Currently, most entrepreneurs supplying the goods between countries of the European Union are wondering: “do their services constitute intra-Community distance supply of goods?” and, in the case of a positive answer to the first question, “where should such a supply be taxed?”. This issue is extremely important and requires a thorough analysis of the provisions and the circumstances of each case.

1. Intra-Community distance sales of goods

The Act of 20 May 2021 amending the Act on tax on goods and services and certain other acts (Official Journal of 2021, item 1163), hereinafter referred to as the amending Act, introduced into the Act of 11 March 2004 on tax on goods and services (i.e. OJ 2021, item 685, as amended), hereinafter referred to as the VAT Act, the concept of intra-Community distance sales of goods. According to the new Article 2, point 22a, of the VAT Act, the intra-Community distance sales of goods should be understood as the delivery of goods sent or transported by or on behalf of the supplier, including situations where the provider participates indirectly in the transport or dispatch of the goods, from the territory of a Member State other than that one where the dispatch or transport of the goods to the customer ends and the person acquiring them is:

a) a taxable person for the purposes of the tax on goods and services or a legal person being not taxable one for the purposes of the tax on goods and services who aren’t obliged to settle the intra-Community acquisition of goods referred to in Article 9 of the VAT Act, either

b) a taxable person for the purposes of value added tax or a legal person who isn’t a taxpayer of value added tax, who aren’t required to settle the intra-Community acquisition of goods corresponding to the intra-Community acquisition of goods referred to in Article 9 of the VAT Act or

c) a non-taxable entity

– provided that the goods supplied aren’t new means of transport or goods referred to in Article 22(1)(2) of the VAT Act.

The abovementioned definition requires a brief explanation. The intra-Community distance sales of goods constitute the supply of goods that are dispatched or transported from one Member State to another. It’s necessary that it takes place in a B2C relationship (delivery to a non-taxable person, or to a taxable person or a non-taxable legal person who aren’t obliged to settle intra-Community acquisition of goods) and that the supplier participates in the transport or shipment of the goods, including indirectly. Situations where the provider indirectly participates in the dispatch or transport of goods are defined in Article 5a of the Council Implementing Regulation (EU) No. 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax. According to the indicated provision, indirect involment of the supplier in the dispatch or transport of goods concerns in particular:

a) the case where the supplier subcontracts the dispatch or transport of the goods to a third party who delivers the goods to the buyer;

b) the case where the dispatch or transport of the goods is carried out by a third party, but the supplier is wholly or partly responsible for the delivery of the goods to the purchaser;

c) the case where the supplier issues the invoice and charges the buyer for transport or dispatch and then passes these fees on to a third party who organises the dispatch or transport of the goods;

d) the case where the supplier encourages the purchaser in any way to use the services for the delivery of goods provided by a third party, facilitates contact between the buyer and the third party or otherwise provides the third party with the information necessary for the delivery of the goods to the purchaser.

The intra-Community distance sales of goods won’t occur if its subject is the supply of new means of transport or goods which are installed or assembled, with or without a trial run, by the person supplying them or by an entity acting on his/her behalf.

It should be emphasised that the definition of intra-Community distance sales of goods essentially corresponds to the definitions of distance selling from the territory of the country (repealed Aricle 2 point 23 of the VAT Act) and mail order within the territory of the country (repealed Article 2 point 24 of the VAT Act), repealed by the amending act. In particular, the catalogue of entities that may be buyers of the goods hasn’t changed.

2. Place of delivery of intra-Community distance sales of goods – principle

In the case of the intra-Community distance sales of goods, the rule is that the place of delivery is that one where the goods are located at the time when dispatch or transport of the goods to the customer ends (new Article 22(1)(1a) of the VAT Act). In other words, the place of supply is the Member State in which the dispatch or transport of the goods to their purchaser ends.

3. Exceptions to the rule

The rule presented above for determining the place of delivery for the intra-Community distance sales of goods isn’t absolute. Indeed, the legislator provided for exceptions to it. If any of them arise, the place of delivery for the intra-Community distance sales of goods will be that one where the goods are located at the time where dispatch or transport of the goods to the purchaser begins.

The first exception applies to works of art, collectors’ items, antiques and second-hand goods, provided that their tax base has been determined in accordance with the principles set out in Article 120(4) and (5) of the VAT Act, i.e. according to the margin scheme.

The second exception is set out in Article 22a(1) of the VAT Act. It results from this provision that the country of consumption won’t be the place of delivery if the following conditions are cumulatively fulfilled:

  • the supplier has a place of business or, in the absence of such a head office, the permanent domicile or habitual residence, only in the territory of one Member State;
  • the goods are dispatched or transported to the territory of a Member State other than that one where the supplier has a head office/permanent domicile/habitual residence;
  • the total sum of the intra-Community distance sales of goods and telecommunications, broadcasting and electronic services provided cross border to consumers (so-called TBE services) didn’t exceed, during the tax year or the previous fiscal year, the amount of EUR 10,000 or its equivalent expressed in the national currency of the Member State in which the supplier has its head office/permanent domicile/habitual residence (in Poland this amount is PLN 42,000).

The threshold of EUR 10,000 is extremely important for the application of the second exception. In order to determine whether it has been exceeded, the sum of the total value of supplies of goods made under the intra-Community distance sales of goods, as well as TBE services provided to consumers in all Member States shall be taken into account.

It should be clarified that if the threshold of EUR 10,000 is exceeded, taxation of the intra-Community distance sales of goods should take place in the Member State where the goods are located at the time when dispatch or transport to the purchaser ends. Thus, a return to the general rule occurs.

4. Possibility to derogate from the exception

The supplier can derogate from the exception of Article 22a(1) of the VAT Act. He/She is entitled to do so by Article 22a(3) sentence 1 of the VAT Act. It results from this provision that the supplier to whom the provision of Article 22a(1) of the VAT Act applies may designate as the place of delivery that one referred to in Article 22a(1)(1a) of the VAT Act, i.e. the place where the goods are located at the time when dispatch or transport to the purchaser ends.

The choice of place of supply applies to all intra-Community distance sales of goods. Therefore, it isn’t possible for the supplier to choose the place of delivery only in relation to one or more Member States and to determine the place of supply for the other Member States on the basis of Article 22a(1) of the VAT Act.

The supplier should notify the head of the tax office about the choice. The notification should be submitted by the 10th day of the month following that one in which this choice was made, on the VAT-29 form. Moreover, within 30 days from the date of the first delivery of goods after using the option, the supplier is obliged to provide the head of the tax office with a document confirming the notification to the competent tax authority in a Member State other than the Republic of Poland of the intention to settle value added tax under intra-Community distance sales of goods in this Member State. This obligation doesn’t arise if the supplier uses One Stop Shop (so-called OSS).

The supplier is bound by the decision concerning taxation of the intra-Community distance sales of goods in the Member State where the goods are located at the time when their dispatch or transport to the purchaser ends, for a period of two consecutive years, counting from the date of making the first delivery in this mode. After this period, the supplier will be able to return to determining the place of delivery in accordance with the general rules if he/she satisfies the statuory criteria. The condition is prior notification to the head of the tax office about the resignation from the selection made. The notification should be submitted before the beginning of the month in which the resignation occurs.

5. Methods of settlements of intra-Community distance sales of goods

If the place of taxation of the intra-Community distance sales of goods is in the Member State in which the goods are located at the time when dispatch or transport to the purchaser ends, account for the VAT due can occur in two ways. The supplier may choose to register for tax purposes in the country of consumption. In this case, he/she will be obliged to submit tax returns and pay tax in the country of registration. He/She may also decide to register with the OSS and settle and pay the VAT due in individual Member States in a single window. The choice is up to the supplier.

6. Legal notice

The study is a work within the meaning of the Act of 4 February 1994 on Copyright and Related Rights (OJ 2006, No. 90, item 631, consolidated text, as amended). Publishing or reproducing this study or its part, quoting opinions, as well as disseminating in any other way the information contained therein without the written consent of Crede sp. z o.o. is prohibited.

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