On 1 August 2025, the CJEU issued a judgment in a Polish case (ref. C-602/24), resolving key doubts regarding the qualification of a transaction for VAT purposes when there is a discrepancy between the parties' original arrangements and the actual movement of goods. The ruling concerns a situation where the Polish supplier originally declared the transaction as an intra-Community supply of goods (ICS), but the goods were ultimately exported outside the EU by the buyer without the supplier's knowledge. Evidence of the export outside the EU customs territory was obtained by the tax authority itself in an attempt to impose 5% domestic VAT for this transaction.

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Case context

The course of events in the case aptly reflects the challenges faced on a daily basis by companies involved in international trade. The Polish company W. sp. z o.o. sold apples to the British company A.E. LP (registered for VAT in Latvia), assuming delivery of the apples to Lithuania. The transaction was declared as an ICS with a rate of 0% in view of the CMR signed by the carrier.

The problem arose when it turned out that the buyer – acting contrary to the original arrangements and without agreement with the Polish supplier – transported the goods not to Lithuania, but to Belarus. The Polish tax authorities, having at their disposal customs documents confirming the actual export of the apples outside the EU, questioned the classification of the transaction as ICS and the application of the 0% rate. They considered that since the goods had not reached another Member State, there could be no ICS, and thus the transaction should automatically be taxed as a domestic supply (VAT 5% + sanction 30%).

The situation gathered pace when the Provincial Administrative Court in Warsaw decided that, despite the formal deficiencies, indirect export had taken place and applied the 0% rate. The Supreme Administrative Court did not agree with this assessment – it pointed out that since export was not assumed at the time the agreement was concluded, the supplier could not later change the qualification of the transaction. As a result, the case returned to the Provincial Administrative Court in Warsaw, which referred preliminary questions to the CJEU.

What does the CJEU say about this?

The CJEU ruled that a supply of goods may be deemed to be an export, even if the export outside the EU took place on the initiative of the purchaser and without the knowledge of the supplier – provided that the material prerequisites for export are met, i.e. the goods actually left the territory of the EU. Importantly, the initial intention to make an ICS does not exclude the possibility of applying the 0% VAT rate applicable to export if the goods are ultimately exported outside the EU.

The CJEU also emphasised that the tax authorities have the right to investigate the risk of abuse, even if it was the contractor who was responsible for exporting the goods outside the EU. At the same time, it recalled that the application of the 0% rate requires the possession of reliable and consistent documents confirming the export – their quality and content are crucial for assessing the right to apply the 0% rate.

It is worth noting that the CJEU referred to a situation where the export had been “established by the tax authorities on the basis of customs documents”. In this case, it was the authorities who established that they had customs data indicating that the export clearance had taken place which closed the discussion on whether the export had effectively taken place. However, in practice – in accordance with the established case law of the Polish courts and, above all, the wording of the legislation – also other evidence, such as shipping documents, commercial correspondence or receipts, may confirm export and provide the basis for applying the 0% rate.

Significance of the judgment for practice

The CJEU judgment is an important support for taxpayers who may find themselves in a situation where the assumed course of transport changes (due to fortuitous reasons, e.g. an accident on the route already outside Poland, or at all after the contractor's decision without consultation). The key points in light of the ruling are:

  • The actual movement of the goods– this determines the classification of the transaction, not the intentions of the parties.
  • Evidence of export– documents/evidence of the actual and full course of the transaction are key to determining VAT consequences. Fragmentary knowledge or relying on the original order without verifying the final shape of the transaction (place of receipt, receiving party, etc.) / transport (including who ordered it) may prove to be a trap.
  • Flexibility in approach– tax authorities cannot automatically deny the right to apply the 0% rate simply because the supplier was unaware of the diversion of the supply from ICS to export. Since the error resulted in the reclassification of the object of the transaction to export (and there is evidence of this), the application of the rate ‘as for a domestic supply’ is unjustified. The objective of the tax authorities should be the correct taxation of the transaction, not profligacy.
  • Due diligence is the key to success – the stage of verifying the correctness of VAT settlements involves an assessment of due diligence. On the one hand, it is important for the tax consequences of the transaction, on the other hand, for those involved in its execution and settlement. The company's security and one's own security require adherence to certain standards and the use of good practice in business and accounting and tax processes. Where the buyer is “responsible” for the transport from a VAT perspective (Incoterms of groups “E”, “F”, “C”), the level of vigilance and the extent of verified data for individual delivery models should be increased.

The judgment will also be important for those taxpayers whose right to apply the 0% VAT rate in analogous situations has been challenged by the tax authorities. After its publication, it will be possible to file a complaint for the reopening of administrative court proceedings or an application for the reopening of tax proceedings – depending on the stage of the dispute. Those taxpayers who have not yet concluded their disputes have gained an additional weapon.

The CJEU, through the judgment in question, has had the opportunity to remind us of the key principles that statute the EU VAT system. Knowledge of the course of transactions is fundamental. The 0% rate in exports is the rule - the taxpayer is entitled to it as long as he proves that the goods have left the EU. Seeking to impose a national rate should not occur as a matter of principle – as long as there are no objections to the course of the transaction. Challenging the rate can only occur in cases of fraud or abuse.

If you wish to adapt your documentation practices and processes to the current standards and requirements set by the Polish tax authorities, or to streamline your procedures so that the accounting and tax department receives the most correct and complete data necessary for settlements, we invite you to contact our experts from the Indirect Taxes Team.

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