Sales support programs vs. VAT
Sales support programs are often used by taxpayers to increase the volume of goods or services sold.
The programs give rise to tax-related problems (e.g. division of services and taxation of free gifts or discounts).
Recent case law provides taxpayers with new opportunities for more tax-efficient accounting of sales support programs, for example with respect to:
- providing buyers with additional goods when certain requirements are met (discounts in the form of goods vs. cashback).
- handing out ‘gifts’ to buyers as part of promotional campaigns – a new approach taken by the CJEU.
Providing buyers with additional goods when certain requirements are met, e.g. a ‘buy 3 and get 1 free’ discount
According to the Supreme Administrative Court’s new position, in a situation where a company offers its customers discounts for goods free of charge if they meet certain purchase-related criteria (e.g. exceed a certain quantity), the entire transaction should be treated as a whole.
There will be no gratuitous supply of goods (no obligation to account for output VAT when the goods are given away).
Accordingly, VAT should not be charged separately on the goods sold and goods given away, but on the transaction as a whole.
This solution is fiscally favorable for traders, although an approach adopted by the taxpayer must be duly supported.
Giving free gifts to buyers as part of an offer
This solution is fiscally favorable for traders, although an approach adopted by the taxpayer must be duly supported.
Giving free gifts to buyers as part of an offer
In a situation where a company, selling its products or services, additionally provides its customers with a free gift of a value exceeding PLN 200 (e.g. a gift in the form of a bag, tablet or loudspeaker is added to the purchase of a product) – in the light of the new position adopted by the CJEU, the entire transaction may be treated as a whole, even if the gift is of considerable value.
Consequently, there is no free transfer of goods (gifts). From a business point of view, gifts often increase the volume of the main sale.
As a result, the taxpayer can deduct the input VAT on the gift without having to account for the VAT due on the gift.
How can we help you?
If you are interested in using sales support programs in a more tax efficient way, we would be happy to help you set up such a program.
Please do not hesitate to contact us.
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