Poland: Excise duty regulations compliant with EU directive, VAT on chain transactions (CJEU action)

The KPMG member firm in Poland has prepared reports about action by the Court of Justice of the European Union (CJEU) with respect to the following excise duty and valued added tax (VAT) issues.

• Polish excise duty regulations compliant with EU directive: The Advocate General of the CJEU on 7 July 2022 released an opinion that the European Commission's complaint that Poland breached Council Directive 92/83/EEC (harmonization of excise duties on alcohol and alcoholic beverages) and infringed the principle of proportionality—by imposing the requirement that ethyl alcohol used for the production of medicines is moved under a duty suspension arrangement in order to benefit from the exemption from excise duty—should be dismissed. The Commission argued that the requirement infringes the principle of proportionality because the duty suspension procedure is more burdensome for traders than the refund system. The Advocate General found that the Commission adduced no evidence to support its argument. The case is: European Commission v Republic of Poland (C-166/21)
• VAT on chain transactions: The CJEU on 7 July 2022 held that Council Directive 2006/112/EC (common system of value added tax (VAT)) does not preclude legislation of an EU Member State under which an intra-community acquisition of goods is regarded as having been made within the territory of that EU Member State, where that acquisition, which constitutes the first stage in a chain of successive transactions has been wrongly classified as a domestic transaction by the taxable persons involved, who have used their VAT identification number allocated by that EU Member State for that purpose, and the subsequent transaction, which has been wrongly classified as an intra-community transaction, has been subject to VAT as an intra-community acquisition of goods by the purchasers of the goods in the EU Member State in which the transport of the goods ends. However, that provision, read in the light of the principles of proportionality and fiscal neutrality, precludes such legislation of an EU Member State when the intra-community acquisition of goods which is regarded as having been affected within the territory of that EU Member State results from an intra-community supply of goods which has not been treated as an exempt transaction in that EU Member State. The case is: B. v Dyrektor Izby Skarbowej w W. (C-696/20)

Read a July 2022 report prepared by the KPMG member firm in Poland