Continuous supplies and tax point
In a judgment of 12 July 2017, court ref. no. I FSK 1714/15, the Supreme Administrative Court confirmed that the provisions regulating the tax point appropriate for services supplied on a continuous basis may be applied to a supply of goods. This judgment may give hope to taxpayers that the favourable case law of administrative courts in this regard will be established and the tax point will be deferred for supplies of goods which are accounted for in settlement periods.
The above judgment was given in connection with a request for a binding ruling interpreting the provisions of the tax law submitted by a taxpayer. The latter asked whether the tax point for the supplies of goods performed in settlement cycles would occur upon expiry of the last day of each settlement period, and consequently whether the proper exchange rate for translating the amounts used to determine the taxable base, denominated in a foreign currency, to Polish zloty would be the average exchange rate of a given currency published by the National Bank of Poland or the European central Bank for the last day preceding the last day of a settlement period.
In the judgment ending the procedure the Supreme Administrative Court noted that the supplies of continuous nature, as referred to in Article 19a paragraph 4 in conjunction with Article 19a paragraph 3 of the VAT Act, should be understood as a sequence of consecutive, separate supplies performed within a period longer than one month, if such supplies arise from the arrangements made between the contracting parties, or the agreements concluded by them, under which the supplier undertakes towards the purchaser to supply him strictly specified goods, according to the agreed plan. In consequence, if a taxpayer has the right to specify the tax point pursuant to Article 19a paragraph 4 in conjunction with Article 19a paragraph 3 of the VAT Act, then in the case of supplies of goods for which remuneration will be set forth in a foreign currency, in order to translate the remuneration into Polish zlotys, the taxpayer should apply the average exchange rate of a given currency published by the National Bank of Poland (or by the European Central Bank) for the last business day preceding the last day of a settlement period, in relation to all supplies performed in a given period.
The judgment may be significant for taxpayers. The ability to account for individual supplies of goods in the same way as in the case of supplies of continuous services makes tax settlements easier for taxpayers, who may issue one document for a number of supplies performed within a given period by regulating properly their contractual relations with counterparties. A taxpayer does not have to document every supply with a separate VAT invoice, determine correctly the tax point or the exchange rate for translating the amount of tax for each of the supplies performed.
Agnieszka Jasica-Skalbmierska, Tax Advisor, ATA Finance.