Chain transactions in trade with third countries: position of the Supreme Administrative Court

This article answers the following questions:

• How do the Supreme Administrative Court and Voivodship Administrative Courts differ in their interpretation of transport allocation in chain transactions?
• What is the significance of the moment when the right to dispose of goods as owner is transferred?
• What practical conclusions should taxpayers draw when analysing chain transactions related to the export of goods?

On 28 January 2025, the Supreme Administrative Court issued a judgment (case ref. I FSK 1389/21) concerning not only the recognition of chain transactions where the organiser of transport is the second entity in the chain, but also the interpretation of Article 22(2a) of the VAT Act – a provision crucial for many taxpayers exporting goods. The Court’s position sheds new light on several important issues, making it essential to examine and analyse its potential consequences for the application of preferential tax rates in Poland.

The Court held that in a chain transaction where the organiser of transport is the second entity in the chain, the key factor is the relationship between the first and second participants in the supply – not, as previously assumed, between the second and third.

This seemingly technical shift has significant practical implications – it determines which supply can be classified as an export and benefit from the 0% VAT rate when settling chain transactions.

What was the dispute resolved by the Supreme Administrative Court about?

The case that led to this landmark judgment concerned a Polish manufacturer of steel products who sold goods to a domestic intermediary. The intermediary then resold the goods to a final purchaser from a third country, while organising the entire transport directly from the manufacturer in Poland to the end recipient located outside the European Union.

The intermediary acquired the right to dispose of the goods as owner while still in Poland. The supply between the Polish manufacturer and the intermediary was made under Incoterms EXW and FCA, and the export to the final purchaser from the third country was carried out by the intermediary or on its behalf.

The Polish manufacturer therefore questioned whether, under these circumstances, it was correct to treat this sale as an export of goods and whether issuing invoices to the intermediary with a 0% VAT rate was compliant with the law.

Proceedings before the tax authority and the first-instance court

The Head of the National Revenue Administration Information Centre, in an individual interpretation, disagreed with the taxpayer’s position and the VAT rate applied.

According to the authority, in a chain transaction of this configuration, the supply between the Polish manufacturer and the intermediary is domestic, as the right to dispose of the goods as owner passes to the intermediary while still in Poland. Only the subsequent supply – from the intermediary to the final purchaser from the third country – is export. Consequently, in the opinion of the Head of NRAIC, the manufacturer should have applied the domestic VAT rate, not 0%.

However, the Voivodship Administrative Court in Poznań disagreed with the authority. It held that since the intermediary transfers the right to dispose of the goods as owner to the final recipient only after delivery to the third country, the movable supply (resulting in recognition of export) should be attributed to the first supply in the chain (between the manufacturer and the intermediary). The Court therefore ruled in favour of the taxpayer, finding that the first entity in the chain correctly recognised the export of goods and properly applied the 0% VAT rate.

This judgment was appealed by the Head of NRAIC, and the case went to the Supreme Administrative Court.

How did the Supreme Administrative Court address the VAT rate issue?

In its judgment of 28 January 2025 (I FSK 1389/21), the Supreme Administrative Court overturned the ruling of the Voivodship Administrative Court in Poznań and sided with the tax authority.

The Court stated that a proper analysis of Article 22(2a) of the VAT Act requires examining the delivery terms and determining when the right to dispose of the goods as owner is transferred between the entities involved in the supply chain.

If the facts and delivery terms of the chain transaction indicate that the right to dispose of the goods passes to the first purchaser while still in Poland – before the transport organised and paid for by the intermediary begins – then the first supply in the chain is an immovable supply (domestic sale). The second supply in the chain – accompanied by the physical movement of goods outside the country and the European Union, to the territory of a third country – constitutes a movable supply (export of goods).

The Supreme Administrative Court thus extended the scope of VAT analysis to the first supply in the chain, whereas the Voivodship Administrative Court had focused primarily on the relationship between the second and third entities (i.e., when and where the intermediary transfers ownership of the goods to the final purchaser). The highest court emphasised that it is essential to examine the entire supply chain and determine which transaction involves the physical dispatch or transport of goods outside the European Union.

The Court also noted that if, in a chain transaction involving the export of goods, the right to dispose of the goods passes to the intermediary while still in Poland (e.g., during collection of goods by the intermediary’s carrier at the seller’s production site), then the first supply is immovable and should be taxed domestically. Only the subsequent supply – made by the domestic purchaser to the foreign contractor – will be a movable supply, i.e., export within the meaning of the VAT Act.

This means that:

• the first seller (manufacturer) should settle VAT as a domestic sale,
• the second entity (intermediary), which carries out the export, may apply the 0% rate after meeting the statutory conditions.

The Supreme Administrative Court clearly stressed that in such cases, the first seller is not entitled to apply the 0% VAT rate, even if the goods actually leave the EU and the taxpayer holds a document confirming the export.

Practical impact of the judgment on analysing chain transactions

The judgment of the Supreme Administrative Court clearly shows that taxpayers must exercise caution. The provisions of the Polish VAT Act regarding the taxation of chain transactions involving the export of goods, where the second entity in the chain is responsible for transport, are ambiguous. The divergent positions of the Voivodship Administrative Court and the Supreme Administrative Court in the same case confirm the complexity of such analyses and how crucial it may be to seek assistance from advisers experienced in representing companies before tax authorities.

For taxpayers, the practical conclusion is clear: each chain transaction should be analysed individually, paying particular attention to the delivery terms, organisation of transport, and the moment when the right to dispose of the goods as owner is transferred between the parties in the chain.

Seemingly minor differences can completely change the tax qualification of a transaction, which in turn determines how it is taxed – including the right to apply the 0% VAT rate.