The theft of goods does not exclude the deduction of input VAT on their purchase (judgment of the Supreme Administrative Court of January 22, 2021, reference number I FSK 2088/19)
The case concerned a company which stated that it sells goods to a contractor registered for VAT purposes both in Poland and in the Netherlands. Doubts, however, related to the goods that were to be the subject of intra-Community supplies to the Netherlands. In a joint application for an interpretation, the company and the contractor explained that there are situations in which goods intended to constitute intra-Community supplies are stolen during transport, even before they leave the territory of Poland.
The tax authority agreed with the position presented in the application that in the situation described above, due to the lack of export of goods outside Poland, the company should recognize the transactions not as intra-Community supplies but as domestic supplies within the territory of Poland. However, it did not agree that the company’s counterparty was entitled in such circumstances to deduct input tax. He argued that since, for the purposes of transactions with the company, he uses a VAT number assigned to intra-Community transactions in the Netherlands, it cannot be considered to be acting as a Polish taxpayer.
The Supreme Administrative Court questioned the position of the tax authority, judging that it had omitted in its considerations the issue of redefining intra-Community supplies for domestic delivery, which entails the necessity to indicate VAT at the rate appropriate for a given product on the invoice. Moreover, the Supreme Administrative Court indicated that it cannot be ignored that the company’s counterparty conducts taxable activities in Poland. He emphasized that the change in the nature of the transaction must have an impact on the legal and tax situation of the contractor, and for the right to deduct, it is sufficient that at the time of purchasing the goods, their purchase was made in order to use the products for activities subject to VAT.
Source Deloitte
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