New VAT regulations for international trade

Adam Sękowski, Tax Manager Crowe 
On 1 July 2020 changes in Polish VAT entered into force. New regulations are particularly important for taxpayers operating in the field of international trade of goods.

Application of the 0% VAT rate to the intra-community deliveries

New regulations introduce additional requirements which have to be met in order to apply the 0% VAT rate to the intra-Community supply of goods.

The seller may apply the 0% rate if they are provided with the buyer’s valid VAT number for intra-Community transactions. It should be noted that from 1 July 2020 it is a substantive condition for applying preferential taxation principles. This means that if the above requirement is not fulfilled, the seller is definitely deprived of the right to apply 0% VAT rate. The parties to the transaction may freely determine the way in which a taxpayer is informed about the VAT number of the buyer.
The second condition for applying the 0% rate is that the seller files a correct recapitulative statement. However, it should be pointed out that in some cases the 0% rate may be applied even if this requirement is not fulfilled. However, in such circumstances, a taxpayer will be obliged to submit relevant explanations to the tax office.

Chain transactions

The amendment introduces changes in determining the place of VAT taxation of intra-EU chain supplies, i.e. transactions in which the same goods are supplied by several parties and which are delivered directly from the first supplier to the final customer.
New regulations introduce a general rule under which in the case of a chain transaction, the transport of goods is assigned only to the delivery made to the intermediary party which arranges the transport of those goods. This means that, as a rule, a cross-border transaction from the VAT point of view is the delivery to the intermediary party. By way of derogation from this general rule, when the intermediary party provides their supplier with the VAT number assigned by the Member State from which the goods are dispatched or transported, the transport is attributed to the delivery made by the intermediary party.
The above change should significantly facilitate VAT settlements in the case of cross-border triangular transactions carried out within the European Union. In particular, the new rules eliminate numerous doubts as to determining to which of the deliveries the 0% rate may be applied.

Call-off stock warehouse

New regulations introduce changes in the call-off stock procedure. The application of this procedure allows some companies which move goods to Poland to avoid the VAT registration obligation.

The most important conditions for applying the call-off stock procedure are:

  • a foreign taxpayer which moves goods to Poland cannot have the business seat or the fixed establishment in the territory of Poland,
  • a foreign taxpayer must know the details of the Polish buyer when the movement of goods starts. The Polish buyer has to have a valid EU VAT number,
  • the movement of goods has to be recorded in a relevant register.

If the conditions for applying the call-off stock procedure are met, the movement of goods is considered as intra-Community acquisition of goods made by the Polish buyer at the time of transferring to them the right to dispose of the goods as the owner.

An important change in the analyzed regulations is that the call-off stock procedure can be applied by taxpayers selling goods intended for commercial activities (previously it was not allowed).

Contact our expert

Adam Sękowski
Adam  Sękowski
Tax Manager

Tax Advisory