Strengthening the rate approach 0% for WDT and related implications for taxpayers

From 1 July 2020 the need to rely on literal interpretation for formal conditions when applying the rate 0% for WDT. This Article is intended to put this issue on the agenda first, and also show the other selected problems that have arisen for taxpayers with the introduction of quick fixes from that day on.

This Article will address the issue of changing the approach to applying the rate 0% for the intra-Community supply of goods. The essence of this case is based on the distinction between the literal provisions of the VAT Act (i.e.

Journal of Laws of 2021, item 685 as amended, Further: VAT Act), and the established case law of the EU Court of Justice and of the Polish administrative courts on the fulfilment of substantive and formal conditions for the possibility of applying the rate 0% on intra-Community supply of goods (hereinafter: WDT).

The Polish tax authorities were of the opinion that the taxpayer for the abovementioned purpose must meet the conditions together, in turn the Polish administrative courts considered that the formal conditions were a secondary matter and that their temporary failure should not deprive the taxpayer of the right to apply the rate 0% in the WDT, due to the nature of VAT, in particular with regard to the principle of neutrality of this tax for the entrepreneur (the substantive principle).

After the implementation of the EU Council Implementing Regulation Directive 2018/1912 1 , in connection with the implementation of the quick adjustment package in the Polish VAT Act, the situation has changed since it was introduced two new material considerations which have changed the practice to date, simultaneously eliminating the difference of opinion between tax authorities and administrative courts.

In addition, on the occasion of these amendments to the EU Council Implementing Regulation No. 282/20112 laying down measures implementing the VAT Directive Article 45a, which contains another catalogue of documents proving the export of goods necessary for the application of the rate 0% for WDT.

For those two threads appeared yet third – in view of Poland's failure to implement the package on time, i.e. from 1 July 2020 instead of from 1 January 2020, the problem arose whether during the transitional period the application of “old” Polish regulations or the revised EU regulations.

This article will therefore highlight the process of applying the rules of literal interpretation for the formal conditions of application of the rate 0% for WDTs, which may be both beneficial and detrimental to the taxpayer, while at the same time drawing out the resulting complications that are an additional obstacle to entrepreneurs.

Introduction of additional material conditions for the application of the rate 0%

Under the rule Article 5(1)(5) VAT, taxation on goods and services is subject to intra-Community supply of goods. On the basis of Article 13(1) VAT Act by intra-Community supply of goods shall mean the export of goods from the territory of the country in the performance of specified operations under Article 7 (i.e.

transfer of the right to dispose of goods as owner) into the territory of a Member State other than the territory of the country (subject to section 2-8, which do not matter for consideration for the purposes of this article).

Therefore, for a given operation to be considered an intra-Community supply of goods, goods must be exported from the territory of the country to the territory of another EU Member State as a result of the supply of those goods (transfer of the right to dispose of goods as owner). This shows the fulfilment of material conditions for VAT-taxed activities, which is WDT.

Moreover, according to Article 41(3) The VAT Act tax rate for WDT is 0%, subject to Article 42, in which the conditions for applying this rate are included, to be further discussed in detail.

This is the so-called Community right of deduction. It follows that the export of goods from Poland to another EU Member State is not subject to VAT, but also allows the supplier to recover the VAT paid on the acquisition of the goods, which ensures the implementation of the principle of VAT neutrality.

However, this rule applies only if, as a result of these exports, the obligation to charge VAT on the purchaser of goods in another EU Member State as a result of intra-Community acquisition of goods (hereinafter: WNT). As a result, VAT is already deducted, except that in the country of the purchaser, i.e. the principle of VAT in the country of destination 3 .

As already mentioned, the conditions for applying the rate 0% for WDT were formulated under Article 42 VAT Act. section 1 and 1a The laws present the law in force in the current state of the law:

Intra-Community supply of goods shall be taxable at the rate of tax 0%, provided that:
the taxable person has supplied the buyer with a valid and valid identification number for intra-Community transactions, given by the Member State competent for the buyer, containing the two-letter code applicable to value added tax which the purchaser has given to the taxable person;
the taxable person, before the expiry of the time limit for filing the tax return for the settlement period in question, has in his records evidence that the goods in question have been exported from the territory of the country and delivered to the buyer in the territory of a Member State other than the territory of the country;
the taxable person making a tax declaration showing that supply of goods is registered as an EU VAT taxable person.

1a.The tax rate in question Under section 1, does not apply if:

the taxable person has not fulfilled the obligation in question under Article 100(1)(1) or section 3 point 1, or
the summary declaration submitted does not contain correct data on intra-Community supplies of goods in accordance with the requirements referred to in the under Article 100(8) - Unless the taxable person duly explained in writing the failure of the head of the tax office.

section 1 point 1 It refers primarily to formal legal conditions, i.e. the need to register the buyer for intra-Community transactions by means of a VAT-EU number (competent for each Member State).

In turn point 2 concerns the obligation to have evidence, i.e. documents proving the actual export of the goods to the EU Member State concerned.

Then point 3 also concerns formal conditions, i.e. the need to register the taxable person (supplier) for intra-Community transactions using the VAT-EU number.

At this point, it should be noted that from 1 July 2020 in the above section 1 Under point 1 After the words ‘for value added tax’, the words ‘the purchaser has given to the taxable person’ were added and after section 1 added section 1a. As a result, it was outlined two new rules which have made:

section 1 point 1 were considered as a material condition, the non-fulfillment of which precludes the application of the rate 0% for WDT 4 . However, the revised rules did not specify in what form the supplier's VAT-EU code should be provided by the buyer. For this reason, there is a presumption that the inclusion of the relevant and valid VAT-EU number of the buyer on the invoice is sufficient in this respect;
Another material condition added above section 1a as regards the possibility to apply the rate 0% in the WDT is the submission by the supplier within the statutory deadline of the correct summary information in accordance with the above mentioned. Article 100 VAT Act. According to the revised provisions of the VAT Act, the failure to submit a summary information or to submit it with incorrect data results in the need to apply the VAT rate applicable to the domestic supply, unless the taxable person duly explains in writing the failure of the head of the tax office 5 .

These amendments were implemented in the VAT Act on the basis of Act dated 28 May 2020 amending the Corporate Income Tax Act, the Goods and Services Tax Act, the Tax Information Exchange Act with other countries and certain other laws (Journal of Laws of 2020, item 1106).

A problematic transition period

It should be stressed that Poland was obliged to 1 January 2020 implement the provisions of the EU Council implementing regulation into the Polish legal order Directive 2018/1910 dated 4 December 2018 amending Directive 2006/112 (VAT Directive) with regard to the harmonisation and simplification of certain provisions in the system of value added tax relating to the taxation of trade between Member States (Official Journal of the European Union L, No. 311 to 7 December 2018, p. 3).

As already mentioned, these provisions only apply from 1 July 2020, However, the Republic of Poland, under EU legislation, was obliged to implement this regulation until the end 2019 Interestingly, since this did not happen, the taxpayer was entitled to apply the VAT Directive directly.

„This possibility arises from the principle of direct effect of the provisions of the Directive. This is a concept arising from the case-law of the TEU, which boils down to the fact that where mandatory and sufficiently precise provisions of the Directive have not been implemented by the Member State concerned, or the implementation has been indefinitely or defective, it is for taxpayers to choose between the application of the provisions of the Directive and the provisions of national law." 6 .

In practice this means that during the period from 1 January 2020 to 30 June 2020 both revised regulations were in force Article 138 VAT Directive (corresponding Article 42 Polish VAT Act as it stands), and Article 42 VAT Act as it stood then.

Thus, according to the doctrine of direct effect (direct effectiveness of the provisions of the Directive), the Polish taxpayer could apply either provisions during this period Article 42 Polish VAT Act (not fully compatible with Article 138 VAT Directive), or directly Article 138 directives excluding national provisions.

The conditions for direct application of the Directive have been met – the provision Article 138 was mandatory and sufficiently precise and was not implemented in time in national legislation 7 .

According to the Ministry of Finance’s communication: ‘In a transitional period, the taxpayer will be able to apply the rules Directive 2018/1910 or national provisions of the Goods and Services Tax Act. Whether the taxpayer chooses to apply the rules Directive 2018/1910, whether the national law should do so consistently in all aspects related to the VAT settlement of a given transaction’ 8 .

However, the following can be read: “Directive 2018/1910 requires the purchaser to have a valid VAT identification number in a Member State other than the Member State in which the transport of goods begins, and to submit correct summary information as material conditions enabling the supplier to apply the exemption (rate) 0%). In the current provisions of the VAT Act, these requirements exist, so that the correct fulfilment by the taxpayer of the obligations resulting from those provisions will fulfil the conditions for applying the rate 0% for WDT also from 1 January 2020” 9 .

The above quotations from the communication may have misled the taxpayer. Importantly, it was merely a press release which does not in any way protect the taxpayer from the effects of its application because it does not constitute a general interpretation or tax clarification.

In this regard, the impression may be that quoted passages contradict each other – from one party, the ministry stated that the VAT Directive does not need to be applied, but with the second party, however, it needs to be applied, both with regard to the requirement to register VAT-EU correctly and to give legal meaning to the material correctness of the summary information.

With regard to the VAT-EU registration of taxable persons, as shown above, such a requirement existed in Polish legislation, however, the TEU consistently argued that this was not a condition for applying the rate 0%, and Polish regulations were still incompatible with EU regulations in this matter. The broader position of the TEU will be quoted further in the article.

However, second significant change, i.e. give legal meaning to the material correctness of the summary information on the rate 0%, It should be pointed out that this requirement did not have to be applied until it was implemented into Polish legislation (with the added section 1a of Article 42) 10 .

Doubts in this subject have dispelled individual interpretations issued at that time by the Director of National Tax Information. They expressed a favourable position for taxable persons that they could continue to prove the right to apply a preferential VAT rate by applying the existing rules on documentation under the VAT Act.

This position follows, for example, from the interpretation of the individual Director of National Tax Information dated 10 February 2020 reference no.

0112-KDIL4.401 2.523.2019.2.TKU.: „for application of the rate 0% for the intra-Community supply of goods, it is sufficient under Polish law that the taxable person has only some evidence in question under Article 42(3) Act, supplemented by documents indicated under Article 42(11) Act.

To document such supply, the taxable person may also have other evidence in the form of the documents in question under Article 180(1) Act dated 29 August 1997 Tax Ordinance (Journal of Laws of 2019, item 900, as amended), according to which, as evidence, anything that may contribute to the clarification of the case and not contrary to the law should be allowed” 11 .

Differences between national and Union category of evidence documenting exports of goods

This interpretation and the following refers to a slightly different issue, however remaining on the subject. These are the amendments to the EU Council Implementing Regulation No. Regulation (EU) 282/2011 dated 15 March 2011 laying down measures implementing the VAT Directive.

They were done by introducing Article 45a of Regulation (EU) 2018/1912. Added Article 45a refers in turn to Article 138 VAT Directive (which, as already mentioned, corresponds to Poland Article 42 VAT Act as it stands). The following content:

For the purposes of applying the exemptions established under Article 138 Directive 2006/112/ The EC is presumed to have been dispatched or transported from a Member State to a destination outside its territory but within the Community, in any of the following cases:

(a) the seller indicates that the goods have been dispatched or transported by him or a person third acting on his behalf, and the seller is held at least two not contrary to the evidence referred to Under section 3 point (a), issued by two different parties which are independent of each other, from the seller and from the buyer, or the seller is in possession of any single evidence referred to Under section 3 point (a), together with any individual non-contrary evidence referred to Under section 3 point (b), certifying the dispatch or transport which has been issued by two different parties that are independent of each other, from the seller and from the buyer;

(b) the seller has the following documents:

((i) a written declaration by the buyer confirming that the goods have been dispatched or transported by the purchaser or by the person third acting on behalf of the buyer and indicating the Member State of destination of the goods; such written declaration shall specify: the date of issue; the name and address of the buyer; the quantity and type of goods; the date and place of arrival of the goods; in the case of delivery of means of transport, the identification number of the means of transport; and the identification of the person receiving the goods to the buyer; and

((ii) at least two not contrary to the evidence referred to Under section 3 point (a), issued by two different parties that are independent of each other, from the seller and the buyer, or any single evidence referred to Under section 3 point (a), together with any individual non-contrary evidence referred to Under section 3 point (b), confirming the transport or dispatch which has been issued by two different parties that are independent of each other, from the seller and from the buyer.

The buyer shall provide the seller with the written declaration referred to in point (b) points (i), by the tenth day of the month following the month in which delivery took place.

The tax authority may overturn the presumption adopted on the basis of section 1.
For purposes section 1 the following documents are accepted as proof of dispatch or transport:

(a) documents relating to the dispatch or transport of goods, such as the signed transport note CMR, the bill of lading, the invoice for goods by air or the invoice from the carrier of goods;

(b) the following documents:

((i) an insurance policy in respect of the dispatch or transport of goods or bank documents confirming payment for the shipment or transport of goods;
((ii) official documents issued by a public authority, for example a notary, confirming the arrival of the goods in the Member State of destination;

((iii) receipt certificate issued by the warehousekeeper in the Member State of destination confirming the storage of goods in that Member State 12 .

It follows that EU law introduced 1 January 2020 additional rules which led to increased obligations for taxpayers to collect evidence in order to prove that the goods had been shipped or transported from Poland to a destination in the territory of an EU Member State and consequently that the rate 0% for WDT can be used.

According to the regulations, the seller must, among others, have:

a written declaration by the buyer confirming that the goods have been sent indicating the Member State of destination of the goods, and
at least two non-contrary evidence from the basic catalogue which was issued by two different parties independent of each other and from each other and from the seller and the buyer, or individual evidence from the basic and additional catalogue (also non-contrary, issued by two various independent parties).

The legislator then defined under Article 3a The basic catalogue on how to understand the word evidence: i.e. the documents relating to the dispatch, such as the signed CMR transport note, the bill of lading, the invoice for the carriage of goods by air or the invoice from the carrier of goods.

Further, Under section 3b , there is also a description of the catalogue of additional evidence. These are the proof of delivery of goods:

• insurance policy or bank documents confirming payment,
• official documents issued by a public authority, such as a notary,
• receipt certificate issued by the warehousekeeper in the Member State of destination.

At this point, for the purpose of comparison, reference should be made to the evidence which has been formulated in the Polish VAT Act. These regulations are in particular under Article 42(1)(2) (previously cited), section 3-5 and section 11 Act.

Based on Article 42(1)(2) VAT Act, intra-Community supply of goods is subject to tax at the rate of tax 0%, provided that: the taxable person, before the expiry of the time limit for filing a tax return for the settlement period in question, has in his records evidence that the goods in question have been exported from the territory of the country and delivered to the buyer in the territory of a Member State other than the territory of the country; (...).

According to section 3 the evidence referred to in that Article Under section 1 point 2, are the following documents if they together confirm the supply of goods subject to an intra-Community supply of goods to a buyer located in the territory of a Member State other than the territory of the country:

transport documents received from the carrier(s) responsible for the export of goods from the territory of the country from which it is clear that the goods have been delivered to their destination in the territory of a Member State other than the territory of the country - where the carriage of the goods is ordered to the carrier(s)

(…)

3) specification of individual cargo units

(…)

subject to section 4 and 5.

section 4 refers to exports of goods covered by the WDT directly by the taxable person or by the purchaser, using the taxable person or the buyer's own means of transport. Then the document should specify in particular: the names of the taxable persons, the addresses of their premises, the delivery address, the identification of the goods and their quantities, the acknowledgement of acceptance by the purchaser or the type and the registration number of the means of transport.

In turn section 5 concerns the exporter of new means of transport without using another means of transport. In that case, the taxable person in addition to the document in question Under section 3 point 3, it should have an export document containing the data enabling the correct identification of the taxable person making the supply and the buyer and of the new means of transport, in particular: data relating to the taxable person and the buyer, data proving that it is a new means of transport, the date of delivery, the signatures of the taxable person and the buyer, a statement by the buyer of the export of the new means of transport and a statement by the buyer of the consequences of the absence of such declaration.

In this respect remains section 11, indicating the directory of open documents confirming the WDT. Under that provision, where the documents in question Under section 3-5, do not clearly confirm the supply to the buyer located in the territory of a Member State other than the territory of the country of the goods, the evidence in question Under section 1 point 2, there may also be other documents showing that an intra-Community supply has taken place, in particular:

1) commercial correspondence with the purchaser, including its order;
2) documents relating to insurance or freight costs;
3) a document confirming payment for the goods, except where the delivery is free of charge or the undertaking is carried out in another form, in which case another document stating the expiry of the obligation;
4) proof that the purchaser accepts the goods in the territory of a Member State other than the territory of the country.

Consequently, it should be concluded that there has been a kind of duality of conditions to be fulfilled for documenting WDT 13 . EU regulations introduced only partially overlapping or differing from Polish regulations, e.g.

(as above): the need for a written declaration of the buyer confirming the delivery, the presence of at least two independent and non-contrary evidence of dispatch, definition of the concept of proof in the basic category i.e. For example, the transport letter CMR and the bill of lading or the additional category e.g.

the insurance policy. As a result, there was a situation which led to a lack of certainty for taxpayers about the application of the law during the transitional period for the implementation of the quick fixes package, i.e. between January and July 2020

A similar position on the possibility of applying Polish rules during the transitional period was presented in the interpretation of the individual Director of National Tax Information about reference no.

0112-KDIL1-3.4012.533.2019.2.TK dated 11 February 2020, in which the tax authority stated that: ‘(...) failure to comply with the conditions introduced by that Regulation does not mean that the rate 0% will not apply.

In such a situation, the supplier will have to prove otherwise, in accordance with the existing provisions of the Act, that the conditions for applying the rate 0% have been fulfilled.’ 14 .

The same position also follows from the interpretations of the individual Director of National Tax Information:

dated 12 February 2020, reference no. 0112-KDIL1-3.4012.522.2019.1.AKR: „(…) failure to meet the conditions introduced Regulation (EU) 2018/1912 does not mean that the rate 0% will not apply. In such a situation, the supplier will have to prove otherwise, in accordance with the existing provisions of the Act, that the conditions for applying the rate 0% have been fulfilled.’ 15 ;
dated 4 March 2020, reference no. 0113-KDIPT1-2.4012.800.2019.1.KT: „Therefore, the supplier has the documents in question under Article 42(3) and 11 Act will entitle – also from 1 January 2020 – to apply a tax rate of 0% for intra-Community supplies of goods.’ 16 ;
dated 9 March 2020, reference no. 0113-KDIPT1-2.4012.747.2019.2.JS: „(…) for application of the rate 0% for the intra-Community supply of goods, it is sufficient under Polish law that the taxable person has only some evidence in question under Article 42(3) Act, supplemented by documents indicated under Article 42(11) Act. To document such supply, the taxable person may also have other evidence in the form of the documents in question under Article 180(1) Act dated 29 August 1997 Tax Ordinance (Journal of Laws of 2019, item 900, as amended), according to which, as evidence, anything that may contribute to the clarification of the case should be allowed and not contrary to the law." 17 ;
and dated 13 March 2020, reference no. 0111-KDIB3-3.4012.8.2020.1.MK:

„The Authority therefore considers that, in view of the description of the case and the provisions in force, it must be concluded that despite the entry into force of 1 January 2020 Article 45a Implementing Regulations, Collection of evidence referred to under Article 42(1)(2) in conjunction with section 3 and 11 VAT Act (in compliance with other statutory conditions) will result in the condition that the rate is applied 0% VAT to WDT referred to under Article 42(1)(2) The VAT Act will be met and thus the applicant will not be required to collect the documents in question under Article 45a implementing Regulations for the application of rates 0% VAT for intra-Community supplies of goods.’ 18 .

This confirms that the tax did not dispute the adherence of the ‘old’ rules under the VAT Act, while allowing taxpayers to choose between national and Community rules during the transitional period concerning implementation Regulation (EU) 2018/1912 to the Polish legal order. Instead, he stressed that the taxpayer should also apply consistently to the option chosen in this regard.

Polish, Union and tax rulings on the subject

It should be concluded that the TEU’s legal line on formal conditions for the application of the rate 0% It's starting to shape. In 2016 For example, the article states that: “The Court of Justice of the European Union’s 20 October 2016, reference no. C-24/15 may to a certain extent alter the practice indicated above.

This ruling underlines that the registration requirement is formal and therefore its failure does not always deprive the right to apply the rate 0%. The rate cannot be refused 0%, if there has actually been a shipment and tax fraud is excluded.

If the authorities can confirm that the shipment is carried out and that it is related to economic activity, they should not question the right to 0%.” 19 .

Already from the decision of the EUS 27 September 2007 on C-409/04, Teleos and others, it was clear that, in addition to the conditions relating to acting as a taxable person, the transfer of the right to dispose of the goods as owner and the physical movement of goods between two Member States may not make the qualification of an activity subject to formal conditions. Quoting in favour of the judgment: ‘(...) it must be considered that, in addition to the conditions relating to acting as a taxable person, the transfer of the right to dispose of the goods as the owner and the physical movement of the goods between two Member States shall not be subject to the fulfilment of any other condition to qualify the activity as an intra-Community acquisition of goods.

Under the transitional arrangements for intra-Community acquisition and intra-Community supply, it is necessary that, in order to ensure the correct collection of VAT, the competent tax authorities check, independently of each other, the fulfilment of the conditions for intra-Community acquisition and the exemption from the corresponding supply tax. Therefore, even if the buyer’s submission of an intra-Community acquisition tax return may indicate the actual movement of goods outside the territory of the Member State of delivery, such a declaration is not of decisive importance as regards proof that the intra-Community supply has been released." 20 .

The Court expressed a similar view on the reference no.

C-21/16 on Euro Tyre dated 9 February 2017, mention also the list of other judgments of the TEU on this matter: ‘(...) neither the purchaser obtains a valid VAT identification number for intra-Community transactions nor the registration of the buyer in the VIES system constitute material grounds for exempting intra-Community supplies from VAT.

These are only formal requirements which cannot undermine the seller's right to VAT exemption because the substantive conditions for intra-Community supply have been met (see By analogy, judgments: dated 6 September 2012, Mecsek-Gabona, C-273/11, EU:C:2012:547, point 60; dated 27 September 2012, VSTR, C-587/10, EU:C:2012:592, point 51; dated 20 October 2016, Plöckl, C-24/15, EU:C:2016:791, point 40)” 21 .

A similar view has been expressed in the abovementioned judgment of the Court of Justice reference no. C-24/15. Importantly, it highlights the issue that the rate 0% applies if the goods have actually been exported and there is no risk of tax fraud.

Only then are the formal conditions of secondary importance: "Article 22(8) sixth Directive 77/388 on the harmonisation of the laws of the Member States relating to turnover taxes, as amended Directive 2005/92, as follows: Article 28h sixth directives and Article 28c Part A point (a) paragraph first and Article 28c Part A point (d) that Directive should be interpreted as precluding the refusal by the tax authority of the Member State of origin of the exemption from value added tax of intra-Community movement on the grounds that the taxable person has not provided the identification number assigned by the Member State of destination for value added tax purposes if there is no serious indication of fraud if the goods have been moved to another Member State and the other conditions for exemption are also met.’ 22 .

However, in principle, tax authorities denied taxpayers the right to apply the rate 0% for the WDT due to the lack of formal conditions for registration of VAT-EU, so the jurisprudence of the Provincial Administrative Courts generally supported the TEU’s position in this respect – of course, until the implementation of the rules of quick fixes to the Polish legal order from the date 1 July 2020 For example, in the WSA judgment in Wrocław dated 20 October 2016 reference no.

I SA/Wr 492/16 “ In the facts of the case, the complainant failed to fulfil the condition described Under point 3 the above-mentioned provision, within the time limit indicated therein, registered for VAT purposes by the EU late, i.e. after the submission of the statement of account for the aforementioned WDT.

Reserving that the other conditions laid down in the abovementioned provision entitling to the rate have been met 0%.

In the Court’s view, on the basis of this particular case, the position of the interpretative authority excluding the right of the party to apply the rate 0% there is no reason why, as the applicant rightly points out, such interpretation of the provisions in question would be contrary to the principle of proportionality’ 23 .

For example, the WSA in Warsaw reached similar conclusions in the judgment dated 29 June 2017 reference no.

VIII SA/Wa 75/17: „In assessing the contested interpretation, the Court of First Instance concluded that the provision Article 42(1)(3) The VAT Act has been understood to mean that the failure to comply with the requirement to register as a VAT taxable person prior to the submission of the tax return containing the settlement of intra-Community supply constitutes an essential obstacle to the application of the VAT rate.

0%, is contrary to Union law, in particular to Article 138(1), with regard to Article 131 and Article 273 VAT Directives Directive 2006/112” 24 .

Here I want to show you yet one, the most recent sentence of the WSA – in this case based in Opole dated 18 March 2021 o reference no. I SA/Op 32/21. It indicates the concepts of the taxpayer's good faith and due diligence.

Good faith is nothing but the taxpayer's action in the belief that the transaction carried out by the taxpayer is not aimed at tax fraud. In turn, due diligence is to demonstrate that the taxpayer has taken the measures required under the circumstances to prevent it from participating in VAT fraud.

This refers to activities such as checking a counterparty in VIES, verifying its website, current contact details, etc. Attention was also drawn, as in the above-mentioned ruling of the CJEU reference no. C-24/15, the obvious lack of the possibility of tax fraud.

According to that judgment: ‘The possibility of withdrawing from the buyer’s requirement to have an identification number, if the material conditions for intra-Community supply have been met, concerns cases where the seller was unaware of the buyer’s status, while maintaining due diligence in his business (so-called good faith).

It does not, however, refer to the situation in the case in question where the seller had full knowledge of the failure to meet the requirement in an unambiguous manner resulting from the Polish law and EU law (cf. NSA judgment of 1 March 2019, reference no. I FSK 172/17).

(…) On the other hand, where it has been established that there is no evidence that the shipment of goods to another Member State is being transferred to a specific (designated) entity, in particular as in the present case, it has been established that the buyer is not only an entity not registered in the VIES system, nor covered by an intra-Community tax system, but established in (...) and not identified in the country of supply ((...)) for intra-Community transactions, the authorities have reasonably considered that the conditions for considering the supply in question as a DTT and applying the rate to them were not met together by the law required to consider the supply in question as a DTT and to apply to them 0%.

In addition, according to the reasons for the contested decision (p.

14-15 the decision), not only the absence of an EU VAT number, but consequently the failure to account for the transaction in question as a WNT in (...), were the basis for the resolution of the authorities of both instances, as this constituted an abuse and violation of the law, in particular the principle of neutrality 25 ”.

In the context of this subject, the individual interpretation of the Director of National Tax Information can also be an interesting example. dated 4 June 2020 o reference no. 0112-KDIL1-3.4012.10.2020.3.AKS.

The case concerned the taxpayer who applied the rate 23% for WDT because in his assessment he was not entitled to apply the rate 0%, Because he didn't fulfill his registration obligations. After doing so, he decided to ask the tax authority if he could correct his accounts by reducing the VAT rate.

The Authority considered his position to be correct: ‘ Taking into account the description of the case submitted, it must be concluded that since the company has been given an appropriate and valid identification number for intra-Community transactions by the French tax authorities In 2017, with retroactive effect from 1 January 2016, in respect of supplies of goods made to the Company during the periods January, February, March, April, June, September, October, November, December 2016, which have been moved from Poland to the territory of other Member States of the European Union, the condition has been met under Article 42(1)(1) Act.(...)

Thus, in the situation described above, in which the Applicant for the described supplies of goods to the Company issued invoices with a tax rate of 23% - which, as decided in this interpretation, are subject to a tax rate of 0% as intra-Community supplies of goods, The applicant should issue corrective invoices in which he will reduce the tax rate from 23% to 0%.

Since when issuing invoices showing an incorrect (higher than due) tax rate for the goods supplied, it should make adjustments on the basis of Article 106j(1)(5) Act.

In addition, the amending invoice should contain the number by which the applicant is identified for tax purposes, preceded by the code PL and the number by which the Company is identified for value added tax purposes in the Member State concerned, containing the two-letter code applicable for value added tax purposes of that Member State’ 26 .

Summary

To sum up the above considerations, little has seemingly changed. Until now, the seller had to place VAT No on the invoice to the buyer.

However, failing this obligation did not automatically lose the right to apply the rate 0%, Since the jurisprudence of the TEU and the Polish administrative courts took the view that it was essential to meet material conditions (the purchaser had to have a VAT number or at least to be in the process of obtaining it), while fulfilling formal conditions was a secondary matter.

Currently, it is necessary to have the VAT number of the buyer and to enter it on the invoice. On this plane, it is worth referring to the difference between the literal interpretation of a provision Article 42(1)(1)(3) VAT laws and the departure of both the TEU and the administrative courts for design reasons.

From 1 July 2020 This incompatibility has been eliminated, although in the author's opinion this work occurs here two pages of the medal. After first, It can be said that the Court's position, as well as its follow-up, was favourable to taxpayers.

Temporary non-compliance with the conditions for registration of VAT-EU by a taxable person or counterparty could not deprive the taxable person of the rate to be applied 0% for WDT.

After second, However, the question of the taxpayer who sought to foresee the result of the linguistic interpretation can be considered, while the interpreter withdrew from it and relied on the system and functional interpretation 27 . A taxpayer who is not aware of this can create a sense of instability in tax law.

In this respect, we can quote a vote to the Supreme Court resolution dated 29 October 2012, reference no.

I KZP 15/12: „Despite controversy and doctrinal disputes, legal practice, both in the civil law and common law countries, in a rather unambiguous way, although not unanimous, advocated a directive of primacy of linguistic interpretation and subsidiarity (subsidiarity) of systemic and functional interpretation.

The language interpretation is the most important way of interpreting the law, which is an obvious consequence of the inability of the legislator to ignore the normal, widely accepted meaning of the terms used." 28 .

Adding to this the issues introduced in the VAT Directive Article 45a EU Council Implementing Regulation No. Regulation (EU) 282/2011 determining the different nature of the documents proving the export of the goods at the rate 0%, and also the doubts which rules should be applied during the transitional period, it seems that the assistance of the tax advisor in clarifying such complex rules will be increasingly justified.

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1 Full name: Council Implementing Regulation (EU) No Directive 2018/1912 dated 4 December 2018 amending Implementing Regulation (EU) No Regulation (EU) 282/2011 for certain exemptions relating to intra-Community transactions (Official Journal of the European Union L, No. 311, p. 10).

2 Full name: Council Implementing Regulation (EU) No Regulation (EU) 282/2011 dated 15 March 2011 laying down implementing measures Directive 2006/112 on the common system of value added tax (Official Journal of the European Union L, No. 77, p. 1).

3 Individual interpretation of the Director of National Tax Information dated 8 March 2021 o reference no. 0113-KDIPT1-2.4012.854.2020.2.KT.

4 https://home.kpmg/pl/pl/blogs/home/posts/2021/02/blog-podatkowy-transakcje-w-vat-po-implementacji-pakietu-quick-fixes.html

5 https://blog-tpa.pl/2020/07/29/nowelizacja-przepisow-vat-w-polsce-implementacja-pakietu-quick-fixes-oraz-inne-zmiany-od-lipca-2020-roku/

6 T. Michalik, VAT Comment, comment on Article 22, Series: Tax Comments of Becka, Warsaw 2021,

7 T. Michalik, op.cit., comment on Article 42.

8 Ministry of Finance’s Implementation Communication Directive 2018/1910, so-called quick package fixes.

9 Ibid.

10 https://oficynafk.pl/vat/brak-quick-fixes-w-polskich-przepisach-poznaj-praktyczne-konsekwencje-16703.html

11 Individual interpretation of the Director of National Tax Information dated 10 February 2020 o reference no. 0112-KDIL4.4012.523.2019.2.TKU.

13 W. Kieszkowski, Director of KIS interprets ‘quick fix’, 2020, https://legalis.pl/dyrektor-kis-interpretuje-quick-fix/ (access: 4 January 2022)

14 Individual interpretation of the Director of National Tax Information dated 11 February 2020 o reference no. 0112-KDIL1-3.4012.533.2019.2.TK.

15 Individual interpretation of the Director of National Tax Information dated 12 February 2020 o reference no. 0112-KDIL1-3.4012.522.2019.1.AKR.

16 Individual interpretation of the Director of National Tax Information dated 4 March 2020 o reference no. 0113-KDIPT1-2.4012.800.2019.1.KT.

17 Individual interpretation of the Director of National Tax Information dated 9 March 2020 o reference no. 0113-KDIPT1-2.4012.747.2019.2.JS.

18 Individual interpretation of the Director of National Tax Information dated 13 March 2020 o reference no. 0111-KDIB3-3.4012.8.2020.1.MK.

19 Samborski M., Is the stake 0% VAT on non-transaction transfer does not always necessarily require registration in an EU Member State?, 23 November 2016. https://mojafirma.infor.pl/moto/logistyka/transport/749080 ,Did-bet-0-VAT-in-location-non-transaction-not-always-requires-registration-in-State-Member-EU.html access: 4 January 2022

20 Judgment of the ECJ dated 27 September 2007 on reference no. C-409/04, Teleos and others.

21 Judgment of the ECJ dated 9 February 2017 on reference no. C-21/16 Euro Tyre.

22 Judgment of the ECJ dated 26 October 2016 on reference no. C-24/15.

23 WSA judgment in Wrocław dated 20 October 2016 o reference no. I SA/Wr 492/16.

24 Judgment of the WSA in Warsaw dated 29 June 2017 o reference no. VIII SA/Wa 75/17.

25 WSA judgment in Opole dated 18 March 2021 o reference no. I SA/Op 32/21.

26 Individual interpretation of the Director of National Tax Information dated 4 June 2020 o reference no. 0112-KDIL1-3.4012.10.2020.3.AKS.

27 B. Brzeziński, Sketch from the interpretation of tax law, Gdańsk 2002, p. 29.

28 Gloss to the Supreme Court resolution dated 29 October 2012 o reference no. I KZP 15/12.