that Mr. Wiktor obtained the IE-599 communication on June 1, 2021, he has the right to correct the invoice in terms of VAT in June. This means that the JPK_V7M file for March is not subject to correction. Correcting invoice reducing the VAT due to the VAT due from the sales invoice relating to export will be shown in the JPK_V7M file for June.

Pursuant to Art. 29a paragraph. 15 point 1, in the case of the export of goods, the taxpayer may make adjustments without having a confirmation of receipt of the correction by the buyer. He also does not need to have documentation agreeing the terms of issuing a corrective invoice.

Summing up, the lack of customs documents does not result in the loss of the right to tax the exported goods with the 0% VAT rate. The legislator took into account the duration of customs procedures. Therefore, the taxpayer has two months from the sale to collect the required documents. Moreover, from 2021, in the event of receiving an advance payment in connection with the export of goods, the deadline for obtaining documentation entitling to 0% of the VAT rate was extended from 2 months to 6 months.