7 CHANGES IN VAT: ICS – changes regarding the conditions of application of the 0% VAT rate

On July 1 this year amendments to the conditions for applying a 0% VAT rate for intra-Community supply of goods will enter into force. The amendments are aimed at adapting Polish regulations to the Council Directive 2006/112/EC.

From this date, the seller will be entitled to apply 0% VAT rate at ICS only if the purchaser has a valid EU VAT number issued by the tax administration of a country other than the country of dispatch of the goods. In addition, this number will have to be provided by the purchaser (the amended provisions do not specify how the data regarding the VAT number should be provided. As it follows from the explanatory notes of the European Commission, if the VAT number appeared on the sales invoice, it can be assumed that the condition of “providing the number” has been met).

An additional condition for applying the 0% VAT rate will be the submission of correct Recapitulative Statement (EC Sales List) by the supplier containing the data referred to in art. 100 paragraph 8 of the VAT Act, i.e.

1. designation or name and surname of the entity submitting the EC Sales List, as well as his tax identification number provided in the confirmation made by the head of the tax office in accordance with art. 97, paragraph 9, which he applied for the transactions and shipments referred to in paragraph 1;
2. correct and valid identification number for intra-Community transactions assigned by the member state competent for the value added taxpayer or a non-taxable legal entity who purchases goods or services; the identification number must contain the two-letter code used for value added tax;
3. correct and valid identification number for intra-Community transactions assigned by the member state competent for the value added taxpayer who supplies goods; the identification number must contain the two-letter code used for value added tax – in the case referred to in paragraph 1, point 2;
4. total value of intra-Community acquisition of goods, total value of intra-Community supply of goods, including total value of delivery of goods referred to in paragraph 1 point 3, total value of the services provided, referred to in paragraph 1 point 4 – for individual contractors;
5. correct and valid identification number for intra-Community transactions of the value added taxpayer assigned to him by the member state on whose territory the goods were moved in the call-off stock warehouse procedure – in the case referred to in paragraph 1 point 5. (new condition).

If a taxpayer fails to submit the EC Sales List or the EC Sales List will include incorrect data the domestic VAT rate should be applied, unless the taxpayer duly explains the deficiency to the head of the tax office; the notice must be submitted in writing.

It must be emphasized that so far, in the light of the favorable case law of the CJEU, failure to meet the condition of having an EU VAT number by the buyer has not excluded the preferential rate for intra-EU delivery to be applied. From July 1, 2020, this will no longer be possible. In addition, failure to submit EC Sales List will not only cause the  risk of fiscal penalties but will also deprive the right to apply a 0% VAT rate at ICS.