Sales through a commission sale in income tax
Entrepreneurs have the option of selling their goods through various sources. From traditional in-store sales through online sales to commission sale. The latter type is not often found, and therefore raises doubts when determining the amount of income or determining the moment when the income arises.
Sales via consignment and a prepared contract
According to Art. 765 of the Civil Code: by a commission agreement, the accepting commission (commission agent) undertakes, for remuneration (commission) in the scope of his enterprise's activity, to buy or sell movables for the account of the principal (principal), but on his own behalf.
The goods accepted by the commission agent are the property of the principal until the sale of the given item.
From the above definition, it can be concluded that in the case of a commission contract we are dealing with two different contracts. The first is an agreement under which the commission agent undertakes to undertake specific actions for the benefit of the commissioner. The second is a contract for the sale of goods, which is the subject of this contract.
Sales via a commission sale and the moment when the tax obligation arises with the commission agent
As mentioned above, any goods accepted by the commission agent under the commission contract do not become his property. Which means that the commission agent is only an intermediary between the principal and the final owner of the item. Consequently, the subject of sale is the property of the principal until the sale. Revenues related to the conducted activity are considered revenues due, even if they have not yet been actually received, reduced by the value of the returned goods, as well as granted discounts and discounts. In connection with the above, the commission agent's income is the remuneration (commission) for the brokerage service. The commissary does not obtain revenues from the sale of the principal's goods, but also does not incur expenses related to the purchase of these goods.
This position was also taken by the Director of the Tax Chamber in Poznań in the individual ruling of March 13, no. ILPB1 / 415-12 / 13-2 / AP, in which you can read that:(...) Acceptance of books - under the commission agreement specified in the Civil Code - does not involve the purchase of books from the principal. The sale made by the Applicant acting as a commission agent for the third party is not made on his account, and therefore the amount received from this sale is not the amount due to him. The receivable for the performance of the commission agreement is a cash remuneration in the form of a commission, the payment of which is borne by the principal.Therefore, the amount obtained by the commission agent from the purchaser of the books - in part due to the principal, which is transferred to him in the performance of the contract after the transaction is completed - should not be included in tax revenues by the commission agent (...). The commissioner should also not recognize the tax costs associated with the purchase of books. The commission agent's income (...) will be the value of the commission due from the principal under the commission contract, less the tax on goods and services (...).
The Income Tax Act does not contain detailed regulations regarding the determination of the moment when income arises from a transaction such as commission sale. Therefore, reference should be made to the general principles of the PIT Act, where in art. 14 sec. 1c, we read that the date on which the revenue arises is, in principle, the date of delivery of the item, sale of the property right or performance of a service or partial performance of the service, but not later than on:
issuing an invoice,
payment of receivables.
Due to the fact that the commission sale is not documented with an invoice (for VAT purposes it is not a service), and the payment for the service usually takes place not earlier than on the day of its performance, the revenue from the service will arise on the day the service is provided or its partial performance, i.e. on the day of sale to the end buyer. The above is confirmed by the individual interpretation of the Director of the Tax Chamber in Poznań no. ILPB1 / 415-12 / 13-2 / AP:(...) the revenue from the sale of books delivered to the Applicant on commission will be created - in accordance with art. 14 sec. 1c of the Personal Income Tax Act - on the date of the service (sale of books by a commission agent to a third party), but not later than on the date of issuing the invoice or settling the amount due. (...)
Sales via a commission sale and the moment when the tax obligation arises with the principal
As mentioned above, as a rule, revenue from the sale of goods arises at the time of their release, but not later than on the date of invoice or payment of receivables.
In the event that the sale takes place via commission, the payment for the goods usually takes place after the goods are released. As a consequence, the date of payment for the goods will not affect the moment when the tax obligation arises. Therefore, it is necessary to consider whether the revenue at the principal will arise on the date of handing over the goods to the commission agent (issuing an invoice), or at the time of handing over the goods to the final buyer. Start a free 30-day trial period with no strings attached!
Due to the fact that the goods sold through a commission shop are the property of the principal until the sale to the final buyer, it seems unfounded to show the revenue on the day the goods are delivered to the commission shop. The commissioning party has not yet achieved any income by handing over the goods to a commission shop, and it is not known whether this will happen at all. It may turn out that the goods will not be sold and will eventually return to the principal.
In the individual ruling of January 12, 2015, no. DD10 / 033/339 / ZDA / 14 / RD-16337/13, issued by the Minister of Finance, we read:(...) the revenue obtained through the store (commission) is the principal's revenue on the day the goods are handed over by the commission agent (store), but not later than the day the invoice is issued by the principal. In light of the above, revenue from a service such as commission sale will arise at the principal when the goods are sold by the commission agent to the final buyer. Then the actual sale will take place.
However, it should be borne in mind that, according to the cited interpretation, if the committee issues an invoice before the goods are released by the commission agent, the revenue will arise on the date of issuing the invoice. Therefore, it is advisable to wait until the actual sale is issued. Otherwise, if the invoice is issued before the goods are handed over to the final acceptance, the obligation to prove the revenue will occur before the goods are released by the commission agent.
The invoice issued before the actual handover of the goods by the commission agent does not document the actual sale. At the moment of issuing the invoice, it is impossible to say whether the goods will be sold, let alone what the final price of the goods will be. However, the application of such a solution may be the subject of disputes between the taxpayer and tax authorities.
Summing up, while in the case of a commission agent, it is quite easy to determine the moment when the tax obligation arises, because it arises when the goods are sold to the final buyer, in the case of the principal, it causes greater difficulties. As a rule, with the principal, revenue is generated when the goods are sold to the final buyer. If, however, prior to the sale, the commissioning party issues an invoice, the moment of issuing the document should be considered as the moment when the income tax obligation arises.