The Court of Justice of the European Union (CJEU) held in judgment C-169/12, that the Polish legislation introducing a specific moment when the tax obligation in the tax on goods and services (hereinafter: VAT) for transport, forwarding and construction services is not compatible with the EU Directive 2006/112 of 28 November 2006 on the common system of value added tax (OJ EU v 2006, 347/1, hereinafter: EU Directive).
The judgment concerned a reference for a preliminary ruling from the Supreme Administrative Court on 10 April 2012 in the case of TNT Express Worldwide Limited Liability Company v Minister of Finance.
Polish tax legislation introduces an exception to the general rule on the moment when the VAT obligation was created is set out in the text Article 19(1) Act dated 11 March 2004 on corporate income tax (Journal of Laws of 2011, item 397, hereinafter: VAT Act), which provides that the tax obligation arises when the goods or services are issued.
one of these exceptions refers to transport, forwarding and construction services provided by the taxable person. In relation to these services, the Polish legislator predicted under Article 19(13)(2) point (a) (d) the VAT Act, a specific moment when the tax obligation arises. Subject to the wording of this provision for services:
- • passenger and freight transport by rail, rolling stock, seagoing ships, inland waterways and coastal waterways, ferry, aircraft and helicopters,
- • construction or construction-assembly,
the tax liability arises as soon as:
- • receiving all or part of the payment,
- • no later than 30 the day from the date of the service.
In the light of the provision cited above, it must therefore be concluded that the tax obligation for the provision of transport or construction services may arise:
- upon receipt of all or part of the payment of the price for this service by the purchaser (which may occur before or after the start of the service, as well as after its performance, provided that the payment was made before 30 the date from the date of the service,
- 30 the day from the date of performance of the service - in the event that the payment for the service until then has not been paid by the buyer, or if by that point the seller has not received the whole payment, only part of it.
The case referred to the settlement of the TNT courier company, whose principle of a specific time when the VAT obligation was imposed made it very difficult to settle, since in addition to transport services, it also provided postal services taxed on general terms (the tax obligation arises at the time the invoice was issued, no later than seven days from the service). TNT therefore wanted all services to be accounted for the same way, and this was not acceptable to tax authorities.
The CJEU ruled that the provision requiring VAT to be shown only in the month in which it expired 30 days after the performance of the service, is incompatible with Directive 2006/112. The TEU considered that the introduction of a period after which the tax becomes chargeable was incompatible with the Directive because companies could only show VAT when they were paid.
In view of the judgment of the CJEU, part of the provisions of the amendment of the VAT Act on a specific point in the obligation to create a tax obligation in transport services to be introduced 1 January 2014
Consequently, transport, freight and construction companies will be able to account for their services on a general basis without any negative consequences from tax authorities.