Chain transaction with third countries (export) – important judgment of the Supreme Administrative Court

Chain transactions create plenty of difficulties for taxpayers in terms of determining their VAT implications. Currently, intra-Community transactions are less problematic, due to the regulation of these questions as part of the package of “quick fixes” changes introduced in 2020. Chain transactions involving the export of goods outside the EU still often remain problematic in terms of determining the so-called moving supply. In particular, there are doubts when the middle entity in the chain is responsible for the transportation of goods.

The Supreme Administrative Court [hereinafter: NSA] ruled on this issue in a judgment of January 28, 2025 (ref. I FSK 1389/21), considering a claim against an individual tax ruling issued by the Director of the National Tax Information [hereinafter: DKIS] regarding the company’s entitlement to recognize transactions performed (within the supply chain) as exports of goods taxed in Poland at a 0% VAT rate. In the case in question, the goods were transported from the territory of Poland by an intermediary entity (an entity that is neither the first nor the last entity in the supply chain).

Regulations on chain transactions in the export of goods

The rules for identifying a moving supply in the supply chain with third countries, when goods are transported by an intermediary, are specified in Article 22(2a) of the VAT Act:

If the goods are dispatched or transported from the territory of the country to the territory of a third country by a buyer who also supplies them (an intermediary), the moving supply is the supply made to that buyer (unless it follows from the terms of supply that the dispatch or transport of the goods is to be attributed to his supply).

The wording of the cited provision itself raises questions of interpretation, as it contains two separate rules for establishing a movable delivery – a presumption (before parentheses) and an exception (in parentheses), without specifying the premises that are to determine the adoption of one of these rules.

State of facts of the case

The Company [hereinafter: Company, entity A] operates in the business of manufacturing and selling steel products, among other steel constructions. The Company is the first or second entity in the supply chain (in the case of the first delivery from a subcontractor to the Company). The goods are sold by the Company to a buyer [hereinafter: entity B] based in Poland, who then sells the goods to contractors outside the EU [hereinafter: entity C]. The goods are transported directly from the Company to entity C, or, if the first entity in the chain is the Company’s subcontractor, directly from the subcontractor to entity C. The goods are handed over by the Company to entity B in Poland, which means that the transfer of the right to dispose of the goods as owner between entity A and entity B takes place in Poland. The supply of goods from the Company to entity B is made on EXW and FCA terms, and the export of goods to entity C (to a third country) is made by or on behalf of entity B. Entity B organizes the transportation and charges the Company for coordinating the delivery of goods to entity C. Entity B also arranges for customs declarations to be made. The Company receives a document confirming the export of the goods outside the EU, the so-called IE-599 electronic message (confirmation of export), indicating the details of entity B as the sender. Entity B is responsible for the goods until they are delivered to entity C, whether transported directly from the Company or from the Company’s subcontractor.

The Company’s doubts concerned the Company’s entitlement to consider its transactions as exports of goods taxed in Poland at a 0% VAT rate, given the facts.

DKIS concluded that the transaction between the Company and the buyer (A – B) is immovable in nature. It therefore constitutes a domestic supply, not an export of goods, so the Company has no reasons to apply the 0% VAT rate. The Voivodship Administrative Court in Poznań [hereinafter: WSA] (ref. I SA/Po 88/21) upheld the Company’s complaints and overturned the challenged tax ruling. The court of first instance held that, in accordance with Article 22(2a) of the VAT Act, the dispatch or transport should have been attributed to the supply made by the Company to entity B, since the transfer of the right to dispose of goods as owner by entity B to entity C occurs only after export to a third country.

The WSA’s ruling was appealed by DKIS and the case reached the NSA.

NSA: the supply made by the Company is an immovable supply, as entity B acquired the right to dispose of the goods as owner in the territory of Poland.

The NSA agreed with the position of DKIS, overturning the judgment of the WSA in Poznań and dismissing the Company’s action. The NSA pointed out that, according to the facts, the transfer of the right to dispose of the goods as owner to entity B (the intermediary) occurs already on the territory of Poland, at the time of receipt of the goods from the Company by entity B’s carrier. It is entity B that is responsible for organizing the transport and disposes of the goods during transport as owner. The NSA stressed that entity A does not perform any activities related to transportation, and all activities in this regard are the responsibility of entity B.

Accordingly, since the right to dispose of the goods as owner is transferred from the Company to entity B on the territory of Poland, the supply of goods in the supply chain between the Company and entity B occurs at the time of receipt of the goods by the carrier of entity B, i.e. on the territory of Poland. Thus, the A – B supply should be considered an immovable supply – a domestic supply. The second supply takes place between entity B and entity C from a third country and occurs on the territory of a third country, so it is a movable supply – export of goods. Given the above, according to the NSA, the exception of Article 22(2a) is met, i.e. it follows from the terms of the supply that the dispatch or transport of goods should be attributed to the supply of the intermediary – thus it is not possible to attribute the transport of goods to the supply made by the Company.

Adoption of the reverse position – recognition of the supply made by the Company to entity B as a moving supply, i.e. export of goods – would be possible if it was the Company that disposed of the goods as owner in the course of transporting the goods, and entity B had a tax registration in a third country and used a third-country identification number in this transaction. In the facts under review, aforementioned is not possible, since entity B acquired the right to dispose of the goods while still in the territory of Poland. The Company is therefore not entitled to apply the 0% VAT rate to the supply made to entity B.

Importance of the judgment for taxpayers

The judgment in question demonstrates how unclear the rules are for chain transactions involving the export of goods outside the EU in a situation where the second entity in the chain is responsible for transportation (Article 22(2a) of the VAT Law). It is possible to adopt different interpretations for a given factual situation, as evidenced by the different positions taken by the juries of both instances in the present case. Therefore, companies should thoroughly analyze the VAT implications of chain transactions, since incorrect classification may result in tax arrears due to the application of a 0% VAT rate in place of the domestic rate. At the same time, it is not sufficient to rely on the Incoterms rules in the analysis, rather, the main criteria should be the place of transfer of the right to dispose of the goods as owner, as pointed out by the Supreme Administrative Court, and also implied by the case law of the EU Court of Justice.