The method of documenting sales in the TAX FREE system
Our country is visited by more and more citizens from countries outside the European Union, especially from Ukraine, Belarus and Russia. These travelers make purchases from our retailers and then take them out of the country. Sellers, wanting to encourage foreigners, sell them goods in the TAX FREE system.
Pursuant to Art. 126 paragraph 1 of the Act of March 11, 2004 on tax on goods and services (i.e. Journal of Laws of 2017, item 1221, as amended), hereinafter referred to as the VAT Act, natural persons who do not have a permanent place of residence in the territory of the Union European, hereinafter referred to as travelers, have the right to receive a refund of the tax paid on the acquisition of goods in the territory of the country, which were intact, exported by them outside the territory of the European Union in the personal luggage of the traveler, subject to paragraph 2. 3 and art. 127 and 128.
The permanent place of residence referred to in para. 1, is determined on the basis of a passport or other identity document (Article 126 (2) of the VAT Act).
Thus, we determine the place of residence on the basis of the traveler's passport.
Who can offer a tax refund?
Pursuant to Art. 127 sec. 1 of the VAT Act, the tax return referred to in Art. 126 paragraph 1, in the case of the purchase of goods from taxpayers, hereinafter referred to as sellers, who:
are registered as taxpayers as well
keep records of turnover and amounts of tax due using cash registers and
concluded a tax refund agreement in at least one of the entities referred to in paragraph 8.
The provision of paragraph 1 point 3 shall not apply in the event that the seller refunds the tax to a traveler (Article 127 (2)).
Pursuant to Art. 127 sec. 3 of the VAT Act, sellers cannot be taxpayers whose sale is exempt from tax pursuant to Art. 113 paragraph. 1 and 9.
Sellers, pursuant to Art. 127 sec. 4 of the Act are obliged to:
inform the head of the tax office in writing that they are sellers;
provide travelers with written information about the TAX FREE rules in four languages: Polish, English, German and Russian;
mark the points of sale with a sign informing travelers about the possibility of purchasing goods for which TAX FREE is entitled at these points of sale;
inform the head of the tax office about the place where travelers who purchase goods from them can collect the tax and with whom they have concluded tax refund agreements; submit copies of these contracts.
Tax free for travelers is made in PLN by the seller or by entities whose business is to make a refund referred to in art. 126 paragraph 1. The tax refund is made in the form of a cash payment or a transfer order, a clearing check or a payment card (Art. 127 (5) of the Act).
Pursuant to Art. 128 sec. 1 of the Act, a tax refund may be made if the traveler took the purchased goods outside the territory of the European Union no later than on the last day of the third month following the month in which he made the purchase.
The basis for the tax refund is the presentation by the traveler of a document issued by the seller, on which the customs office has confirmed the export of goods with a stamp with a numerator. The TAX FREE document should be accompanied by a receipt issued by the seller from the cash register referred to in Art. 111 sec. 1, as provided for in Art. 128 sec. 2 of the VAT Act.
What goods are not covered by TAX FREE?
At the outset, it should be remembered that not all purchases may always be claimed by the traveler for the VAT paid. It is not entitled to:
in the case of purchase of motor fuels,
if the minimum total value of purchases, including VAT, resulting from the document issued by the seller, is at least PLN 200 (before August 1, 2017, it was PLN 300).
How to document sales in the TAX FREE system?
Under Art. 130 sec. 1 of the VAT Act, the Minister of Finance issued an ordinance of 28 March 2011 on specifying the following patterns: a sign informing travelers about the possibility of purchasing goods at points of sale for which VAT is refunded, and a stamp confirming the export of goods outside the territory of the European Union, as well as determining the necessary data, which should be contained in the document constituting the basis for the refund of tax for travelers.
The TAX FREE document referred to in Art. 128 sec. 2 of the VAT Act, should contain at least:
1) the inscription: "VAT REFUND FOR TOURISTS", and below it: "TAX FREE FOR TOURISTS";
2) document number;
3) seller details:
c) NIP (tax identification number);
4) name of the town and date of sale;
5) surname and first name of the traveler;
6) traveller's address:
c) street name,
d) house and flat number;
7) the number of the passport or other document confirming the identity of the traveler and the name of the country that issued the passport or other document confirming the identity of the traveler;
8) the name of the goods sold, the measure and quantity of the goods, the unit net price of the goods, the net value of the goods, the rate and amount of the tax on goods and services, the gross value of the goods, the total amount of the tax on goods and services and the total gross value of goods;
9) passenger's signature and legible signature of the seller;
10) information: "The document is the basis for travelers who do not have a permanent place of residence in the territory of the European Union to apply for a refund of the tax on goods and services on purchased goods that were intact and exported outside the territory of the European Union - art. 126-130 of the Act on on March 11, 2004 on tax on goods and services ";
12) the inscription: "I confirm the identity of the traveler and that the goods specified in the document have been exported outside the territory of the European Union" and a place for the signature of an officer of the Customs and Tax Service and the stamp "Polska-Customs";
13) a place for the stamp confirming the export of goods outside the territory of the European Union;
14) the form of returning the tax on goods and services to the traveler; if the tax return is to:
a) be made in the form of a cash withdrawal, the following text should be included: "Tax return in the amount of ............................ PLN ... ....... I have received a copy ", and under it, indicate the place to insert the date of the tax refund received and the traveller's signature,
b) in a non-cash form, specify the form in which the tax is to be refunded;
15) place for comments of offices.
Application of the 0% rate by the seller
In order to apply the 0% rate on the sale, the seller should meet the requirements set out in Art. 127 sec. 4 points 1 and 4 of the VAT Act, concerning informing the head of the tax office that the taxpayer is a seller making tax refunds or a seller who has contracts concluded with entities dealing with tax refunds and informing the head of the tax office about the place where the traveler may collect the tax. The second condition is more difficult to meet because it does not depend on the seller. It concerns the receipt by the seller of a document issued to the traveler at the time of purchase of the goods, with the customs office's confirmation of the exportation of the goods outside the Community, which is closely related to the traveler who exports the goods purchased from the seller in personal luggage outside the territory of the European Union.
It follows from the above provisions that the right to a refund of the tax paid on the purchase of goods within the territory of the country is granted to travelers who exported goods intact outside the territory of the European Union, in the personal luggage of the traveler. The above is closely related to the seller, because the seller, when selling goods to a traveler who will export these goods outside the European Union, under the conditions set out in Art. 127-129 of the VAT Act, is entitled to apply the 0% rate to goods sold to a traveler. Summing up, therefore, in order for the seller to apply the 0% rate, he should sell to the traveler referred to in Art. 126 of the VAT Act, and the latter, in turn, should export intact goods purchased from the seller outside the territory of the European Union, in the traveler's personal luggage. Finally, it should be emphasized that the tax authorities believe that the seller is responsible for the validity of the application of the 0% rate. According to the tax authorities, it should assess whether the purchase and exportation of goods by the traveler is of a non-commercial nature. The above theses are confirmed by the individual interpretation of the Director of the Tax Chamber in Łódź of November 10, 2016, number 1061-IPTPP2.4512.430.2016.2.JS), in which we read:
The seller (Applicant) is obliged to verify the documents - provided by buyers - and to assess the legitimacy of the return and compliance with the facts. In the event of any irregularities, the Applicant may suffer negative consequences of incorrect tax refund.
TAX FREE settlement in the VAT-7 declaration
We will use examples to illustrate the problem.
Polish active VAT taxpayer, entitled to refund VAT to travelers, on March 5, 2017, delivered goods to a natural person residing in Georgia, which was determined on the basis of a passport. The value of the delivery, which was registered using the cash register, was PLN 1,200 (net value PLN 975.61 + VAT at the rate of 23% - PLN 224.39). The taxpayer accounts for VAT on a monthly basis. He received a TAX FREE document confirming the export of goods outside the territory on April 6, 2017. On the basis of this document, he refunded the VAT to the bank account indicated by the traveler.
In this case, the taxpayer made the tax settlement in the VAT-7 return for March 2017. It showed in item 13 and 14 the amount of PLN 975.61 (sales taxed at the 0% rate).
In this example, the situation is similar to the above, but the taxpayer did not receive a document confirming the export of goods outside the territory by April 25, 2017. In this case, he made a settlement in the VAT-7 declaration for March 2017 of the sale as domestic and taxed it with the tax rate in 23%. The taxpayer shows sales in item 19: the amount of PLN 975.61, and the VAT in pos. 20 in the amount of PLN 224.39
In this example, the situation is similar to example 1. Until April 25, 2017, the taxpayer did not receive the document confirming the export. He received it on September 12, 2017. The document shows that the goods were exported on May 18, 2017 (the three-month period from the date of sale has been retained). In this case, the taxpayer settled the VAT-7 for September 2017 as follows: it showed the sale in item 13 and 14 in the amount of PLN 975.61 (sales taxed at the 0% rate). In addition, in the declaration, the taxpayer made a tax adjustment in item 19 - the amount of PLN 975.61, item 20 - 224.39 PLN.