Exports of goods for private persons and not only - part 2

Service-Tax

The export of goods is one of the driving forces of the Polish economy. Polish products are more and more visible in the world and their quality is much more appreciated. The recipients of Polish products are not only companies from the EU, but also from outside the EU. In addition to clients running a business, there are also private individuals who do not operate from outside the EU. Therefore, it is worthwhile for the taxpayer to be aware of the principles of taxing the export of goods to companies, and also to know how to tax the export of goods to private individuals without activity.

Tax liability for VAT on the export of goods

Regardless of whether the export of goods is made to private persons or companies, the tax obligation will arise:

  1. on the date of transfer of the right to dispose of the goods as an owner, i.e. delivery,

  2. on the date of receipt of the advance payment (if the seller received it before the delivery).

It should be emphasized that due to the different rules of sale prevailing in the export of goods (due to trade with countries outside the EU, where the rules governing the moment of disposal of the goods by the seller and the recipient are very different), the emergence of a VAT obligation, and therefore the date of delivery may be determined on different ways.

On the other hand, if there is an export of goods to private individuals from outside the EU, the export of goods will most often take place after the seller or buyer has completed the declaration formalities at the customs office. The exception in this situation may be the participation of the buyer's agent in the export of goods.

Example 1.

Polish, active VAT payer (benefiting from the cash register exemption) sells electronic parts in the country and in the world. Recently, a client from Ukraine (not running a business) purchased 20 headphones from a taxpayer. It turned out that the buyer asked for the possibility of delivering the goods to the warehouse of his colleague who runs the company. Thus, the terms of delivery have been established and written down (on the basis of DAP - delivery of goods to a specific place) that the goods will be delivered to a warehouse in Ukraine.

The declaration of export, issuing an invoice and execution of the export was made in the month of 05/2019. and the goods were delivered to the warehouse in the month of 06/2019. The customs document confirming the export was received by the taxpayer on 07/2019. (before August 26, 2019). The taxpayer wonders when he should tax a given transaction?

Due to the fact that the goods are exported under DAP conditions, the date of delivery (transfer of the right to dispose of the goods as owner) will be the month in which the goods were delivered to the warehouse agreed with the recipient, i.e. in the month 06/2019. Due to the fact that the taxpayer received a customs document confirming the export of the goods before the date of submitting the declaration for the month 06/2019. then, by settling this period, he may apply the 0% VAT rate for a given export of goods for a private person from Ukraine.

Advance payment received from a private person outside the EU

If the seller who exports goods to private persons or companies receives an advance payment before it is made, then the tax obligation in VAT will arise in the month of its receipt and in relation to the amount of the advance.

It does not matter whether the advance was made by a company or a private person from outside the EU. The rules for its settlement are the same.

Thus, the taxpayer-seller has the right to tax the 0% VAT rate on the advance payment received from a private person outside the EU, if:

  1. the goods are exported within 2 months from the end of the month in which the taxpayer received the payment and at the same time

  2. the taxpayer within 2 months from the end of the month in which the taxpayer received the advance payment - received the customs document confirming the export.

Example 2.

Polish, active VAT taxpayer (benefiting from the exemption from the cash register) sells car parts in the country and around the world. Recently, a customer from South Africa (not running a business) purchased 5 turbo-compressors from a taxpayer.

In the month of 04/2019. the seller received a 40% advance payment for the goods. The declaration and export of the goods was made by a company acting on behalf of a private person from South Africa in the month of 06/2019. This month, the taxpayer received the rest of the amount for the goods.The seller applied a 0% VAT rate to the advance payment, but has not yet received the customs document confirming the exportation of IE-599 (electronic message confirming the exportation of goods). The taxpayer is not sure whether he will receive this document at all.

If the seller does not receive the customs document confirming the export by July 25, 2019, he will be obliged to include:

  1. in the VAT declaration for the month of 04/2019. correction of the 0% VAT rate to the value of the advance payment received and show it with a 23% VAT rate,

  2. in the VAT declaration for the month of 06/2019. the remaining amount of the receivable received at the rate of 23% VAT.

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Example 3.

Polish, active VAT taxpayer (benefiting from the exemption from the cash register) sells furniture parts and accessories in the country and in the world. Recently, a customer from the USA (not running a business) purchased 50 shelves from a taxpayer.

In the month of 03/2019. the seller received a 70% advance payment for the goods. The declaration and export of the goods was made by a company acting on behalf of a private person from the USA in the month of 05/2019. That month, the taxpayer received the rest of the amount for the goods. The seller applied the 0% VAT rate to the advance payment, but has not yet received the customs document confirming the exportation of IE-599 (electronic message confirming the exportation of goods). Due to the lack of receipt of the document, the taxpayer communicated several times with the buyer, after which he received the export documents in 08/2019.

In this situation, the taxpayer seller due to the lack of a customs document confirming the export until June 25, 2019. will be obliged to include:

  1. in the VAT declaration for the month of 03/2019. correction of the 0% VAT rate for the advance payment received at that time and at the same time demonstrate it with the 23% VAT rate,

  2. in the VAT declaration for the month of 05/2019. the remaining amount of the receivable received with the 23% VAT rate,

  3. in the VAT declaration for the month of 08/2019. correction of the full amount due with a 23% VAT rate and simultaneous reporting of exports of goods with a 0% VAT rate.

The special conditions for the implementation of the export of goods allow the application of the 0% VAT rate even for the export after two months

Finally, it is necessary to mention a special regulation relating to the settlement of advance payments for the export of goods, namely Art. 41 sec. 9b of the VAT Act, providing for special preferences for the received advance payment in relation to the subsequent export of goods.

It is about the issue where the export of goods takes place later than 2 months from the end of the month in which the taxpayer seller received the advance payment.

Thus, the preferential 0% VAT rate will be applied by the taxpayer to the advance payment, even if the export takes place after 2 months from the end of the month in which the advance was received, provided that the export of goods at this later date is justified by the specificity of such deliveries confirmed by the terms and conditions deliveries which specify the date of exportation of the goods.

There can be a lot of cases and circumstances here, e.g. depending on the time period of receiving manufactured parts for individual orders, shipment, processing of goods and re-receipt of goods, a complicated production process, seasonality and limitation of the necessary elements to produce goods for export and many, many others .