UK company supplies goods under Polish VAT reg.

Polish VAT on goods supply in Poland by UK Co A, to UK Co B, with delivery to B’s Polish customer

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Company A is an established UK company trading goods (raw materials) internationally B2B. It is registered for VAT in Poland (as well as in UK) but has no place of business in Poland. It owns stock stored in Poland, in a third party warehouse, on which full Polish import VAT and duties have been paid at time of import.

Co A is approached by a UK company (B) who want to buy goods and have them delivered by A to B’s Polish customer (C) from A’s stock held in Poland. It is B who will pay A for the goods. What VAT treatment should A apply when it invoices B?

The goods are located in Poland, so the place of supply is Poland, so this is outside scope of UK VAT but within scope of Polish VAT. The goods never leave Poland, so this is a Polish domestic supply. It seems therefore that Polish VAT (23%) should be charged by A on the invoice it issues to B in the UK. (B however will have great difficulty reclaiming PL VAT if it is not itself registered for VAT in PL.)

Company A is not in any way connected with B nor with C.  And this is not triangulation as the goods do not move between EU states.

Is it correct that A should invoice B under A’s Polish VAT registration number, rather than under its UK VAT registration, and charge Polish VAT?

Thank you, especially if you are able to answer this!

Replies (5)

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VAT
By Jason Croke
17th May 2022 14:48

Nicely detailed question and yes, you are correct.

Company A owns stock in Poland and sells it to Company B (goods still in Poland), therefore Company A must charge Polish VAT to Company B (Company A charging Polish VAT and declaring on their Polish VAT return, not on their UK VAT return). This is a Polish/domestic sale, no movement of goods across borders.

Company B actually acquires the goods in Poland (from Company A) and Company B makes a supply to Company C in Poland of those goods, so Company B is required to register for VAT in Poland, it can then i) reclaim the VAT that company A charges it and ii) charges Polish VAT to Company C as a domestic (Polish) transaction. Company C presumably can reclaim Polish VAT if it is VAT registered.

Triangulation saved all of the above faff, without triangulation, you have to do the faff.

As ever with VAT, you have to slow the transaction down and look at what is happening in slow-mo and we follow the ownership/title, where the respective parties companies are established is not altogether relevant, but we look at where the goods are when title changes and it seems everything takes place in Poland, therefore Polish VAT rules in play, nothing to do with the UK/Outside the scope of UK VAT.

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Replying to Jason Croke:
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By Graham Pears
17th May 2022 15:17

Brilliant Jason, thanks, and for such a rapid response. It seems to me that these things can become quite fiddly, but then going back to fundamentals helps unravel things even when at first impressions the correct solution does feel right. Co B presumably assumed this would be a neat move and save on freight charges etc - but unless they are registered in Poland they may get a bit of a shock. C'est la vie!
Thanks again.

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Replying to Graham Pears:
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By WhichTyler
17th May 2022 16:03

Alternatively, A supplies (and invoices) C for the rate agreed by B (all with Polish VAT which C recovers) and pays B a commission (which may be subject to UK VAT or not...)

B presumably doesn't want to lose customers to A, but also can't recover the VAT unless it registers in Poland. So B has to reduce its margin either way (either from irrecoverable Polish VAT, or admin cost of registering in Poland, or sharing profit with A); their choice...

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Replying to WhichTyler:
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By Graham Pears
18th May 2022 09:45

Thanks for that thought Which. I hadn't considered that but it may be a very neat solution either in this case or in the future.
All best, Graham P

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Replying to Jason Croke:
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By D V Fields
18th May 2022 12:33

Great question and answer. We would all do well to reference this for the future.
Thanks to both.

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