Intra-Community Supply of Goods

Within the European Union a number of supplies take place between entities from Member States. When carrying out a transaction with a foreign counterparty, it should be borne in mind that such a transaction may benefit from a preferential VAT rate, provided that certain conditions are met.

In order for a taxpayer to apply the 0% VAT rate to an intra-Community supply of goods (ICS), the conditions set out in Article 42(3) and (4) of the VAT Act must be fulfilled. A key aspect of applying the 0% rate is that the taxpayer must prove that they hold evidence confirming the removal of the goods to another Member State. It should also be noted that the VAT Act specifies the time limits within which the taxpayer must obtain such evidence for the ICS carried out by them to be taxed at the 0% rate.

Pursuant to Article 42(1)(2) of the VAT Act:
“before the expiry of the deadline for submitting the tax return for a given settlement period, the taxpayer holds in their documentation evidence that the goods being the subject of an intra-Community supply have been removed from the territory of the country and delivered to the purchaser in the territory of a Member State other than the territory of the country.”

If the documents enabling the taxpayer to apply the 0% rate are not collected in due time, the procedure set out in Article 42(12) of the VAT Act should be followed.

What kind of evidence is this?

The evidence referred to includes:

• transport documents received from the carrier (freight forwarder) responsible for removing the goods from the territory of the country, from which it clearly follows that the goods were delivered to their destination in the territory of a Member State other than the territory of the country – where the transport of goods is entrusted to a carrier (freight forwarder);
• a specification of individual items of the shipment.

The document that best proves that the conditions for applying the 0% rate have been met is the CMR document bearing the signatures of the warehouse manager, the carrier and the recipient—that is, the persons who participated in the given transaction. Additionally, attention should be paid to whether the document in question, such as the CMR or a consignment note, is consistent with the invoice documenting the supply in terms of the number of items of goods, the recipient’s details, or the order number.

If the taxpayer does not possess the above-mentioned documents, they do not lose the right to apply the 0% rate; however, they must make the removal of the goods plausible, i.e. collect evidence which, taken as a whole, confirms that the ICS actually took place and was carried out.

Such supporting documents may include, pursuant to Article 42(11) of the VAT Act:

• documents relating to insurance or freight costs;
• commercial correspondence with the purchaser, including their order;
• a document confirming payment for the goods;
• evidence confirming that the purchaser accepted the goods in the territory of a Member State other than the territory of the country.

Where the ICS is carried out independently by the taxpayer or the purchaser using their own means of transport, in addition to holding a specification of the individual items of the shipment, the taxpayer should hold a document containing the following data:

• the first and last name or business name, and the registered office address or place of residence of the taxpayer making the intra-Community supply of goods and of the purchaser of those goods;
• the address to which the goods are transported, if it is different from the registered office address or place of residence of the purchaser;
• a description of the goods and their quantity;
• confirmation of acceptance of the goods by the purchaser at a location situated in the territory of a Member State other than the territory of the country;
• the type and registration number of the means of transport by which the goods are removed, or the flight number—in the case where the goods are transported by air.

Summary

In summary, in order to benefit from the 0% rate in the case of an ICS, the taxpayer does not have to possess all of the primary documents. They may supplement them with supporting documents so that, taken together, they confirm that the supply of goods was carried out in the territory of another Member State of the European Union.