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Intra-Community transactions - the key obligations of an entrepreneur - Super Księgowy
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Intra-Community transactions - the key obligations of an entrepreneur - Super Księgowy

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  • Intra-Community transactions – the key obligations of an entrepreneur

Intra-Community transactions between businesses operating in the member states of the European Union are subject to special procedures primarily related to VAT taxation. It is worth emphasizing that in this regard, the legislator has provided for a separate set of obligations concerning intra-Community acquisitions of goods (IAG) and services.


Intra-Community acquisition of goods – key obligations


Intra-Community acquisition (ICA) involves transferring the right to dispose of goods as the owner, which are transported from a Member State to Poland.

The taxation mechanism is based on the reverse charge principle, whereby the tax liability is accounted for by the purchaser, which simultaneously becomes the input tax subject to deduction under general rules. Taxation takes place in the buyer’s country, making the acquirer responsible for determining and calculating the tax in accordance with Polish law. The taxable amount is considered to be the amount that the buyer is obligated to pay to the seller, and may also include other taxes, duties, and charges.


It should be emphasized that the tax obligation is determined, as a rule, based on the date of issuing the invoice, which should occur by the 15th day of the month following the month of delivery. Significant changes have also been introduced by the Slim VAT 3 package, under which the absence of an invoice does not eliminate the possibility of deducting VAT on intra-Community acquisitions. It should be noted that until the end of June 2023, the regulations stipulated that the tax could only be deducted once we received the invoice from the supplier.


It’s also worth knowing that in the case of intra-Community transactions, the entrepreneur is obliged to register for EU VAT by submitting a VAT-R declaration to the Tax Office. Registered counterparts for EU VAT can be verified on the VIES online platform.


However, an exception to the registration rule has been introduced, which applies to VAT-exempt taxpayers. In the event that such an entity acquires goods with a value not exceeding 50,000 Polish złoty annually, they may treat them as regular domestic transactions. The obligation to register for EU VAT occurs after exceeding this limit, and then the taxpayer is required to submit VAT-8 declarations as well as summary declarations for EU VAT. It should be noted that the aforementioned exemption limit is voluntary, and the taxpayer may waive it by submitting a duly completed VAT-R form to the Tax Office.


Intra-Community acquisition of services – what should the taxpayer know?


The free movement of goods was one of the fundamental principles of European integration, however, regulating the provision of services proved to be a much greater challenge. This was primarily due to the various models of providing such transactions, which is why to this day, one can encounter numerous exceptions to the rule in this regard.

This matter is regulated by Article 28b of the Value Added Tax Act, which states that the place of supply for both domestic and foreign services in the case of:

  • The provision of services to a taxable person – the place is where the taxable person receiving the service has its seat;
  • where services are provided to a fixed establishment of the taxable person which is located in a place other than its seat – the place of supply shall be considered the fixed establishment;
  • if the recipient of services does not have a seat or a fixed establishment, the place of supply of services shall be the place where they have their permanent residence or habitual residence.


It should also be emphasized that the purchaser of services within the intra-community dimension is obliged to register for VAT-EU. This situation also applies to exempt taxpayers, who should also register, thereby maintaining the right to exemption.


An important issue is the declaratory obligation related to the acquisition of intra-community services. In the case of active taxpayers – regarding transactions specified in Article 18b of the Value Added Tax Act – they are not required to submit a summary of VAT-EU.

The situation is somewhat different for VAT-exempt taxpayers. They are required to submit a VAT-9M declaration, in which they report the calculated tax, which they then remit to the Tax Office. Due to the lack of the right to deduct, they can include it as a cost of revenue.


The sale of goods and services to EU countries.

Another issue is the sale of goods and services to European Union countries. In the case of intra-community supplies of goods, the taxpayer may tax the goods at a 0% rate, provided the criterion of documenting the departure of the goods beyond the country’s borders is met. In such a situation, the recipient – a VAT taxpayer – will be able to charge and deduct VAT in the destination country, under rules analogous to those for exports.

The situation is somewhat different when sales to other EU countries are made to retail customers. Up to the limit of 10,000 euros, the supplier may tax the sale of goods under general rules, at the VAT rate applicable in their country. Subsequently, they should tax the sale at the rate applicable in the destination country and should previously register as a VAT taxpayer in that Member State or opt for the VAT One Stop Shop (VAT-OSS) procedure. The latter option allows the taxpayer to settle with the Tax Office based on a single settlement declaration, submitted in Polish..


A somewhat more complicated issue may arise with the supply of services. In this case, the place of supply, as described above, is crucial. The general rule, however, entails the reverse charge mechanism, under which the service recipient accounts for VAT in their own country. It’s worth noting that there are several exceptions to this rule, among which, according to Article 28e of the Value Added Tax Act, includes the provision of construction services, where the place of supply is deemed to be the location of the immovable property. In such cases, a Polish service provider issues an invoice to the foreign service recipient with a notation regarding the reverse charge mechanism, without indicating the value or rate of tax. It is the responsibility of the service recipient – provided they are an active VAT taxpayer registered in their country – to account for such tax.


In summary, it should be emphasized that intra-community transactions – despite additional obligations regarding VAT settlement – should not hinder the development of business activities. However, when conducting such transactions, it is important to remember the general principle of VAT EU registration and the exceptions that apply to it.