Question:
What is the place of taxation of these marketing services and what VAT rate should be included on the invoices issued by PL supplier to IFD?
Analysis:
According to article 44 of the Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax the place of supply of services to a taxable person acting as such shall be the place where that person has established his business.
The same rule has been included in Art. 28b paragraph. 1 of the Polish VAT Act which states that the place of providing services in the case of providing services to the taxpayer is the place where the taxpayer who is the recipient of the service has its registered office.
Marketing services have not been defined as specific services to which some special rules apply therefore they should be treated as general services for which place of taxation is defined according to article 44 of the Council Directive 2006/112/EC and Art. 28b paragraph. 1 of the Polish VAT Act.
Since the place of taxation is in the given situation Cyprus, Polish VAT cannot be charged on the invoices. Consequently the buyer of the goods or services is obliged to settle VAT in the country of residence or fixed establishment under reverse charge. The PL supplier is obliged to issue an invoice with NP instead of VAT rate, i.e. an invoice that does not contain the tax rate and the tax amount on the sum of the net sales value.
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