The tax base should be increased by the shipping costs
Entrepreneurs who deliver goods to customers via various types of courier companies or Poczta Polska most often charge the buyers with the costs associated with it. In such a case, particular attention should be paid to the issue of taxation of such supplies. The most common practice is charging shipping costs separately, i.e. reselling transport, courier and postal services. Is this procedure correct?
Equal VAT rate
Pursuant to Art. 29 sec. 1 of the VAT Act, the taxable amount is the turnover defined as the amount due from the sale, less the amount of the tax due. It covers all the benefits payable by the buyer or a third party. In addition, the turnover is increased by received subsidies, subsidies and other payments of a similar nature, having a direct impact on the price (amount due) of goods or services provided by the taxpayer, less the amount of tax due.
With the above The provision states that the costs of shipping goods are included in the amount due to the seller, therefore they must be included in the tax base and - what is more - taxed at the same VAT rate that applies to the sale of the goods to which the shipment relates.
This position was presented in the interpretation of the Tax Chamber in Katowice of January 29, 2013 (IBPP2 / 443-1083 / 12 / AB). We read there that "Shipping costs added to the sale of goods by the applicant do not constitute a separate service provided by the applicant or by another entity (postal operator), but they are additional costs of the basic activity, which is the sale of goods. Additional costs, including shipping costs, are one from the costs incurred related to the principal service, which in effect forms the final amount claimed from the buyer.
It follows that shipping costs incurred in connection with the sale of goods, as an element of the basic service, should increase the amount due from the buyer for the supply of goods and be taxed at the tax rate applicable to the goods sold (...) ".
What if the shipping costs relate to goods subject to different VAT rates? The Director of the Tax Chamber in Warsaw, in an individual ruling of May 22, 2012 (IPPP3 / 443-432 / 12-2 / BH), explained that if the delivery concerns goods taxed at different VAT rates, shipping costs should be allocated proportionally to value of goods taxed at particular rates.
How should shipping costs be invoiced?
The costs of shipping the goods, as a rule, should not be treated as a separately provided service, but - as has already been mentioned - should increase the taxable amount of the goods being delivered. In this case, taxpayers have two ways to increase the base.
One of them is to increase the net prices of goods sold by the cost of shipping. The second solution, much more common in practice, is showing these costs as a separate item on the sales document. The first method seems to be more correct in the light of the cited regulations and positions presented by tax authorities. However, nowhere can we find regulations prohibiting the use of the second solution.
Moreover, they are also allowed by the director of the Tax Chamber in Warsaw in the interpretation of June 24, 2010 (IPPP2 / 443-254 / 10-4 / AO): “There is no obstacle for showing separately under one invoice. If the performance is shown in several items (including transport as an indispensable element for the performance of the contract for the supply of goods), the tax base will always be the sum of the amounts shown by the supplier on the invoice, including the amount due for the delivery, i.e. the amount due for the main activity, as well as the amount due for auxiliary activities necessary for its performance. The supplier of the goods may recognize separately the amounts payable for the main activity and the ancillary activities for the purposes of document clarity. "
Or maybe the purchase of services in the name and on behalf of the buyer of goods?
However, it is possible to exclude shipping costs from the tax base. The tax authorities recognize that if a taxpayer (seller of goods) buys a postal or courier service in the name and on behalf of a customer (buyer of goods), charging the customer with these costs is outside the regulations of the VAT Act.
What does this mean in practice? Well, in a situation where the customer grants the seller an appropriate power of attorney to conclude a service contract on his behalf, then - as we read in the interpretation of the Tax Chamber in Warsaw of February 13, 2013 (PPP2 / 443-1301 / 11-2 / AO) - "we are dealing with a refund.An effectively granted power of attorney by the buyer results in the fact that the amount received for the delivery of the purchased goods is not included in the taxable amount, due to the fact that this amount will not constitute a turnover for the Applicant, as referred to in Art. 29 sec. 1 of the act on tax on goods and services. In such a case, the Applicant does not provide the postal service, but is purchased from Poczta Polska directly by the buyer. In this case, only costs are reimbursed, which is not subject to VAT, as the tax base does not include the amounts received by the taxpayer from the buyer or customer as reimbursement of expenses incurred on behalf and for the account of that buyer or customer. (...) "
It is also worth noting that no regulations regulate how such a power of attorney to purchase a transport service on behalf of and for the customer should look like. It seems that both the written and oral form should be acceptable in this situation. However, due to the fact that acting in the form of a power of attorney has certain tax consequences, for evidence reasons it is better, however, that it should be in a written form.
Moreover, it is not necessary to adopt any particular form to grant the power of attorney in question. It is therefore permissible for the buyer to grant it, for example by accepting the regulations of an online store or the terms of an online auction. This position is shared by tax authorities in their interpretations.
What do the individual solutions give?
The use of including or not including shipping costs in the tax base depends only on the taxpayer's decision. However, there are certain situations in which choosing one of the solutions may prove to be beneficial for both the buyer and the seller.
The decision to exclude shipping costs from the tax base is beneficial when the entrepreneur sends goods via Poczta Polska to a person who has no right to deduct input VAT. In this case, the purchase of the goods will be cheaper for the buyer by the VAT cost corresponding to the shipping cost (it should be remembered that the shipping service provided by Poczta Polska is tax-exempt).
If, on the other hand, buyers who are not entitled to a deduction, goods are shipped via entities other than Poczta Polska and they are taxed with a reduced VAT rate (e.g. books for which the correct rate is 5%), it will be more advantageous to include shipping costs in the base taxation. Such a solution will reduce the VAT costs corresponding to the expenses for the purchase of the transport service.