Poland: ECJ rules Polish VAT law on intra-Community acquisitions is contrary to EU VAT Directive and may result in refund of unduly paid interest

Local contact

EY Global

30 Mar 2021
Subject Tax Alert
Categories Indirect Tax
Jurisdictions Poland European Union

The European Court of Justice (ECJ), in judgment C-895/19 of 18 March 2021, has confirmed that the Polish Value-Added Tax (VAT) law which does not allow taxable persons to deduct input VAT resulting from intra-Community acquisitions of goods due to late reporting of output VAT is against the European Union (EU) VAT Directive.

The ruling has a significant impact for all entities reporting purchases of goods and services in Poland as they are now entitled to apply for a refund of unduly paid interest and report these transactions neutrally (i.e., with no additional charge of VAT or interest).


Based on the current provisions of the Polish VAT Act which came into force in 2017, a taxpayer is able to deduct VAT on an intra-Community acquisition without additional charges, only if it reports the output VAT within three months in the same VAT return in which it reports the input VAT and if it has received the relevant purchase invoice within three months from the tax point date. 

As a result of the above, if despite the purchaser’s good faith, it failed to report the transaction in the correct period (e.g., due to not receiving the relevant invoice on time), the taxpayer was obliged to report output VAT retroactively and report input on a current basis. As a result, the taxpayer was obliged to pay interest for the period between those two periods.

As the application of these rules has been denied by the ECJ, there is an opportunity for the entities reporting intra-Community acquisitions in Poland to change their settlements by reporting output and input tax in the same period without additional charges. In addition, they may now apply for the overpaid interest resulting from the Polish rules that are inconsistent with the EU law.

It should be noted that the same condition i.e., necessity to report output VAT within a three-month period, is also required to neutrally report other transactions settled under the reverse charge mechanism, i.e., import of services and local supplies for which the purchaser settles VAT using the reverse charge. As a result, although the ruling refers solely to intra-Community acquisitions in Poland, there is a strong position to claim that the above-mentioned process should also apply to these transactions.

For additional information with respect to this Alert, please contact the following:

EY Doradztwo Podatkowe Krupa sp. k., Warsaw
  • Dorota Pokrop 

  • Tomasz Dziadura 

  • Mateusz Machalski 

  • Renata Lapinska

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.