On 10 March 2022 the District Administrative Court in Warsaw (‘WSA’) issues a judgement(III SA/Wa 1806/21) in which it repealed the decision of the tax authorities and admitted that the Amazon VAT Transactions Report in the Excel format may be treated as a document allowing for the application of the 0% rate to the intra-community supplies of goods (‘ICS’).
The entrepreneur was represented by the Tax Advisor Magda Olszewska.
The dispute related to the entrepreneur, carrying out sale through the platform Amazon with the use of the FBA (Fulfilment by Amazon) option. Following an audit, the tax authority questioned the right to apply the VAT rate of 0% on the intra-community transfer of own goods carried out by Amazon from the Polish warehouses to the warehouses in other EU Member States. According the tax office, the submitted Amazon VAT Transactions Reports were not sufficient to charge VAT at the rate of 0% on ICS.
The tax office issued a decision, in which it requalified the turnover reported as ICS in the VAT returns to sales subject to the taxation with 23% rate.
The entrepreneur submitted the appeal to the WSA.
The WSA dismissed the decision of the tax office. According the WSA, Amazon is an entity responsible for the transport of the goods of the entrepreneur and the lists generated by Amazon should by treated as “specification of the items of cargo”, as mentioned in the provision of section 42 (3) (3) of the VAT Act. The WSA held, that it cannot be reasonably expected from the entrepreneur to submit the CMR document, printed and containing the signatures and stamps of the managers of the warehouses in Poland as well confirming the delivery to the destination in the Amazon’s warehouse in another EU member state. The WSA pointed to the necessity of considering of the specifics of the world’s e-commerce trade using the automated warehouses by evaluating evidence gathered by the entrepreneur to prove his eligibility to apply the VAT rate of 0%.
The tax office may raise doubts concerning the content of the Amazon VAT Transactions Reports. Nevertheless, in such a situation the tax office, according to the WSA, should have applied the same evidence rules, that are used to other consignment notes, i.e. submit a request to clarify the doubts to Amazon as the carrier.
Sellers on Amazon, who decide on selling with the use of the FBA option, are authorizing Amazon to allocate and store any of theirs FBA inventory in any of all the countries covered by the option. Amazon, according to its own algorithm, allocates the inventory of the seller’s storage across its European fulfilment network in those countries that the seller has enabled for inventory placement, in order to meet the anticipated future demand of customers.
All the allocations of the inventory of the seller’s storage between different EU member states are events subject to VAT taxation. They constitute the so-called intra-community transfers, being subject to taxation as ISC in the country of dispatch and intra-community acquisition in the country of destination.
The ICS from Poland are subject to taxation with the VAT rate of 0%, provided that all of the conditions mentioned in the provision of section 42 of the VAT Act are met. One of the conditions is the obligation to posses the evidence confirming that the taxable goods have been transported from Poland and delivered to an acquirer in another EU member state (section 42 (1) (2) of the VAT Act).
In the business practice it is customary, that the consignment notes, in particular the CMR documents, are treated as such evidence. However, the Amazon sellers do not get such documents. Amazon makes available to the entrepreneurs registered on its platform only automatically generated lists of all transfers in the .csv or .txt. format, the so-called Amazon VAT Transactions Reports.
In our tax practice we have experienced that that the tax authorities, carrying out the tax audits by the entrepreneurs who sale through Amazon with the use of the FBA option, commonly do not approve of the submitted Amazon VAT Transactions Reports as documents confirming the right to apply the VAT rate of 0% on the ICS. The standpoint of the tax authorities poses enormous tax risks to all the Amazon sellers using the FBA option, considering the fact that the amounts of the inter-warehouse transfers carried out by Amazon are often significant.
The concerned judgement is good news for the Amazon sellers. It means, that the practice of tax authorities of questioning the right to apply the VAT rate of 0% on the basis of the Amazon VAT Transactions Reports does not comply with the law. In case of the dispute with the tax authorities there is a good chance to obtain a judicial decision that is positive for the taxpayer.
How can we help you?
We are representing our clients in tax audits and tax proceedings as well as before the administrative courts. If you also experience problems with the tax office with regard to questioning of the validity of the submitted Amazon VAT Transactions Reports, we are offering our help in the dispute with the tax office.
My name ist Magda Olszewska. I’m Polish Tax Advisor and leader of the Olszewska Tax Consulting. I write posts regularly for our blog on the tax issues which we deal with in our praxis.
If you have any questions or would like to inquire about our advisory services, please feel free to contact me.
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