V. sp. z o.o. was part of the E group, in which the parent company was E. S.A.. V.’s principal activity was wholesale of tobacco products.
The authority issued an assessment based on finding of irregularities consisting in the company’s overstatement, in its VAT purchase registers and tax returns for the periods indicated, of the net purchase value and input VAT resulting from invoices issued to it by:
1) L. sp. z o.o. and I. sp. z o.o. for marketing services for e-cigarettes,
2) E. S. sp. z o.o. for data processing services,
3) E. S. sp. z o.o. concerning re-invoicing of purchases incurred by E. S. sp. z o.o..
The tax authorities did not find that V. sp. z o.o. was entitled to reduce output tax by the input tax shown on the disputed invoices issued to it by: L. sp. z o.o. and I. sp. z o.o., relating to marketing services, and E. sp. z o.o., relating to data processing services and a re-invoicing of part of the purchases incurred by that entity.
An appeal was filed by V. sp. z o.o. with the Administrative Court.
Judgement of the Administrative Court.
The Court dismissed the appeal of V. sp. z o.o..
Excerpts
“The evidence gathered confirms that the services documented by the disputed invoices were not performed for the benefit of the company V., and are not related to its taxable activities within the meaning of Article 86(1) of the VAT Act. As demonstrated by the authorities, in the period from 15 July 2016 to 19 August 2016, when the marketing activities resulting from the invoices issued by L. sp. z o.o., consisting in the testing and sale of, inter alia, Iiquids, were carried out, the V. Company did not have commercial goods that could be offered for sale or distributed in the form of samples. The company made its first purchase in September 2016 and its first sale in October of that year. The activities carried out by I. sp. z o.o. and L. sp. z o.o. (according to the KRS, carrying on the business of selling tobacco products) did not concern the goods traded by V. as well as the company itself, which was not made visible in the materials submitted. Thus, the scope of the applicant’s business activity resulted from the role envisaged for it within the E. Capital Group. , which was the supply of commercial goods to the companies – E. and L. , in the quantities indicated by these entities. No other customers were sought. The increase in sales of the company V. in the following years, i.e. 2017-2018, referred to by the party – was the result of increased sales to the above-mentioned companies, which was established on the basis of data submitted by the taxpayer, supplemented by information resulting from JPK files and VAT-7 declarations submitted by V. (table no. […] of the decision of the authority of first instance – […]).
As the authorities inferred, the applicant did not sell and was not intended to sell commercial goods (liquids) to customers other than E. and L. . Contrary to the party’s assertion, the marketing services resulting from the invoices issued by E. and L. , were not justified by the acquisition of new markets for V. sp. z o.o. as the company functioned as an internal distributor of goods, to the abovementioned entities. Its transactions during the period under review consisted of the purchase of flavoured oils and their sale to E. and L. , while the contested purchases were related to the sale of the entire range of tobacco products (including traditional cigarettes, tobacco) to various distributors and retail customers, as V. admitted in its objections to the protocol of examination of the tax books and in its appeal. Such transactions were not and were not to be carried out by the taxpayer. Therefore, the authorities correctly concluded that the marketing services documented by the invoices issued by the above-mentioned entities were not provided to the applicant and did not relate to its taxable activities within the meaning of Article 86(1) of the VAT Act. Company V. was not the actual recipient of the services in question.
The Court assesses as correct the findings of the authorities concerning the invoices documenting the purchase by V. sp. z o.o. of data processing services from E. sp. z o.o., which were issued in connection with the contract concluded by these entities on 20 June 2016. […] The valuation of these services was based on the costs incurred by E. in the period from January 2016, plus a 5% margin. An analysis of the provisions of the contract in question for the provision of data processing services, does not confirm that the subject of the services provided to the applicant were activities such as: searching for suppliers and buyers of goods, assistance in establishing and maintaining business contacts, preparing goods for sale, promoting goods on the market. The contract provided for the support of E. sp. z o.o. for the company V.
– in the area of financial and administrative management, i.e. supervision of the area of financial issues; reporting of business results, support of decision-making processes; management of financial resources; supervision of internal control procedures and risk management; introduction of accounting documents as required by the computer system; printing of accounting documents, preparation and maintenance of accounts related to payments; preparation of reports: fiscal, statistical, financial and other administrative activities as required by the principal;
– handling personnel and occupational safety documentation, i.e. setting up and maintaining personal files of employees; carrying out recruitment processes; settling all obligations towards the Social Insurance Institution (ZUS), tax offices and others required by law; cooperation with labour offices in the area of refunding salaries of juvenile employees; drawing up necessary certificates, reports, statements, payrolls, holiday plans, referrals for medical examinations, etc.; sending payroll transfers; archiving personal documentation of dismissed employees; others not mentioned above, but related to personnel and occupational safety services.
The authorities reasonably concluded that the data processing services (with the exception of the services recorded between 1 September 2016 and 31 December 2016 in […] with the symbol […] do not relate to taxable sales of the company V., which was not the actual purchaser of the services. Having regard to the provisions of Article 86(1) and (2) of the VAT Act, the authorities correctly concluded that the input tax shown in the invoices issued on this account was not deductible from the tax due. In the period under review, V. was part of the E. Capital Group, but was a separate economic entity with the status of a VAT taxpayer. Its right – as a taxpayer – to reduce output tax by input tax could only relate to input tax resulting from purchases related to taxable sales of the V. company and not to taxable sales of another entity of the E. Capital Group.
In the Court’s opinion, the contested decision also correctly assesses the events documented by invoices issued to V. sp. z o.o. by E., constituting re-invoices of part of the purchases made by this entity, concerning the purchase of marketing, advertising and other services and related goods. In the light of the evidence gathered, the applicant’s position that the purchases resulting from these invoices show a connection with the economic activity carried out by V. sp. z o.o. is unfounded.”
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I SA_Po 112_23 - Wyrok WSA w Poznaniu z 2023-05-25