Free of charge transfer of advertising or promotion goods for which the right to deduct VAT charged on VAT is not subject to VAT. This is due to the interpretation of the National Tax Information Director at 25 September 2017 The signature. 0114-KDIP1-1.4012.447.2017.1.AO.
The applicant for interpretation is a limited liability company, an active VAT taxable person. The subject of the activity is the distribution of fuels. The applicant shall issue its own advertising material to its counterparties, e.g. flags, posters, stickers.
The sole purpose of sharing is to promote your own brand or to show the company’s offer. Applicants shall have the right to reduce the amount of tax due by the amount of input tax due in connection with the purchase or manufacture of materials.
The company wanted to obtain information whether the free transfer of such materials with a value exceeding 10 PLN is taxed on VAT.
Based on Article 7(2) VAT acts shall also be regarded as the supply of goods subject to VAT in principle as transfer free of charge by the taxable person of goods belonging to his undertaking.
The Director of National Tax Information pointed out that consideration should be given to how much the transfer of goods can be of a consumer nature:
„VAT shall be charged to the consumption of the goods (or services) in question by which the use of the acquired goods (or services) should be understood to satisfy any consumer’s need.
In this factual situation, the transfer of promotional material to the counterparty was intended solely to promote and advertise the company, the recipient could not be regarded as a consumer. For this reason, it was considered that no obligation to pay VAT on such events arises:
„free of charge issue to counterparties of advertising materials indicated in the application shall not be subject to VAT(...) The reason for leaving these editions outside the scope of VAT is the lack of their consumer character.’
It should be noted that this VAT exemption applies only to goods not having consumer value. If an entrepreneur were to distribute free of charge, e.g. T-shirts with a logo of his company with a value exceeding 10 PLN that such an operation would be subject to the obligation to pay VAT (provided that VAT is reduced by the amount of VAT charged in connection with the goods) because such clothing would have not only advertising but also utility value.