Own goods shipped between EU countries and VAT

Although few taxpayers are aware of this, the VAT effects are also caused by the transfer of own goods between EU countries. So, when dealing with intra-Community supply, which means non-transactional movement of goods, when there is a zero-rate option, and is the resale of goods after their movement also taxed? These are the questions we will try to answer in this article.

Shipment of own goods between EU countries as intra-Community supply

One of the activities subject to VAT is the intra-community supply of goods (intra-community supply of goods). According to Art. 13 sec. 1-2 of the VAT Act, the intra-Community supply of goods is understood as the export of goods from the territory of the country as part of the transfer for consideration of the right to dispose of the goods as an owner, to the territory of a Member State other than the territory of the country. WDT takes place on the condition that the buyer of the goods is:

1. a taxpayer of value added tax identified for the purposes of intra-Community transactions in the territory of a Member State other than the territory of the country;

2. a legal person that is not a value added tax payer and that is identified for the purposes of intra-Community transactions within the territory of a Member State other than the territory of the country;

3. a taxpayer of value added tax or a legal person that is not a taxpayer of value added tax, operating as such in the territory of a Member State other than the territory of the country, not listed in points 1 and 2, if the subject of delivery are excise goods which, in accordance with the provisions on excise duty, are under the excise duty suspension arrangement or the movement of excise goods with excise duty paid;

4. an entity other than those mentioned in points 1 and 2, operating (residing) in a Member State other than the Republic of Poland, if the subject of delivery are new means of transport.

Basically, therefore, intra-Community supply of goods occurs when the right to dispose of the goods, for consideration, is transferred as an owner to another entrepreneur, and this activity involves the physical transfer of goods from Poland to another EU country.

Thus, in a typical situation, WDT occurs when we are dealing with a sale between two taxpayers of value added tax from two different EU countries.

However, in the context of the analyzed issue, it is necessary to refer to the content of Art. 13 sec. 3 of the VAT Act, which states that an intra-Community supply of goods is also the transfer by a taxpayer or on his behalf of goods belonging to his enterprise from the territory of the country to the territory of a Member State other than the territory of the country, which was by that taxpayer within the territory of the country under the by him, enterprises produced, extracted, acquired, including as part of intra-Community acquisition of goods or brought into the territory of the country as part of the import of goods, if they are to serve the taxpayer's business activity.

Therefore, the above provision constitutes a derogation from the general rule and indicates that intra-Community supply may also be applied for in an activity which is not a bilateral transaction for remuneration.

In the light of Art. 13 sec. 3 of the VAT Act, WDT also occurs when the taxpayer transfers goods belonging to his enterprise from the territory of Poland to the territory of another Member State. In this case, we can speak of an intra-Community transfer of own goods that are to serve the business activity conducted by the taxpayer. The VAT Act recognizes as ICS not only transactions for remuneration made between contractors from different EU countries, but also the transfer of own goods from Poland to another EU country.

Non-transactional movement of goods

In order for the intra-Community supply to take place, it is necessary for the taxpayer (or on his behalf) to move goods belonging to his enterprise from the territory of the country to the territory of a Member State other than the territory of the country, if these goods:

1. have been manufactured, mined, acquired by this taxpayer within the territory of the country within the framework of his or her enterprises (including also under intra-Community acquisition or import of goods);

2. are intended to serve the taxpayer's business activities.

The above situation means that a Polish taxpayer who transfers his own goods from Poland to another EU country must prove WDT to the Polish tax office. On the other hand, in the EU country to which the goods have been transported, the intra-community acquisition of goods (WNT) must be demonstrated.

Example 1.

An active VAT payer moves goods from a warehouse in Poland to a warehouse in the Netherlands. In this situation, WDT should be shown in Poland, while in the Netherlands - WNT. Start a free 30-day trial period with no strings attached!

Tax rate for non-transactional movement of goods

Assuming that the statutory conditions specified in Art. 42 of the VAT Act, it is possible to use the 0% rate in the case of non-transactional intra-Community supplies. According to Art. 42 sec. 14 of the VAT Act, the provisions on the zero rate also apply to the intra-Community supply of goods referred to in art. 13 sec. 3.

Pursuant to Art. 42 sec. 1 of the VAT Act, the intra-Community supply of goods is subject to taxation at the 0% tax rate, provided that:

1. the taxpayer has made a supply to a buyer who has a valid and valid identification number for intra-Community transactions, assigned by the buyer's Member State, containing the two-letter code used for value added tax that the buyer has provided to the taxpayer;

2. the taxpayer, before the deadline for submitting a tax return for a given tax period, has evidence in his documentation that the goods being the subject of the intra-Community supply were exported from the territory of the country and delivered to the buyer within the territory of a Member State other than the territory of the country;

3. the taxpayer, when submitting a tax return showing this supply of goods, is registered as an EU VAT payer.

Pursuant to Art. 42 sec. 1a of the VAT Act, in the case of non-transaction intra-Community supplies, the tax rate referred to in paragraph 1, does not apply if:

1. the taxpayer has not complied with the obligation referred to in art. 100 sec. 1 point 1 or sec. 3 point 1, or

2. the complex summary information does not contain correct data on intra-Community supplies of goods in accordance with the requirements referred to in art. 100 sec. 8

- unless the taxpayer has duly explained the failure to the head of the tax office. The transfer of own goods between EU countries treated as non-transactional intra-Community supplies may use the 0% VAT rate.

Resale of goods after they have been moved

It is worth noting that under Polish law, only the movement of goods from Poland to another EU country will be subject to taxation. Any subsequent sale of the transported goods will not be subject to Polish VAT, but according to the regulations of the country where the sale is made.

This is also what the Director of KIS stated in the interpretation of July 24, 2020, No. 0112-KDIL1-1.4012.294.2020.1.HW:

"In the case at hand, the Applicant will move his own goods as part of the intra-Community supply of his own goods, referred to in art. 13 sec. 3 of the Act, and then will sell the goods to other entities from a third country in the territory of that Member State (Germany). The applicant indicated that the ownership of the goods would be transferred to the buyers on the territory of Germany. Consequently, it should be stated that the described transaction of sale of goods located in Germany is not subject to tax on goods and services in Poland.

Therefore, due to the transfer of the right to dispose of the goods as an owner in Germany, where the goods are stored and from where they will be transported to the final buyer, this activity is subject to taxation in that country (Germany).

Therefore, the activity consisting in the delivery of goods located in the territory of Germany to an entity from a third country is not / will not be subject to tax on goods and services in the territory of Poland ”.

Moving on to the summary, it should be noted that the scope of activities covered by the intra-Community supply of goods also includes the non-transactional movement of the taxpayer's own goods.