Is the trade in collectors' items taxed if it is intended to exclude the exchange and supplement of collections? In one of its recent rulings, the Supreme Administrative Court has dealt with this issue from its recent rulings.
Economic activity under the VAT Act
"According to the NSA, however, it was irrelevant for the case in question whether the sale was profitable and what its purpose was"
The basic provisions of the Goods and Services Tax Act governing the taxable persons of VAT should be cited. According to Article 15(1) they are legal persons, organisational units without legal personality and natural persons, carrying out themselves an economic activity, regardless of the purpose or outcome of such activity.
It is crucial to determine whether a person is a VAT taxable person whether he or she carries on an economic activity within the meaning of the VAT rules.
Economic activity is defined under Article 15(2) and according to its content, it covers all activities of producers, traders or service providers, including natural resources acquirers and farmers, as well as the activities of professionals, including in particular activities involving the use of goods or intangible assets on a continuous basis for commercial purposes.
Trade in collector items
The case dealt with by the NSA concerned whether the collector selling coins through an auction service is a VAT taxable person if the purpose of these transactions is only to replace copies from the collection and supplement the collections.
In order to make transactions related to his collection, the collector established several accounts on the auction portal and a separate bank account. The proceeds of the transaction were spent on expanding the collection. Total collector sold 733 coins and earned as a result of these operations ok. 50,000 PLN.
NSA: a VAT collector
Administrative Court first instances – WSA in Warsaw found VAT to be subject to professional and continuous activity. The object of such trade, according to the WSA, may also be assets originally acquired for personal purposes and used for such purposes, such as the personal collection of coins.
The case then went to the NSA, which in judgment dated 23 October 2014 (reference no. I FSK 1577/13), held that the sales transactions made by the collector constituted an economic activity within the meaning of the VAT Act, i.e. meet the conditions set out under Article 15 VAT Act. The NSA considered collector activity to be an economic activity because:
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- It was organized in nature (provided by, among others, three registered accounts on the auction portal and a separate bank account),
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- it has been performed independently,
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- was continuous and
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- transactions have been made frequently.
According to the NSA, however, it was irrelevant to the case in question whether the sale was profitable and what its purpose was.
In the light of the above, it should be noted that the collector who makes a single or occasional sale of specimens from his collection should not be afraid of VAT. However, if transactions are characterised by a higher frequency and a higher degree of organisation, there is a risk of such activities being considered an economic activity, but it should be noted that each factual situation requires an individual assessment.