Intra-Community Supply – how to document it for the 0% VAT rate?

September 28, 2021

Intra-Community Supply (ICS)

The abbreviation WDT derives from Polish words: “Wewnątrzwspólnotowa Dostawa Towarów”. It means the Intra-Community Supply (hereinafter: ICS). The intra-community supply transaction is a transaction consisting in the export of goods from the territory of Poland to the territory of a Member State other than the territory of Poland. Additionaly, in order to consider a transaction as an intra-community supply, the following conditions must be met:

The ICS transaction is taxed with the 0% VAT rate

A tax obligation for the ICS arises at the moment of issuing an invoice. However, if the invoice was not issued in the month of delivery, the tax obligation arises no later than on the 15th day of the month after the delivery month (Article 20 paragraph 1 of the VAT act).

As a rule, the intra-community supply transaction is taxed at 0%. Nevertheless, application of the 0% preferential rate is possible only provided that the obligations specified in the VAT act are met, i.e.:

• The buyer of goods uses a valid tax identification number for ICS
• Before the deadline for submitting the tax return for a given period, a person making the delivery will have at least two non-contradictory evidences* that the goods have been exported from the territory of a country and delivered to the buyer
• The supplier of the intra-community supply of goods correctly submits  summary information (i.e. VAT-EU) containing correct data of the intra-community supply transaction

*Evidences required to confirm the intra-community supply transaction are, according to the regulation:

1. Group A: documents related to the shipment / transport of goods, e.g. signed CMR consignment note, bill of lading, VAT invoice for air freight or VAT invoice from the carrier of the goods;
2. Grupa B:

• insurance policy for the shipment / transport of goods or documents from the bank confirming payment for the shipment / transport of goods;
• official documents issued by a public authority that confirm the arrival of goods in the country of destination;
• notice of delivery issued by a warehouse in the country of destination confirming that the goods are stored in that Member State.

It is recommended that the seller has at least two evidences from group A. The second option is to have one evidence from group A and one from group B.

Example documents to confirm an intra-community supply

The most often problematic condition to be met by those who perform the ICS is completion of evidences regarding the confirmation of the delivery of goods. It  must be done until the date of submitting the declaration for the transaction period. Below we present a diagram of the procedure in which the transaction must be shown, depending on when we complete all the evidences entitling us to apply the 0% preferential rate.

For example: The taxpayer made an ICS transaction in August 2021. The complete set of evidences confirming the transaction was completed by:

If the documents do not reach the taxpayer within the time limits indicated below, the procedure will be as follows:

If the taxpayer receives the documents after November 26, the intra-community supply of goods with a 0% rate must be indicated in the VAT declaration in August by submitting an appropriate correction of the declaration. Additionally, it will be necessary to correct the VAT declaration for October. Then the value of transaction will be adjusted according to the tax rate in a given country.

Author: Agnieszka Siwa-Kogut

Tags intra-community supply transaction