Taxation of transport services provided in Poland and abroad

Service-Tax

Transport is one of the fastest growing industries in the Polish economy. Thanks to such a rapid development, Poland belongs to the EU tycoons in road transport. Taxpayers running transport companies make transactions both with domestic and foreign entities. The above causes that tax settlements of taxpayers running transport companies are complicated. Therefore, we explain how to account for taxation of transport services.

Transport services and the place of service provision

Pursuant to Art. 5 sec. 1 of the Act of March 11, 2004 on tax on goods and services (Journal of Laws of 2017, item 1221, as amended) - hereinafter referred to as the Act, taxation of the above-mentioned tax are subject to:

  1. paid delivery of goods and paid services within the territory of the country,

  2. export of goods,

  3. import of goods into the territory of the country,

  4. intra-Community acquisition of goods for remuneration within the territory of the country,

  5. intra-Community supply of goods.

In the case of the provision of services, it is essential for the correct settlement of tax on goods and services to determine the place of provision of a given service. It depends on the correctness of determining the place of supply whether a given service is subject to tax on goods and services in Poland or not.

The place of provision of services is governed by the provisions of Art. 28a to 28o of the Act.

Pursuant to Art. 28a of the Act - for the purposes of applying this chapter:

  1. whenever a taxpayer is mentioned - it means:

    1. entities that independently conduct the economic activity referred to in art. 15 sec. 2, or economic activity corresponding to this activity, regardless of the purpose or result of such activity, taking into account art. 15 sec. 6;

    2. a non-taxable legal person pursuant to point (a) and, which is identified or required to be identified for the purposes of tax or value added tax;

  2. a taxpayer who also conducts business or conducts transactions that are not considered taxable supplies of goods or services in accordance with art. 5 sec. 1, shall be considered a taxable person in respect of all services provided to him.

The above article introduces the second definition of a taxpayer to the Act. This definition only applies where the place of supply of the services is determined. According to this regulation, the taxpayer is an entity that independently carries out economic activity. For this purpose, the legislator refers to the definition of economic activity set out in Art. 15 sec. 2 of the Act.

The general rule for determining the place of supply of services to taxpayers is contained in Art. 28b paragraph. 1 of the act, according to which - the place of supply of services in the case of the provision of services to the taxpayer is the place where the taxpayer who is the recipient of the service has its registered office, subject to paragraph 2-4 and art. 28e, art. 28f paragraph. 1 and 1a, art. 28 g of paragraph 1. 1, art. 28i, art. 28j paragraph. 1 and 2 and article. 28n.

The above general rule also applies to transport and has an impact on the taxation of transport services.

Taxation of transport services - what rate of VAT?

Transport services, as a rule, pursuant to Art. 41 sec. 1 of the VAT Act are subject to the tax rate of 22%, subject to paragraph 2-12, art. 83, art. 119 paragraph. 7, art. 120 paragraph 2 and 3, art. 122 and art. 129 sec. 1.

Pursuant to Art. 146a, point 1 of the Act, in the period from 1 January 2011, subject to Art. 146f, the tax rate referred to in article 1. 41 sec. 1 and 13, art. 109 paragraph. 2 and art. 110 is 23%. However, both in the content of the act and its implementing regulations, the legislator provided for the taxation of certain activities at reduced rates or for exemption from tax. Pursuant to Art. 83 sec. 1 point 23 of the Act, the tax rate of 0% applies to international transport services.

Based on Article. 83 sec. 3 point 1 of the Act by the international transport services referred to in sec. 1 point 23, it is understood the carriage or other way of moving goods:

  1. from the place of departure (sending) within the territory of the country to the place of arrival (destination) outside the territory of the European Union,

  2. from the place of departure (sending) outside the European Union to the place of arrival (destination) within the territory of the country,

  3. from the place of departure (sending) outside the territory of the European Union to the place of arrival (destination) outside the territory of the European Union, if the route runs along a certain section through the territory of the country (transit),

  4. from the place of departure (sending) in the territory of a Member State other than the territory of the country to the place of arrival (destination) outside the territory of the European Union or from the place of departure (sending) outside the territory of the European Union to the place of arrival (destination) in the territory of a Member State other than the territory of the country, if the route passes through the territory of the country for some distance.

In turn, art. 83 sec. 5 of the Act stipulates that the documents constituting evidence of the provision of services referred to in para. 1 paragraph 23, in the case of transport:

  1. goods by a carrier or forwarder - a bill of lading or a forwarding document (rail, air, road, sea bill of lading, inland waterway bill of lading), used only in international transport, or another document which clearly shows that as a result of transport from the place of shipment to the place destination, the border was crossed with a third country, and an invoice issued by the carrier (forwarder), subject to point 2,

  2. imported goods - in addition to the documents referred to in point 1, a document certified by the customs office, which clearly shows the fact that the value of the service is included in the tax base for the import of goods,

  3. goods by the exporter - proof of export,

  4. persons - an international air, ferry, ship or rail ticket, issued by a carrier for a specific route of transport for a specific passenger.

Moreover, pursuant to § 6 sec. 1 of the regulation on reduced rates, taxation of transport services may take place using the preferential VAT rate, among others in the case of services:

  • transport of goods, if it is performed entirely within the territory of the country and forms part of an international transport service;

  • the intra-Community transport of goods, if such transport forms part of an international transport service;

  • transport of goods provided to the taxpayer referred to in art. 28a of the Act, whose registered office, permanent place of business or permanent residence is in Poland, and the transport is entirely performed outside the territory of the country:

    • from the place of departure (sending) in the territory of a Member State other than the territory of the country to the place of arrival (destination) outside the territory of the European Union or

    • from the place of departure (sending) outside the European Union to the place of arrival (destination) in the territory of a Member State other than the territory of the country.

Settlement of a transport service abroad for the Polish taxpayer

We will use an example to illustrate the problem.

Example 1.

A Polish taxpayer running a transport company provided a transport service from Norway to Sweden. The above service was provided to the taxpayer from Poland. The taxpayer wonders how to tax the above service.

At the outset, it should be remembered that in accordance with the above-cited regulations, in the analyzed case, taxation of transport services will be possible with the use of a preferential tax rate. The application of the reduced VAT rate to transport services provided entirely outside the territory of the country is possible when the service is provided to the Polish taxpayer. However, in order to be able to apply the above rate, we must have documents that clearly show where the service was performed.

In the case of transport of goods by the carrier, the evidence is:

  • documents: a bill of lading or a forwarding document (rail, air, road, sea bill of lading, inland waterway bill of lading), used only for international transport, or any other document which clearly shows that the border was crossed as a result of transport from the place of dispatch to the destination with a third country and an invoice issued by the carrier.

In the above case, you can issue an invoice with a 0% rate, provided the company has the relevant documents. If the taxpayer does not have the above-mentioned documents, the rate of 23% will apply here.

In the case of transport of imported goods in accordance with Art. 83 sec. 5 point 2 of the VAT Act, in addition to the documents referred to above, the taxpayer must have a document certified by the customs and tax office, which clearly shows the fact that the value of the service is included in the tax base for the import of goods.

The above condition also applies in the case of the application of the 0% rate pursuant to § 6 of the Reduced Rate Ordinance, where the transport relates to the import of goods.

The above is confirmed by the interpretation of the Director of the National Tax Information of January 5, 2018, number 0114-KDIP1-2.4012.568.2017.2.KT, in which we read:

The 0% rate may only apply to the value of the transport service that has been included in the taxable amount for the importation of goods, which should be reflected in the customs document. So if - in the case of the transport of imported goods - the taxpayer does not have the document referred to in art. 83 sec. 5 point 2 of the Act, is obliged to tax the transport service, which is part of the international transport service, at the basic rate. It results directly from the provisions of Art. 83 sec. 5 points 1 and 2 of the Act, also with regard to the services referred to in § 6 sec. 1 point 1 of the Regulation, because the regulation of § 6 sec. 2 of the regulation refers to the documents listed in Art. 83 sec. 5 point 1 of the Act, which in turn contains a reservation relating to point 2 (ie imported goods).