Tax law, case I SA/Po 454/10

August 15th, 2010, Tomasz Rychlicki

The Polish company offers its partners and customers different products free of charge during its advertising actions. These are coffee and coffee machines or gadgets such as umbrellas, pens, mugs and other gifts such as shirts and other stuff with the logo of the company. The Company has considered whether this type of gratuitous transfer of goods is a transaction subject to VAT tax in accordance with article 5(1)(i) and 7(2)(3) of the Act on Goods and Services Tax – GSTA – (in Polish: ustawa o podatku od towarów i usług) of 11 March 2004, Journal od Laws (Dziennik Ustaw) No. 54, item 535 with subsequent amendments.

Article 5
1. The goods and services tax, hereinafter called “the tax”, shall be charged on:
i) supply of goods and services for a consideration in the territory of the country;

Article 7
2. The supply of goods, referred to in Article 5.1.1, shall also mean the transfer by a taxable person of goods constituting the property of his undertaking for the purposes other than those related to the undertaking operated by a taxable person, in particular:

i) transfer or use of goods for private needs of a taxable person or that of his employees, including former employees, partners, shareholders, members of a cooperative and their household members, members of decision-making bodies of legal persons, members of associations,

ii) any other transfer of goods without consideration, in particular donations

– where the amount of input tax on those transactions was wholly or partially deductible from the amount of output tax.

3. The provision of paragraph 2 shall not apply to printed advertising and informational materials, gifts of small value or samples.

The Voivodeship Administrative Court in Poznań in its judgment of 10 August 2010 case file I SA/Po 454/10 held that such transfer of goods is not subject to VAT.