Voivodship Administrative Court in Warsaw (hereinafter: “Court”) in its judgment of 10 March 2022, case no. III SA/Wa 1806/21, commented a problematic issue concerning entities using Amazon’s logistics services and the recognition of Amazon’s reports. The court confirmed that they constitute sufficient evidence of an intra-Community supply, entitling them to apply the 0% rate in ICS.

FACTUAL STATE

In the present case, during a tax inspection, the authority questioned the correctness of the reported intra-Community transactions. As a result of the tax proceedings, the taxpayer obtained a decision determining the amount of the tax liability and, of course, establishing an additional tax liability for this period due to an understatement of the amount of tax due.

The transactions concerned non-transit movement of own goods (hereinafter: “NTMOOG”), as defined in Article 13(3) of the VAT Act – from the territory of Poland to the territories of other Member States, which the taxpayer reported as ICS taxed at the rate of 0%.

Evidence of transactions referred to in Article 42(1) para. 2 of the VAT Act, i.e. evidence that the goods being the subject of intra-Community supply were transported out of the territory of the country and delivered to the purchaser in the territory of a Member State other than the territory of the country, in the present case were to be Amazon reports in the form of Excel files.

Although the judgment itself does not explicitly state that the Amazon reports were the subject of the dispute – the judgment has been anonymised to ‘A’ – this fact was nevertheless confirmed in a publication by the Applicant’s representative.

These files were records as to the identity of the goods (its code. type, quantity, description), as well as information on the country of departure of the goods and the country of supply. In the opinion of Director of the chamber of fiscal administration (hereinafter: “DIAS”), the evidence so presented did not confirm that the goods had actually left the territory of Poland and arrived in the country of their destination.

Moreover, the taxpayer did not submit any VAT invoices confirming the NTMOOG, nor any documents or evidence that the goods which were the subject of the intra-Community supply had been exported from the territory of the country and delivered to a purchaser in the territory of a Member State other than the territory of the country. However, the authority had no objection either to the form of the reports (Excel files) or to the authenticity and originality of the reports submitted. 

Therefore, in the opinion of the authority of first instance, the Party should tax the above transactions at the basic rate of 23%.

The subject of the dispute in the present case therefore boils down to the issue of the Party’s right to apply the 0% rate to NTMOOG transactions from the territory of Poland to the territories of other Member States due to documenting the transactions in question with Amazon reports.

WHAT DOES THE Court SAY?

The Court, setting aside the decision in the appealed part, acknowledged that the authority violated the principle of objective truth and the principle of trust (Article 274c of the Tax Ordinance) by arbitrarily deciding that the reports were insufficient to confirm the movement of the Party’s goods under ICS and by failing to take uncomplicated evidentiary steps, i.e. requesting explanations from the Party’s counterparty – Amazon (which should be treated as a transporter), which could dispel the authority’s doubts. Tax Office, by refusing to acknowledge the evidentiary value of the submitted reports from the Amazon platform without providing convincing justification, violated the rules of evidence.

At the same time, the Court agreed with the Taxpayer that in the case of NTMOOG, the Taxpayer was obliged to issue an invoice, but the lack of such an invoice does not condition the fact of transfer of goods and thus the possibility of applying the 0% rate – as the invoice in itself is not evidence of ICS and transfer of goods between countries.

In the Court’s opinion, it is unquestionable that the report on inter-warehouse transfers made by Amazon should be treated as a document referred to in Article 42(3)(1) of the VAT Act, i.e. as a ‘transport document received from the carrier (forwarder) responsible for the export of goods from the territory of the country (…) where the transport of goods is commissioned to the carrier (forwarder)’.

Moreover, also the regulations submitted by the Taxpayer “Guidelines of the pan-European program implemented by A.” confirm that Amazon is the entity responsible for the transport of the Company’s goods between the platform’s warehouses located in different Member States.

It follows unequivocally from these regulations that the Taxpayer cannot require other documents to be issued at its request, with different content than the reports submitted so far – there can therefore be no question of any negligence on the part of the Taxpayer consisting in the fact that it could have obtained more precise reports or other documents from Amazon, but neglected to take advantage of such an opportunity.

With regard to the CMR, the Court rightly pointed out that it is not the only form of documenting ICA – it cannot therefore be absolutely required of the Taxpayer, however, in the Court’s view, the same rules of evidence that apply to other consignment notes, in particular the CMR, should be applied to assess the evidential value of Amazon reports. The content of the consignment note may therefore be assessed under Articles 180(1), 187(1) and 191 Tax Ordinance.

In the Court’s view, there is no reason for the authority not to clarify its doubts as to the content of the report and to uncritically trust the report, especially as it is not signed or authenticated by anyone. This is all the more justified as the authority submits that there is no mention in any part of these documents that Amazon transported the disputed goods.

Moreover, in the present case, the DIAS required the Party to produce other documentation when it is known that the Party has not obtained other documentation from Amazon and cannot obtain it, and the Party has no such legal possibilities to verify the reliability of Amazon’s issuance of reports.

The court also noted that the wording of the Party’s guidelines for cooperation with Amazon shows that “It is important to note that we are obliged to make available information on transactions and entities in progress in justified cases, e.g. at the request of government institutions or regulatory authorities with jurisdiction over A.”

However, it is not clear from this sentence whether Amazon is obliged to make additional transaction confirmations available directly to a customer who has been obliged to do so by an authority or only if it is the authority itself that makes the request, which it is not only entitled to do, but also obliged to do under Article 187 § 1 of the Tax Ordinance.

In the present case, however, the Court drew attention to Article 122 of the Tax Ordinance, which prescribes the pursuit of objective truth, which should be understood to mean that in the event of doubts as to the completeness and reliability of the consignment note, the authority may and should ask the carrier to clarify the authority’s doubts – which was in fact lacking in the present case.

CONCLUSIONS

The judgment itself also makes several key statements regarding the NTMOOG:

• in this case there is neither a supplier nor a buyer, as there is no transfer of the right to dispose of the goods as owner;
• for reasons of ‘appropriateness of application’ in the case of NTMOOG, some of the regulations contained in Article 42(1) to (4), (11) and (12) of the VAT Act must be disregarded, e.g. regulations concerning commercial correspondence and payment for goods, due to the fact that the taxable person will not correspond with himself and will not pay himself;
• it is not possible to present a document that confirms the export of goods from Poland and their delivery to a purchaser in the territory of another Member State – as there is no purchaser to whom such goods would be delivered;
• Article 42(14) of the VAT Act must therefore be read as meaning that a taxpayer, before the expiry of the deadline for submission of the tax return for a given accounting period, has in his possession evidence that own goods which are the subject of an ICS have been exported from the territory of the country and delivered (instead of to the “purchaser”) to the taxpayer’s warehouse or to a warehouse leased by the taxpayer, in the territory of a Member State other than Poland;
• Thus, the Amazon reports can provide documentary evidence of the applicability of the 0% rate for NTMOOG.

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The Court judgment finally gives hope for a quicker resolution of the problematic issues related to one of the world’s largest online commerce platforms, Amazon. Not only is it valid, but it was also confirmed by the judgment of the Supreme Administrative Court of 2 December 2022, which further emphasised that “the Act does not specify what form the transport document confirming the export of goods is to take as well as that “the taxpayer may use and present various forms of documents to confirm non-transit movements of goods, as long as they show that the goods have actually been exported from Poland.” The court of first instance, while emphasising the importance of establishing that the substantive prerequisites of Article 13(1) and (3) of the VAT Act are met, noted that in the sphere of documenting such transactions, the changing rules and specifics of online trading must be taken into account, which – due to the wide scope of transactions carried out in this form and the participation of many entities – may prevent individual taxpayers from coming into possession of typical documents, e.g. CMRs, due to the simultaneous movement of goods of many suppliers by entities organising the entire turnover of goods.”

The number of disputes regarding the proper documentation of transactions is indeed high – something we ourselves also encounter in our practice. Given the volume of transactions through the Amazon platform, and thus how many taxpayers are indirectly affected by the case in question – despite the unfavourable decisions issued by the authorities, this judgment confirms that such actions by the authority are not lawful.