The Court of Justice of the European Union (CJEU) ruled on 1 August 2025 to resolve an important case from Poland (C-602/24) regarding application of the zero rate of VAT to exports of goods.

The case involved a seller who, based on available information and its contract with the purchaser and holding certain documents from the carrier, filed a VAT return reporting a zero-rated intra-Community supply. However, unbeknownst to the seller, the purchaser moved the goods out of the EU using the same transport.

The tax authorities held an audit and concluded that what actually happened was not an intra-Community supply but an export of goods and the seller was not in possession of documents evidencing such export transaction. However, there were customs documents confirming export that were generated and were available for the tax authority in the case. The authorities held that because the seller did not hold customs documents, he should amend its return and report a domestic supply, and punished the seller by imposing a surcharge equal to 30% of the output tax.

CJEU ruled that the right to apply the zero rate of VAT to exports of goods may not be subject only to compliance with formal requirements if the tax authorities are satisfied that the goods actually left the EU territory. The court held that the seller may zero rate the transaction as it meets the substantive requirements:

  • the right to dispose of the goods as owner was transferred to the purchaser;
  • the goods really left the EU territory, as confirmed by the tax authorities during their proceedings based on customs documents; and
  • the goods were not consumed in the EU territory.

At the same time, the negative test was not met, i.e. there was no fraud or abuse on the part of the seller as he was not aware of the purchaser moving the goods out of the EU and did not hold full transport documentation showing the real course of the transaction.

The top European court further noted that:

  • the Member States may lay down conditions for tax exemptions (0%) applicable in export transactions, but must follow the principle of proportionality and may not impose excessive formal requirements beyond what is necessary to ensure correct tax collection;
  • of crucial relevance for the use of the zero rate of VAT are substantive requirements, i.e. that the goods were actually moved out of the EU and the right to dispose of the goods was transferred to the purchaser. Seller being unaware of the removal of the goods or not having complete formal documentation does not preclude the right to an exemption (0%) if the tax authorities are certain, based on documents in their possession, that the goods have been exported. In the absence of documents evidencing exportation, the tax authorities may deny an exemption (0%) only if they are not certain that the goods actually left the EU territory.

If this issue pertains to your business and you are interested in our assistance, please contact us.

This blog post is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.