On 13 March 2025, the Polish top tax court NSA ruled in case number I FSK 2148/21, confirming the existing position that an intra-Community supply of goods (ICS) must be taxed at the domestic rate if it does not involve the goods being physically removed from the territory of the state.
The case involved sales of goods from Poland to EU-based customers where the goods where made available to be picked up by the customer from a warehouse in Poland. The customers, who were based in other EU countries, were responsible for transportation of the goods from Poland and made the transport arrangements by themselves. The supplies were invoiced already on receipt of the order by the supplier, ensuring that the specific goods and no other will be sold to the customer who ordered them. The supplier taxed those supplies in Poland in accordance with the regulations applicable to the zero-rating of ICS, which meant that he did not use the domestic tax rate until 2 months after supply.
Both the tax authority requested to rule on this case and the lower tax court on appeal were clear: you cannot rely on the regulations governing the zero-rating of ICS to apply them by analogy where the goods have not physically left the territory of the state. NSA in turn added that the mere intention of removing the goods from Poland is not sufficient for treating the transaction as an ICS and applying the zero rate of VAT. The reason is that an ICS occurs when, in giving effect to a supply of goods from Poland, there is a transfer of the right to dispose of them to the customer, which was not what happened in the discussed case. The ICS evidence regulations apply only in cases of physical removal of goods where the documents in support of such removal have not been obtained within the statutory time.
NSA’s decision reinforces the current line of authority and resolves any remaining doubts concerning how to prove ICSs in which goods do not leave the territory of Poland at the transaction time. Businesses regularly engaged in ICSs should now verify their procedures to ensure proper identification of the supplies which are taxed at the domestic rate by reference to the period in which there is a transfer of the right to dispose of the goods as owner.
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