WDT - Intra-Community Supply of Goods

Service-Tax

Poland has opened up to trade abroad and has adopted certain standards imposed by the European Union. Therefore, a taxpayer selling commercial goods to foreign contractors who have their seat and place of business in the European Union, carries out a transaction referred to as WDT - which means intra-Community supply of goods. Let's check what conditions must be met to be able to talk about WDT and how such a transaction should be accounted for.

What is WDT?

Pursuant to Art. 13 sec. 1 of the VAT Act, the intra-Community supply of goods is understood as the export of goods from the territory of Poland to the territory of a Member State other than Poland to a taxpayer of value added tax identified for the purposes of intra-Community transactions in the territory of a Member State other than Poland.

WDT takes place provided that:

  • the supplier of the goods is:

    • a taxpayer conducting business activity (Article 15 of the VAT Act),

    • active VAT taxpayer (does not benefit from VAT exemption pursuant to Article 113 (1) and (9) of the VAT Act),

    • registered as a VAT-EU taxpayer (Article 97 of the VAT Act) before the date of the first intra-Community supply;

  • the buyer of the goods is:

    • a taxpayer of value added tax identified for the purposes of intra-Community transactions in the territory of a Member State other than the territory of the country

or

  • a legal person that is not a taxpayer of value added tax, but is identified for the purposes of intra-Community transactions in the territory of a Member State other than the territory of the country

or

  • an entity not listed above, if the subject of the delivery are excise goods that are covered by the excise duty suspension arrangement or the excise goods movement with excise duty paid

or

  • another entity (not being a taxpayer), if the subject of the delivery are new means of transport.

In a situation where the buyer does not settle the VAT tax in the country of consumption, then this supply does not constitute an intra-Community supply transaction, but an ordinary domestic delivery (mail order sale).

A Polish taxpayer delivering goods under the intra-Community supply of goods must have and provide their own VAT-EU number (NIP number with the prefix PL) and the number by which the buyer of goods or services is identified for the purposes of value added tax in a given Member State, containing a two-letter code applicable for value added tax relevant for that Member State.

When it comes to new means of transport under ICS, the same rules as in the case of standard ICS do not apply. In this situation, intra-Community supply of goods does not depend on the supplier's status (whether he has VAT-EU or not) - the tax obligation will arise on the basis of art. 20 paragraph 9 of the VAT Act.

Conditions for applying the 0% rate in the case of intra-Community supply

Pursuant to Art. 42 of the VAT Act, WDT may be taxed at the 0% rate if the following conditions are met:

  • the taxpayer has made a supply to a buyer who has a valid and valid identification number for intra-Community transactions, issued by the buyer's Member State and containing the two-letter code used for value added tax, which he has provided to the taxpayer;

  • the taxpayer, before the deadline for submitting a tax declaration (JPK V7M / JPK V7K) for a given tax period, has evidence in his documentation that the goods being the subject of the intra-Community supply of goods were exported from the territory of Poland and delivered to the buyer within the territory of a Member State;

  • at the time of submitting the tax declaration, which shows the intra-Community supply of goods, the taxpayer is registered for VAT-EU.

From July 1, 2020, the 0% tax rate for intra-Community supplies does not apply if:
1) the taxpayer has not complied with the obligation to submit the VAT-EU summary information in a timely manner
or
2) the submitted summary information does not contain correct data on intra-Community supplies of goods in accordance with the requirements referred to in art. 100 sec. 8 of the VAT Act
- unless the taxpayer has duly explained the failure to the head of the tax office.

WDT and buyer verification

Before the transaction, the taxpayer should always check his contractor in the VIES system. Simply put, the VIES system is a search engine that allows you to obtain information whether the verified entity is registered as performing intra-Community transactions. For the intra-Community supply transaction to take place and the 0% rate to be applied, the acquirer must be a taxpayer with a proper and valid identification number for intra-Community transactions, issued by the acquirer's Member State and containing the two-letter code used for value added tax that the acquirer has provided to the taxpayer ( suppliers).

When does the tax obligation in WDT arise?

Pursuant to Art. 20 paragraph 1 of the VAT Act, in the case of intra-Community supplies of goods (intra-Community supply of goods), the tax obligation arises upon the issuance of the invoice by the taxpayer, but not later than on the 15th day of the month following the month in which the delivery was made. The exception to the above is the performance of WDT continuously for a period longer than a month. Then the tax obligation expires at the end of the month until the end of these deliveries of goods.

The WDT advance payment does not create a tax obligation, so there is no need to document it with an advance invoice.

Example 1.

Mr. Włodzimierz delivered goods to a contractor from the Czech Republic on April 20, 2021. It followed from Poland to the Czech Republic. Mr. Włodzimierz and the Czech contractor have an active VAT-EU number. Mr. Włodzimierz issued an invoice documenting WDT on May 12, 2021. Therefore, the tax obligation arose on May 12, 2021.

Example 2.

Mr. Jerzy forgot to issue an invoice on May 12, 2021 and did so only on May 18, 2021. As the invoice was issued after the 15th day of the month following the month in which the delivery of goods took place (April), the tax obligation arose on May 15th and therefore the intra-Community supply of goods should be included in the tax records on that day.

Example 3.

Ms Monika, who runs a sole proprietorship and is an active VAT taxpayer, concluded a contract with the French company "ABC" for the supply of goods from Poland to France. The contract provides for 5 separate deliveries, which will be made every two weeks from January 2021. Due to the fact that it is a continuous supply, covering a period longer than one month, Ms Monika must show the income from WDT at the end of January, February, March 2021, because then a tax obligation will arise.

What is the tax base in WDT?

When determining the tax base in WDT, one should refer to the general principles set out in Art. 29a paragraph. 1 of the VAT Act. According to the wording of this provision, everything that constitutes the payment that the supplier of goods or the service provider has received or is to receive for the sale from the buyer, recipient or third party, including received subsidies, subsidies and other payments of a similar nature, having a direct impact on the price of the goods provided or services provided by the taxpayer - constitutes the taxable amount in WDT.

According to the cited definition, the tax base includes:

  • taxes, duties, fees and other charges of a similar nature, except for the amount of tax;

  • ancillary costs, such as commission, packaging, transport and insurance costs, charged by the supplier or service provider to the buyer or recipient.

Obligations related to WDT - summary of changes from July 1!

Registration for VAT-EU with the use of VAT-R

An active VAT taxpayer carrying out an intra-Community supply of goods, who wants to apply the 0% rate, should first register for VAT-EU using the VAT-R form. The willingness to register for intra-Community transactions is declared in item 58 of the VAT-R form and in pos. 61 indicates the planned date for the commencement of intra-community transactions.

Then, after registration, the taxpayer has the right to use the NIP number with the prefix PL and thus to make intra-Community transactions.

Summary information of VAT-EU

A taxpayer who has made an intra-Community supply of goods and taxed the transaction with a 0% intra-Community supply rate is obliged to submit the VAT-EU summary information on time and without errors. It is submitted by the 25th day of the month following the month in which the intra-Community transaction took place.

In addition to the intra-Community supply of goods (intra-Community supply of goods), the VAT-EU information contains data on the following:

  • intra-community acquisitions of goods;

  • intra-community supply of services;

  • transfers under the call of stock (in version 5 of the EU-VAT declaration).

Late or incorrect submission of VAT-EU results in the loss of the right to apply the 0% rate, unless the taxpayer duly explained the failure to the head of the tax office.

Documenting the export of goods under the WDT

At the outset, it should be noted that from July 1, 2020, along with the new condition regarding the VAT-EU summary information, the announced changes in the documentation regarding intra-Community supply have not entered into. Therefore, in order to apply the 0% rate, the taxpayer must have appropriate documentation (before the deadline for submitting the VAT declaration for a given tax period) confirming that the goods being the subject of the intra-Community supply of goods were exported from Poland and delivered to the buyer within the territory of an EU Member State.

The documents confirming the intra-Community supply of goods, conditioning the application of the 0% VAT rate, are the documents listed in art. 42 sec. 3 of the VAT Act, if they jointly confirm the delivery of goods to the buyer from an EU Member State. Among them can be distinguished:

  • transport documents received from the carrier (forwarder) responsible for the export of goods from the country, which clearly shows that the goods have been delivered to their destination in the territory of an EU Member State - if their transport is commissioned by the carrier (these are mainly consignment notes, e.g. . CMR, CIM);

  • specification of individual items of cargo (specifying its type, parameters, properties, origin, destination, etc.); it is about the necessity to show the elements identifying the goods being the subject of the delivery.

However, this does not mean that the taxpayer must have all types of the above-mentioned documents, because the point is that such documents contain information that will show that the goods have actually been delivered to another EU Member State.

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If the above-mentioned documents do not clearly certify the delivery of goods that are the subject of intra-Community delivery to the EU buyer, other documents that indicate that the intra-Community delivery has taken place may also be the evidence of intra-Community delivery. These documents should, however, contain reliable information that shows that the goods have actually been delivered to the buyer from the EU Member State.

In this sense, the appropriate evidential value is also valid for documents in the form of a photocopy or sent by fax, or other evidence in the form of documents referred to in Art. 180 § 1 of the Tax Code, as long as they jointly confirm the removal and delivery of the goods to the buyer from the EU.

What to do when you do not have a document confirming the export of goods is suggested in the article: Lack of confirmation of goods export under the intra-Community supply of goods in the light of the VAT Act.

WDT in the wfirma.pl system

In the wfirma.pl system, the taxpayer will easily and quickly settle the intra-Community supply of goods (WDT). For this purpose, he must first register for VAT-EU (if he has not already done so) using the VAT-R form, which will generate the following scheme in the system: START »TAXES» VAT TAX »ADD A DECLARATION» VAT-R APPLICATION. In the window that will appear, you must complete as the purpose of the notification - registration or update of data (when updating, it is necessary to indicate whether the Tax Office property will change), depending on the event that is taking place. In field 12, the abbreviated name of the company (in the case of a taxpayer who is not a natural person) or the name of the father and mother (natural person) is completed. On page 3 we check box 58 and in box 61 we indicate the date from which the intra-community transaction will be made. We save the application. Using the PRINT option, they can be printed and delivered in person / by mail, or sent using your own qualified signature.

After reporting to intra-community transactions, it should be appropriately marked in the settings. To do this, go to the sub-tab: SETTINGS »TAXES» VAT TAX and in the window that opens, select the option REGISTERED IN THE EU (VAT-EU).

Then, when issuing the sales invoice, it will be possible to select the 0% VAT rate. To issue an invoice, go to the tab REVENUE »SALE» EXHIBITION »ISSUE AN INVOICE and complete the required information in the internal system window. When completing the basic data, pay special attention to the address (choosing the country correctly) and the customer's tax identification number (NIP). In the case of contractors from the Community countries, enter the VAT-EU number. As the VAT rate, if certain requirements are met, we choose 0% ICA.

Then go to the ADVANCED tab and select the currency and language in which the document is to be issued.

Detailed information on issuing an invoice for a foreign contractor is described in the help article: Sales invoice for a foreign contractor - how to issue it. On the other hand, the information on submitting the VAT-EU summary information is illustrated in the help article: VAT-EU information - how to generate it in the system?