Understanding how to apply the 0% VAT international transport rate is essential for every carrier entering the TSL market, as it requires specific documentation and adherence to tax regulations.

How should VAT be settled in the TSL industry? This is a question many carriers ask when they are just entering the transport market. The most attractive option is undoubtedly the 0% VAT rate, but applying this rate requires meeting specific conditions and collecting the right documents. When can the 0% VAT rate be used in international transport? What needs to be documented?

When does the 0% VAT international transport rate apply?

The 0% VAT rate for international transport services allows the service provider to retain the right to deduct input VAT while not increasing the price of the service for the client. It is worth using this rate whenever possible, but it cannot be applied in every case. According to Article 28b of the Polish VAT Act, the place of taxation is generally the country where the service recipient has its registered office.

For example, transport between France and Germany carried out for a French contractor means that the service is taxed in France and cannot be settled according to Polish VAT rates. In such a case, the invoice should include a note such as “reverse charge” or “NP”, meaning that the service is not subject to taxation in Poland.

There is, however, an exception. Polish VAT applies when the transport is carried out entirely in Poland for a buyer from outside the European Union. In this situation, Poland becomes the place of taxation, and the service may be settled at the 0% VAT rate or at the standard 23% VAT rate, depending on the specific circumstances.

To benefit from the 0% VAT international transport status, you must ensure all your freight documents are compliant with Polish tax law.

Article 83(1)(23) of the Polish VAT Act: settlement under current regulations

The rules for tax settlement are regulated, among others, by the Polish VAT Act. Article 83(1)(23) provides information on the 0% VAT rate. This rate applies to international transport services. The definition of international transport is included in Article 83(3) of the same Act. According to this definition, international transport is a transport service whose route passes through Poland, or where Poland is the place of dispatch or destination, and where the starting point or final destination is located in a non-EU country.

To understand this definition more clearly, it is useful to look at a few examples. The 0% VAT rate applies to the transport of goods from Poland to China or from China to Poland. The provisions of the Polish VAT Act also apply to transit through Poland between non-EU countries, as well as to transport from another EU country to a non-EU country if the route runs through Poland.

Transport service: which VAT rate applies?

The 0% VAT rate therefore applies to international transport. It may also apply to intermediary and freight forwarding services related to international transport operations. However, transport carried out within Poland or between Poland and another EU country does not fall under the definition of international transport and is not covered by the 0% VAT rate.

This rate also does not apply when transport takes place outside the EU and the route does not pass through Poland, or when transport is carried out between two EU Member States, even if the route runs through Poland. In such cases, the transport service is settled according to the regulations applicable in the buyer’s country, if the parties are based in EU countries.

VAT rate in international transport

There is one more important rule. The Regulation of the Polish Minister of Finance issued on 9 December 2023 provides the basis for applying the 0% VAT rate to transport services when the transport of goods is carried out entirely within Poland or within the EU, but only if that transport is part of a service considered international transport.

An example would be the transport of a container from Gdynia to a terminal in Warsaw as part of a shipment from Poland to the United States.

When else does the 0% VAT rate apply? It may also apply to accompanying services. In addition to intermediary and freight forwarding services connected with international transport, these may include sea rescue and inland waterway services, loading, unloading and transshipment in seaports and airports, as well as supplies and services for sea vessels and aircraft.

International transport: VAT and required documents

To apply the 0% VAT rate, the service provider must present appropriate documents confirming the international nature of the transport. In some cases, it is also necessary to prove that the value of the transport service has been included in the taxable base for import.

According to Article 83(5) of the Polish VAT Act, settlement at the 0% VAT rate requires a consignment note or a freight forwarding document, such as a CMR, AWB, sea bill of lading, railway consignment note, road transport document or inland waterway transport document. Another document may also be accepted if it clearly shows that the transport from the place of dispatch to the place of destination crossed the border with a third country.

The 0% VAT rate also requires an invoice issued by the carrier or freight forwarder and, if the goods are imported into Poland, a customs document confirmed by the customs and tax office. If the required documents are missing, the service provider must apply the standard 23% VAT rate. Once the documents are provided, a corrective invoice may be issued to apply the 0% VAT rate.

VAT rate in transport: what is worth knowing?

The 0% VAT rate may apply not only to the direct provision of a transport service, but also to re-invoicing such a service. In this case, the same rules apply as for the direct provision of the service.

To avoid the risk of corrections and penalties, it is worth determining the place of taxation before the transport is carried out. This helps reduce the risk of incorrectly applying either the 0% or 23% VAT rate. It is also good practice to collect all documents required for settlement at the 0% VAT rate before the tax return submission deadline. These documents should be stored for five years, as they may be needed during a possible tax audit.

By cooperating with the freight forwarding company Express Heroes, carriers gain the possibility of direct contact with an accountant, which means fewer doubts and a lower risk of errors. In addition, preparing and sending invoices to many different buyers becomes a thing of the past. One invoice issued to the freight forwarding company is enough.

Express Heroes is responsible for the continuity of transport orders by searching for assignments and negotiating contract terms on behalf of the transport company. This allows carriers to save time and focus on performing transport services instead of dealing with these time-consuming administrative and sales-related tasks.