Call-off stock warehouse in Polish VAT Act

From 1 July 2020 The Polish VAT Act introduces new rules on call-off stock warehouse. Amendments to the rules have been made Directive 2018/1910 dated 4 December 2018 1 , (hereinafter as the Directive), which aimed to harmonise the system governing call-off stock in the European Union.

Until the date of entry into force of the Directive, in the absence of detailed regulation of the Directive 2006/112 2 , Member States themselves have regulated such warehouse issues. This was a highly unfavourable situation for taxpayers operating with partners from other European Union countries.

The lack of uniform rules led to an increase in business costs and to tax risks in the case of possible controls by tax authorities. As a result of the amendment of the VAT Act, the provisions governing this matter have been harmonised at Community level[3].

Legal status prior to the entry into force of the amendment to the VAT Act

Consignment warehouse, predecessor of call-off stock magazine, was introduced into the Polish VAT Act on 1 December 2008 4 . At this point it is worth to mention a short description of the naming adopted by the Polish legislator for this type of magazine.

“ The characteristic feature of the warehouse is that the goods stored in it are not intended for a known buyer. On the other hand, call-off stock is distinguished by the fact that the goods are intended for a pre-defined “customer”.

The Polish VAT Act adopted a model of a warehouse called -off stock, except that until the day before the entry into force of the Act implementing changes caused by Directive 2018/1910, It operated under the name of the Consignment Magazine. The purpose of the proposed amendment is to introduce a terminology order in this area.

However, given that the Polish equivalent of the term "call-off stock" (except for the term "consignive warehouse", but, as noted above, this term does not reflect the meaning of the term), was accepted – behind the Polish translation Directive 2018/1910 – the term ‘call-off stock magazine’ 5 .

To 30 June 2020, the Consignment Magazine was considered to have been isolated from a taxable person registered as an EU VAT taxable person in question under Article 97(4), the place of storage in the territory of the country of goods belonging to the taxable person of value added tax transferred by him or on his behalf from the territory of a Member State other than the territory of the country to the place where the taxable person registered as an EU VAT taxable person who holds the goods collects them and the transfer of the right to dispose of those goods as the owner takes place at the time of their collection[6]. The owner of the warehouse was a taxable person who keeps the goods in the warehouse and collects them from the warehouse[7].

The definitions presented above make it possible to distinguish the characteristics of the consigning warehouse 8 , namely:

• 1) the movement of goods into storage for a particular buyer;
• 2) goods belonging to the taxable person's value added tax shall be moved from a Member State other than the territory of the country into the territory of the country;
• 3) Postponing the transfer of rights to dispose of the goods as the owner.

Specific issues have been regulated under Article 12a VAT Act. That provision indicated that in order to be able to carry out intra-Community transactions in the context of the consigning warehouse procedure, it is necessary to:

• • transactions with a taxable person who is not registered in Poland as a VAT taxable person;
• • the storage in a warehouse of goods intended exclusively for the production or service activity of the purchaser;
• • notification in writing to the head of the tax office of the intention to keep the warehouse before first the entry of goods into it by the warehousekeeper;
• • keeping detailed records of goods entering the warehouse

An important element characterising the existing regulations of the warehouse was the fact that the goods in the warehouse could only be stored until 24 months after their introduction.

In the event that the goods are not used by the storekeeper, it shall be considered that their collection took place on the day following the expiry of the period indicated.[9]. The expiry of that period resulted in the intra-Community supply of goods and intra-Community acquisition of goods.

Similar tax effects caused the destruction of the goods or the finding of their absence[10].

The warehouse in the above model operated in the Polish VAT system to 30 June 2020 These regulations have been radically changed due to implementation Directive 2018/1910 dated 4 December 2018

Call-off stock warehouse operating from 1 July 2020

When the legislator changes the rules governing the operation of a call-off stock warehouse, In the first set points 27c and 27d included under Article 2 VAT Act. The definitions of the Consignment Magazine and the owner of the Consignment Magazine were removed from the VAT Act.

A similar fate Article 12a VAT Act, which has so far regulated the detailed rules of operation of the Consignment Warehouse.

In their place, the VAT Act was introduced two new chapters (Chapter 3a and Chapter) 3b), which in a much more extensive and more detailed way regulated the issue of storekeeping both within the territory of the country and within the territory of a Member State other than the territory of the country.

In the case of movements of goods under the call-off stock storage procedure into the territory of the country, this procedure shall occur if the following conditions are met: 11 :

1. goods are dispatched or transported by the taxable person or by a person third acting on its behalf from the territory of a Member State other than the territory of the country for their delivery at a later stage and after their introduction into a warehouse in a call-off stock procedure to another taxable person entitled to acquire the right to dispose of those goods as the owner, in accordance with an agreement concluded between those taxable persons;
2. the value added tax taxable person sending or transporting the goods does not have a place of business or a permanent place of business within the territory of the country;
3. the taxable person to whom the goods are to be supplied shall be registered as the EU VAT taxable person and his name and the tax identification number preceded by an PL code shall be known to the taxable person of value added tax to the consignor or the transporter at the time of dispatch or transport;
4. the value added tax taxable person sending or transporting the goods shall record the movement of the goods in the records in question under Article 54a(1) Regulation (EU) 282/2011, and gives in the information corresponding to the summary information referred to under Article 100(1)(5), tax identification number referred to Under point 3.

Where all the conditions described above are met, only when the right to dispose of the goods as the owner is transferred will the buyer acquire intra-Community goods. Such postponement of the tax obligation will be possible provided that the transfer takes place within the time limit 12 months after the date of entry into storage.

A convenience for taxpayers wishing to use the call-off stock storage procedure will certainly be the possibility of changing the counterparty, the buyer of goods stored in the warehouse. According to Article 13a(2)(3) The VAT Act to which the goods are to enter is known to the taxable person who sends those goods. However, if within time 12 months from the date of entry of the goods into the warehouse, there will be a change on the part of the consignee of the goods, then for the new buyer the benefits of applying the call -off stock storage procedure will also be available provided that:

• 1) the substitute taxable person is entitled to acquire the right to dispose of the goods as the proprietor, in accordance with the agreement between him and the taxable person for value added tax, of the consignor or transporter of the goods;
• 2) the value added tax taxable person sending or transporting the goods does not have a place of business or a permanent place of business within the territory of the country;
• 3) the substitute taxable person is registered as an EU VAT taxable person and his name and the tax identification number preceded by an PL code are known to the taxable person for value added tax when the goods are dispatched or transported;
• 4) the value added tax taxable person sending or transporting the goods shall indicate in the summary information referred to under Article 100(1)(5), tax identification number referred to Under point 3;
• 5) the replacement was registered by the taxable person with the value added tax of the consignor or transporter of the goods in the records in question under Article 54a(1) Regulation (EU) 282/2011 12 .

Such a solution will certainly be beneficial for taxpayers wishing to extend their cooperation with other counterparties during the storage of goods in a call-off stock, or when for some reason the previous buyer is no longer interested in the goods in the warehouse.

If, in such a case, the taxable person obtains a buyer on his goods within the territory of the country, the costs associated with the export of the goods will not be necessary, re-entering them in the warehouse.

Assuming that all conditions with Article 13c VAT laws will be met, there will be a smooth change on the buyer side of the goods.

It is also worth remembering that if any of the conditions in question under Article 13a, ceases to be fulfilled, the intra-Community acquisition of the goods shall be deemed to have taken place once that condition has ceased to be fulfilled[13].

The situation will be similar in case of destruction, loss or theft of goods entered into the warehouse. The date on which the intra-Community acquisition of goods is to occur shall be the date on which the goods were destroyed, lost or stolen.

If such a date is not possible, the WNT shall occur on the date on which the destruction or lack of goods was found.[14].

The issue related to the tax effects resulting from the transfer of the right to dispose of the goods was slightly different from that previously indicated as a buyer of goods moved in a call-off stock storage procedure.

If there is a transfer of the right to dispose, as the owner of the goods located in such a warehouse to another entity, the conditions of Article 13a(2) or Article 13 c VAT Act was no longer fulfilled immediately before such action[15].

This may give rise to some interpretational doubts as to how to determine when these conditions will cease to be fulfilled. Other paragraphs Article 13d indicate precisely the day when the WNT effects arise.

It therefore appears that the term ‘directly before such an act’ should be understood as the same date as the transfer of the right to the Regulation by goods as the owner took place[16].

For the taxable person who has placed his goods has a call-off stock and for his counterparty (the entity for which the goods have been placed in that warehouse) it is important that before the expiry of 12 the months following the date of placing of those goods, decide on the further fate of those goods.

Leaving them in storage will require the taxable person for whom the goods are to be delivered to recognise the intra-Community acquisition of the goods on the day following the expiry of the twelve-month period. However, the consignor will be able to relocate those goods to the country from which they were dispatched or transported.

Such action will result in the intra-Community acquisition of goods not occurring. It will only be necessary to register their return to the records in question under Article 54e(1) Regulation (EU) 282/2011 17 .

At the end of the discussion of detailed rules for the operation of a call-off stock warehouse, it would not seem to be the most important amenities for taxpayers. The rules in their current burden allow the call-of stock storage procedure to include commercial goods.

Until now, goods intended for production or service activities may have been included in the consigning warehouse procedure. Such requirements have led to a significant reduction in possible operators who could benefit from this procedure.

In principle, only taxpayers could be interested in this solution, who, in part or entirely, based their production on goods imported from another Member State and when they needed these goods, could collect them from the warehouse. Only then would there be effects on VAT.

Currently, also because the warehouse may also operate an entity third, Polish taxpayers will be able to offer their ready-to-use trade goods to counterparties in Member States more effectively.

The requirement to use the call-of stock storage procedure is to meet the information requirements set out in detail under Article 13f VAT Act.

Within time 14 days from day first the entry of goods into the warehouse in this procedure shall be notified by electronic means of the operation of the warehouse used in the call-off stock procedure.

Interestingly, such requirements have not been provided for by Directive 2006/112/ EC and can be considered unnecessary 18 in view of a number of reporting obligations related to the use of call-of stock storage. Nevertheless, the VAT Act requires this notification to include:

1) the place and purpose of the notification;

2) data of the taxable person or value added tax taxable person:

• (a) name,
• (b) the address of the establishment or the address of the place of residence,
• (c) the tax identification number - in the case of the taxable person,
• (d) the identification number under which the value added tax taxable person is identified for the purposes of that tax in the country in which he is established or established, and in the case of the value added tax taxable person, the date of birth,
• (e) the value added tax code applicable to the Member State of issue of the number referred to in point (d);
• 3) the address of the warehouse;
• 4) date first the entry of goods into storage;

1. contact details of the taxable person, value added tax taxable person or proxy:

(a) name,

(b) the telephone number.

The material requirement mentioned above concerns the situation where the movement of goods in a call-off stock warehouse procedure takes place in the territory of the country.

The VAT Act in Chapter 3b also regulates the requirements that the Polish taxpayer must meet in order to be able to use this procedure in the territory of a Member State other than the territory of the country. They are a mirror reflection of those requirements that concern the call-off stock storage procedure in the country.

However, it is worth noting that when considering the possibility of applying it, it should verify the provisions of the local VAT Act in the Member State to which we want to send the goods.

This is because other tax jurisdictions can introduce their own rules on how to report their intention to use the movement of goods in a call-off stock storage procedure. Article 17a Directive 2006/112 it does not contain detailed rules for notifying the intention to use these procedures.

Under Article 246(3) Directive 2006/112 there is only a requirement to keep such records so that tax authorities can verify the correctness of this procedure.

Summary

The change in the rules concerning the operation of a call-off stock warehouse (formerly a consigning warehouse) should be assessed positively. Directive 2018/1910 filled the current regulatory gap Directive 2006/112, since so far there has been no regulation at Community level on the issue of a consigning warehouse.

This resulted in different models of this procedure in the Member States. The solution currently adopted gives certainty as to the law regarding the operation of the call-off stock storage procedure throughout the Community.

A taxpayer wishing to expand its trading activities to new Member States will be able to offer its counterparties the opportunity to identify WNT at a convenient time when goods are needed.

This gives new development prospects for a wider group of taxpayers who have so far been unable to benefit from the facilities of the Consignment Magazine. It is also worth noting that regulations allow a call-off stock warehouse to be run by the entity third, not being a party to the transaction.

This will certainly allow taxpayers offering storage space to expand the range of services provided. The amendment to the VAT Act in this respect certainly deserves approval and clearly shows the benefits of the functioning of the harmonised tax on goods and services.

_____________________________________