Delivery of goods and services - when will you pay VAT?

Service-Tax

The supply of goods and services is subject to VAT. In principle, this obligation arises with the delivery of the goods or the performance of the services. What activities are understood as the delivery of goods and for which services is it necessary to pay tax?

Delivery of goods and VAT

Simply put, the delivery of goods is the transfer of the right to dispose of the goods as owner. This means the right to actually dispose of the goods without the necessity to transfer the ownership right, therefore the definition of delivery also includes such concepts as, for example:

  • trial sale,
  • installment sale,
  • sale subject to ownership.

These are transactions that assume the transfer of ownership from the seller to the buyer after meeting the conditions specified in the contract.

Please note that the delivery of goods cannot be equated with a sale. On the basis of VAT, sales is a broader concept. It covers not only the supply of goods, but also the provision of services, WDT and export. The delivery of goods can take place both before and after sale.

Important!

The supply of goods is also understood as the free transfer by the taxpayer of goods belonging to the enterprise, e.g. the transfer or consumption of goods for personal purposes of the taxpayer, its employees, former employees, shareholders, partners, shareholders, members of cooperatives and their household members, members of legal entities, members associations and any other donation.

 

The above rule does not apply to goods delivered in the form of gifts of small value and samples. The total value of gifts of small value may not exceed PLN 100 in the tax year. A sample within the meaning of the VAT Act (Article 7 (7)) means a copy of the goods (or a small amount of goods) that allows the goods to be assessed in its final form, and the primary purpose of its transfer is to promote the goods.

In addition, the delivery of goods within the meaning of Art. 7 of the VAT Act is:

  • transfer of ownership of goods in return for compensation ordered by a public authority or entity acting on behalf of such authority or transfer by operation of law,

  • delivery of goods on the basis of a lease, rental, leasing or other contract of a similar nature concluded for a definite period or a sale contract on deferred payment terms, if the contract provides that as a result of normal events provided for in this contract or upon payment of the last installment, the ownership right will be transferred ,

  • release of goods on the basis of a commission agreement: between a commission agent and a commission agent and delivery of goods by a commission agent to a third party,

  • release of the goods to the principal by the commission agent on the basis of a commission agreement, if the commission agent was obliged to purchase the goods for the account of the principal,

  • establishment, transfer or sale of cooperative law (Article 7, paragraph 1, point 5),

  • putting land in perpetual usufruct and selling the rights to it.

 

Provision of services and VAT

Pursuant to the VAT Act, the provision of services is any activity for the benefit of the entity that does not constitute a supply of goods. The nature of the entity for which the services are provided is irrelevant - it may be a natural person, a legal person or an organizational unit without legal personality. The following should be considered the provision of services:

  • transfer of intangible property rights,

  • a commitment to refrain from performing an action or to tolerate an action or situation, e.g. easement,

  • provision of services in accordance with an order of a public authority or entity acting on its behalf or an order resulting from the law, e.g. municipal waste management.

Provision of services against payment also includes the use of goods that are part of the enterprise or the free provision of services for purposes other than the taxpayer's business activity (Article 8 (2)).