VAT (part 2) - activities subject to VAT, part AND
VAT tax occurs in most of the commercial transactions we carry out on a daily basis. While the consumer dealing with food errands does not necessarily have to know exactly how they are taxed, the entrepreneur should be well versed in activities subject to VAT.
A detailed catalog of activities subject to VAT can be found in Art. 5 of the VAT Act. According to it, tax on goods and services is subject to:
- delivery of goods and provision of services throughout the country,
- import of goods into the territory of the country,
- export of goods,
- intra-Community acquisition of goods for remuneration within the territory of the country,
- intra-Community supply of goods.
These activities are subject to VAT regardless of whether they were performed in accordance with the conditions and forms specified by law.
In addition, due to the specificity of the place of tax settlement, among the activities subject to VAT, the import of services and the supply of goods, for which the buyer is the taxpayer, are also distinguished. However, it should be remembered that these are special activities that are not independently listed among taxable activities.
Supply of goods and services provided within the territory of the country as activities subject to VAT
The delivery of goods for consideration should be understood as the transfer of the right to dispose of the goods as the owner. In addition, the following are considered to be a supply of goods against payment:
- transfer by order of a public authority or entity acting on behalf of such authority or transfer by virtue of ownership of goods in return for compensation,
- delivery of goods on the basis of a lease, rental, leasing or other contract of a similar nature concluded for a definite period or a sale contract on deferred payment terms, if the contract provides that as a result of normal events provided for in this contract or upon payment of the last installment, the ownership right will be transferred ,
- release of goods on the basis of a commission agreement: between the commissioner and the commission agent, as well as the release of the goods by the commission agent to a third party;
- release of the goods to the principal by the commission agent under a commission agreement, if the commission agent was obliged to purchase the goods for the account of the principal;
- establishing a co-operative tenant right to a dwelling, establishing a co-operative ownership right to a dwelling and transforming a co-operative tenant's right to a dwelling into a co-operative ownership right to a dwelling, as well as establishing, for a member of a housing co-operative, separate ownership of a dwelling or premises for a different purpose and transfer to member of the cooperative ownership of the premises or the ownership of a single-family house.
What's more, among the activities considered to be a paid delivery of goods, we can also mention:
- the transfer or consumption of goods for the personal purposes of the taxpayer or its employees, including former employees, partners, shareholders, shareholders, members of cooperatives and their household members, members of the governing bodies of legal persons, members of the association,
- any other unpaid transfer of goods, in particular donations
- if the taxpayer was entitled to reduce the amount of tax due by the amount of input tax on these activities, in whole or in part
Any service provided for a fee in the territory of the country is deemed to be any service provided to a natural person, legal person or organizational unit without legal personality which does not constitute a supply of goods referred to above, including:
- transfer of rights to intangible assets, regardless of the form in which the legal transaction was performed,
- an obligation to refrain from performing an action or to tolerate an action or situation,
- provision of services in accordance with an order of a public authority or entity acting on its behalf or an order arising from the law,
- provision of services free of charge, other than the supply of goods for personal purposes of the taxpayer or its employees, including former employees, partners, shareholders, shareholders, members of cooperatives and their household members, members of governing bodies of legal persons, members of the association, and any other provision of services free of charge, if they are not they related to running an enterprise, and the taxpayer was entitled to reduce the amount of tax due by the amount of input tax on the purchase of goods and services related to these services, in whole or in part.
Import and export of goods and VAT taxation
Pursuant to the provisions of the VAT Act amended in 2013, import of goods is understood as import of goods from the territory of a third country to the territory of the European Union.
On the other hand, export of goods is defined as the delivery of goods dispatched or transported from the territory of a country outside the European Union by:
- supplier or on his behalf, or
- a buyer established outside the territory of the country or on its behalf, with the exception of goods exported by the buyer himself for the purpose of equipping or supplying recreational craft and tourist aircraft or other means of transport for private purposes
- if the export of goods outside the European Union is certified by the customs office specified in the customs regulations.
Taxation of VAT on intra-community acquisitions of goods
The definition of an intra-Community acquisition of goods refers to the acquisition of the right to dispose of as owner the goods which, as a result of the delivery, are dispatched or transported to a Member State other than that from which the dispatch or transport began by or on behalf of the delivering buyer of the goods. Such activities include, among others:
- export of goods from the territory of the country (the country in which the taxpayer is established) to the territory of another Member State,
- movement by a taxpayer of goods belonging to his enterprise from the territory of the country to the territory of another Member State.