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Consignment stock for intra-EU trade

  • Description

Date: 2011-04-22 15:37

In many cases foreign investors which plan sales of goods in Poland may face problems with understanding the Polish tax regulations, particularly the VAT Law. Although the Polish VAT Act is to some extent harmonized with EU provisions, some derogations are still allowed and full harmonization has not been yet achieved.


For entrepreneurs tending to simplify the tax procedures relevant to the process of bringing goods to Poland, the idea of “call-off stocks” may be a solution. Setting up such stock in Poland can facilitate the business of both the foreign entrepreneur and his Polish contractor. “Call-off stock” should be located near or directly on the site of the final purchaser of the goods, whilst permanent access to parts or semi-finished products needed in the production process must be ensured.

Consignment warehouses under the Polish VAT Law

Pursuant to the amendment to the Polish VAT Law introducing the concept of “call-off stock” (December 2008), it is possible to use a special simplified procedure for settlement of tax on intra-Community acquisition of goods with the use of a consignment warehouse (“magazyn konsygnacyjny”).

Consignment warehouses shall be understood as a separate place held by the Polish taxpayer (registered as a EU VAT payer) for the storage of goods belonging to the foreign supplier. These goods are moved by the supplier from the territory of EU to the place in Poland, from which the Polish entity may collect them. It should be emphasized that until such time, the goods are owned by the foreign supplier and ownership is transferred to the Polish entity only when it receives the goods from the store.

The consignment warehouse may also release the foreign entity from the obligation to register for VAT in Poland and to move the obligation of reporting intra-Community acquisitions to the Polish purchaser. What is more, the responsibility to declare the arriving goods to the Intrastat authorities is also passed on to the customer controlling the warehouse facility.

The simplified settlement procedure described above shall apply under the conditions that:

  • the foreign supplier must not be registered for Polish VAT purposes;
  • goods are intended for production or service activity, excluding trade purposes;
  • only one purchaser can take goods from the stock;
  • the warehouse owner should notify the head of the local tax office of his intention to keep the consignment warehouse before the first delivery of goods into stock;
  • the warehouse owner should keep records of goods delivered to the warehouse, such as: date of their entry, date of collection of goods from the warehouse and data allowing the identification of the warehoused goods.

Before the first delivery, the warehouse owner should inform the tax office (in writing) about the intention of running a consignment stock. Such a notification should include:

  • declaration of the supplier’s intention to move the goods to the consignment warehouse;
  • information regarding the supplier of goods and the stock keeper – i.e. the names of these entities, their business addresses and identification numbers used for VAT purposes as well as the address of the consignment warehouse.

If the notification to the tax office does not meet all the requirements, an extension of an additional 7 days may be allowed to rectify this. The stock keeper shall also notify the revenue office in writing of any changes concerning the data contained in the notification within 30 days from the date of such a change.

It is worth noticing that as a result of the displacement of goods within the Polish territory by a foreign supplier to the consignment warehouse, the tax obligation related to the intra-EU acquisition of goods does not arise at the time of shipment of the goods to the warehouse. It is postponed to the moment of collection of the goods from the warehouse, but no later than until the date of issue of the invoice covering the goods being sold. If the goods stored are not collected within 24 months from their entering into the warehouse, it is assumed (for tax purposes) that these goods are collected on the first day after such period.

If the stored goods go missing or are totally destroyed, they are deemed to have been removed on the day when they left the warehouse or were destroyed or - if it cannot be determined – on the day when it was found out that they were missing or had been destroyed.

In case of the use of the goods stored in the consignment warehouse before their withdrawal from the warehouse, it shall be understood that they are collected when usage commences.

Conclusions

The concept of call-off stock described above may be suitable for foreign contractors, due to the following reasons:

  • it eliminates the need to register for VAT in Poland by foreign companies moving goods to Poland for their further sale;
  • it moves forward the obligation for reporting intra-Community acquisition of goods until the time of collection of goods from the warehouse by the buyer;
  • it moves the obligation for reporting intra-Community acquisition of goods from a foreign entity to a Polish  stock keeper.

Source: Trinity Corporate Services (click here)
Market leader in trust services including company formation, shelf companies, accounting, payroll and management services.