Excise duty drawback NOT possible on cars exported outside Poland?
June 14, 2023
Companies that import passenger cars from abroad and then sell them to another country, may have difficulties in getting the excise duty drawback. Drawback is a reimbursement of Polish excise duty. It does not matter whether the country of sale is within or outside the European Union. All due to the judgment of the European Court of Justice of May 17, 2023 (C-105/22) which our tax advisor will analyze for you today.
A dispute over the return of excise duty for a car sold
The essence of the dispute was Art. 107 of the Excise Duty Act. Pursuant to this provision, a taxpayer who had purchased a car previously unregistered in Poland and settled the excise tax due, and then made an intra-Community delivery or export of this vehicle, has the right to a refund of the previously paid tax. For many years, the tax authorities have been refusing to refund excise duty to Polish taxpayers. They claim that this precludes any earlier registration of the car. Entrepreneurs did not agree with this approach, arguing that cars imported from abroad are registered only for a certain period of time – only for the purpose of later export outside the country. They pointed out that the road traffic law clearly links the registration of a vehicle with the issuance of a registration certificate for it. In the case of the so-called export registration, the owner of the vehicle does not receive such proof. It is just about enabling the car to be exported outside of Poland.
Double taxation with excise duty on the same vehicle?
Cases have been heard many times by Polish courts, where taxpayers lost many times. One of the disputes was finally resolved by the Court of Justice of the European Union. This time, the case concerned a Polish entrepreneur who purchased a car, paid excise duty on it, and then – after a few months – decided to sell the car to an entity from Norway and thus export it outside Poland. He believed that in this case he should be reimbursed for the excise duty paid, at least in part. Otherwise, the same vehicle may be taxed twice with this tax – once in Poland and once in Norway.
CJEU: the Polish tax office can refuse to return the excise duty
The CJEU sided with the Polish tax office. In the judgment, the Court pointed out that excise duty on cars is not subject to harmonization in the European Union, so our country has the right to freely shape regulations in this area and introduce its own conditions, on which the right to excise duty refund depends. It is crucial that they apply to all vehicles, regardless of their origin. Therefore, in the opinion of the CJEU, art. 107 of the Excise Duty Act, may constitute grounds for refusing to return the excise duty.
Is there a chance to recover excise duty on cars sold abroad?
It should be noted that the CJEU issued a judgment in relation to one specific situation. In this case several months passed between the registration of the car in Poland and its export to Norway. Such a time interval could indicate that it was an ordinary registration, the purpose of which is to definitively admit the vehicle to traffic in Poland. Potentially, there is a chance to recover the excise tax on cars that are sold outside our country, immediately after the first purchase, i.e. without actually “using” them in Poland.
