5 most common sources of VAT risks in international trade

Adam Sękowski | Tax Manager | Crowe Poland

9/8/2026

5 most common sources of VAT risks in international trade

Most VAT risks arise long before transactions reach the accounting department. Incomplete transport documentation, incorrect allocation of transport, or the absence of internal procedures can lead to serious tax irregularities. Discover the five most common sources of VAT risks in international trade and learn how to mitigate them before they become the subject of a tax audit.

International trade offers businesses significant growth opportunities, but it also brings increasing complexity in VAT compliance. Even well-organised companies can unknowingly make mistakes that result in tax arrears, the denial of the 0% VAT rate, or costly disputes with tax authorities.

Importantly, the root cause of many issues is not a lack of knowledge of VAT regulations, but rather insufficient coordination between sales, logistics, procurement, and accounting teams.

What risks are associated with incorrect VAT treatment?

Errors in VAT settlements related to international trade may result not only in the obligation to pay outstanding tax and late payment interest. In practice, they often also lead to tax penalties, challenges to the application of the 0% VAT rate, lengthy disputes with tax authorities, and the need to correct previously submitted VAT returns. Tax audits frequently involve multiple departments within the organisation and require the reconstruction of documentation and transaction flows dating back several years.

Where do VAT risks most commonly arise?

1. Sales: incorrect use of Incoterms

Delivery terms (Incoterms) have a direct impact on the VAT treatment of transactions. In practice, however, they are often selected solely from a commercial perspective, without assessing the related tax implications.

The most common issues include:

incorrect determination of the place of supply,
incorrect identification of the transfer of the right to dispose of goods as owner,
improper VAT treatment of exports or intra-Community supplies of goods (ICS).

As a result, a company may apply the wrong VAT rate or incorrectly determine the place of taxation.

2. Logistics: incorrect allocation of transport

Chain transactions are among the areas most frequently reviewed by tax authorities.

Businesses often face questions such as:

to which supply should transport be allocated?
who is responsible for organising the transport?
which transaction qualifies for the 0% VAT rate?

Incorrect allocation of transport can fundamentally change the VAT treatment of the entire supply chain.

3. Documentation: lack of evidence for applying the 0% VAT rate

The mere movement of goods outside Poland is not sufficient to apply the preferential VAT rate.

Tax authorities expect taxpayers to maintain appropriate documentation proving the nature and completion of the transaction.

The most common deficiencies include:

transport documents,
proof of receipt of goods,
complete export documentation,
consistency between invoices, transport documents, and purchase orders.

Even minor discrepancies may lead to the denial of the right to apply the 0% VAT rate.

4. VAT compliance: incorrect use of VAT numbers and tax rates

International transactions require proper verification of the customer's VAT status and the correct application of VAT regulations.

Risks may arise from:

the use of invalid EU VAT numbers,
incorrect classification of transactions,
incorrect determination of the place of taxation,
application of an incorrect VAT rate.

These issues are often identified only during a tax audit.

5. Internal controls: lack of procedures and information flow

In many organisations, sales, logistics, and accounting departments operate based on different sets of information.

This often results in:

incomplete transport documentation,
lack of information on logistical changes,
inconsistent customer verification procedures,
discrepancies between commercial and accounting documents.

Increasingly, the organisation of internal processes itself is becoming a key area of focus during tax audits.

How can VAT risks be reduced?

The most effective approach is to conduct periodic reviews of processes related to international trade.

This is not limited to reviewing VAT settlements. It involves assessing the entire process, from the moment a transaction is agreed, through transport arrangements, to documentation and accounting treatment.

Such a review helps identify potential risks before they are identified by the tax authorities.

Check whether your processes are secure

At Crowe, we conduct an International Trade VAT Review, designed to identify risks related to cross-border transactions and provide practical recommendations to reduce tax exposure.

As part of the review, we analyse, among others: