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ICS with a break for enrichment. Destruction of part of goods does not preclude tax advantages


Intra-community supply of goods is in principle taxable at a 0% VAT rate. What, however, if certain additional works are performed on the goods in the meantime? The legislator has provided for this possibility. If certain conditions set out in implementing regulations are met, the sellers retain the right to apply the preferential rates. Nevertheless, each supply is different and may give rise to new doubts.

One of such doubts was faced by a textile importer who intends to sell textiles to customers in other EU states.  However, they will not be supplied directly to the customers. The purchasers will name companies in Poland which will make clothes out of the textiles. Subsequently, the ready-made clothes will be dispatched from the tailors’ warehouses to other EU states. And part of the materials will inevitably be destroyed during the process. The offcuts and scraps resulting from the sewing process will ultimately not be exported from Poland.

The seller wondered whether he would be allowed to apply the 0% rate to such supplies, and if so - whether the leftover material that will never leave Poland will be covered by it, too.

What do the regulations say?


The regulation on the goods and services on which the VAT rate is reduced and on the conditions for the application of reduced rates provides that the 0% rate is also applicable to a delivery of goods purchased by a taxpayer from another EU state where some services have been performed in respect of such goods prior to them being exported to another Member State.


The regulation sets out certain additional conditions to be met in such situations. It is necessary, inter alia, that payment is received into a bank account within 60 days of the product being released. The seller must also be in possession of documents showing that the materials subjected to further processing have eventually left Poland.

There is no provision, however, which requires that a statement be obtained from the purchaser that he has received the materials purchased in full. Even if some part of the materials has been destroyed in the process of the services performed on the goods, the seller is not required to determine the amount destroyed. The regulations do not impose an obligation upon the seller to verify whether the goods have reached their overseas destination in the original amount.

A single rate on the entire supply

Hence, the 0% rate will apply to the entire supply – including in respect of the leftovers which will not leave Poland. There is no need for a correcting invoice to be issued or such leftovers to be taxed at a 23% rate.

Destruction of some material is a natural consequence of processing. The regulations do not require that sellers incur such technological risk. The conclusions of this tax ruling can be applied to all kinds of services involving processing, tooling or enriching.

Private ruling of Head of the National Revenue Information Service of 13 July 2021 (case no. 0113-KDIPT1-2. 4012. 345. 2021. 2. JSZ).


Agnieszka Jasica-Skalbmierska, Tax Advisor, ATA Tax Sp. z o.o.

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