22 August 2022 saw publication in the Official Journal of the European Union of a CJEU decision precluding the practice of Polish tax authorities whereby they thoughtlessly imposed penalty VAT on taxable persons who gave their suppliers a wrong VAT ID for the purposes of intra-Community acquisition because they had incorrectly characterised their chain transaction. That day marks the beginning of the time during which you could request the re-opening of unfavourable proceedings where you may have been unreasonably required to pay the tax.

What are the consequences of the case?


A “penalty VAT ” (surcharge) is imposed under Article 25(2) of the VAT Act if a taxable person misstates his VAT ID for the purposes of an intra-Community acquisition (“ICA”). The CJEU case means that the penalty VAT cannot apply  where the misstatement involves giving a VAT ID assigned by a country that is not the one where the transport ended, as a result of a wrong recognition by an intermediary operator of a chain transaction that is not tax fraud, and the the supplier of the goods could not, in light of the law applicable in the country where the transport began, apply VAT exemption and was liable to tax the transaction at the domestic rate of VAT. CJEU said that penalty VAT in such a case would mean double taxation of the same transaction and, as such, would violate the principles of proportionality and neutrality of VAT.

Following the judgment, misstating your VAT ID for ICA purposes should not in such situations trigger the duty to pay penalty VAT.


For whom is the case important and what kind of opportunities does it open?


The case is important for all the businesses that were involved in chain transactions as intermediary operators and misrecognised the so-called axial supply (by treating the supply made to them as a domestic supply whereas in fact it is an intra-Community supply) so that the tax authority:

  • re-characterised the supply made to the intermediary operator from domestic supply to an intra-Community supply;
  • requested the supplier to pay the VAT stated on the invoice issued to the intermediary;
  • denied the right of deduction to the intermediary with respect to the VAT stated on that invoice (hence leading to the intermediary incurring the real burden of the tax);
  • demanded that the intermediary ensure VAT compliance in Poland in respect of the ICA but without the associated right of deduction.


Effectively, then, the intermediary had the burden of the tax twice: first with respect to supplier’s invoice and then with respect to ICA.

The subject case opens an opportunity  to possibly recover the ICA-related tax paid in such situations on grounds of it not being payable. This opportunity can be pursued by:

  1. filing a motion to re-open tax proceedings, if you have received a final tax decision that is in contravention of CJEU’s judgment; or
  2. filing a motion to re-open court proceedings, if you have received a final and definitive judgment of an administrative court upholding a tax decision that is in contravention of CJEU’s judgment.

The motion to re-open needs to be filed within one month in the case of tax proceedings or three months in the case of court proceedings, in each case counting from publication of CJEU’s decision in the Official Journal of the European Union (22 August 2022).

If you are interested in these topics, do not hesitate to contact us. We will be happy to address any questions or doubts you may have in this regard.