Government Consolidation Package and VAT

During the negotiations on the government’s consolidation package held in the Chamber of Deputies, a great number of amendments were submitted. One of the most interesting amendments was probably the unification of the 12% VAT rate on the supply of newspapers and magazines, the wider application of the 12% tax rate to soft drinks, the supply of cut flowers or firewood, and above all, the very broad extension of the application of the 12% tax rate to medical devices/equipment. The consolidation package, on the other hand, introduces an unchanged ban on the application of VAT deductions for the purchase of passenger cars, even though the proposed amendment contains rather serious shortcomings disrespecting the neutrality of VAT.

Donation of Hard-to-Sell Goods

After an extended period of time, the General Financial Directorate has issued information on determining the tax base when donating goods that are practically unsellable. For such donations, the GFD will allow the tax base to be set at close to zero. In this information, the GFD also comments on the general rules for determining the tax base for the distribution of commonly traded goods.

Judgements of the CJEU

• In case C-453/22 Schütte, the CJEU ruled that the tax authority is obliged to reimburse the customer for VAT improperly invoiced by the supplier if the customer cannot recover it from the supplier because the relevant claim is time-barred. This is a decision that could have an impact on additional VAT assessment by the tax authorities and on the reversal of such assessments.
• In case C-461/21 SC Cartrans Preda, the CJEU did not allow the exemption of transport directly linked to importation in case of fraud, or unless it is proven that the value of the services was included in the VAT base of the imported goods. This is an opinion that could change the common interpretation of the rules for the exemption of services directly connected with importation.
• The CJEU also prepared a surprising answer in case C-180/22 Mensing, in which it described the determination of the taxable amount for the supply of works of art acquired by a dealer, intra-Community directly from the creators. The CJEU held that self-assessed VAT on the intra-Community acquisition of a work does not reduce the taxable amount because such tax is not (in purely linguistic terms) part of the purchase price of the work, although it is undoubtedly an expense for the dealer. This decision may have a significant impact on the tax treatment of sales of works of art.
• In case C-108/22 C. sp. z o.o., the CJEU addressed the application of the special scheme for travel services to the resale of hotel accommodation in its unaltered state. It concluded that such a transaction should be subject to the special scheme of taxation even though no additional services are added to the accommodation by the seller. In our view, this is not a ground-breaking decision.