Free transfer of goods and VAT
The gratuitous transfer of goods belonging to a business, according to Article 7(2) of the VAT Law, is subject to VAT if the taxpayer was entitled, in whole or in part, to deduct VAT on the acquisition, import or manufacture of those goods or their components.
Thus, it should be noted that the taxation of a gratuitous transfer of goods occurs when the taxpayer transfers goods on the acquisition, import, manufacture of which he had the right to deduct input tax. At the same time, for VAT taxation of a gratuitous transfer it is irrelevant whether the taxpayer exercised this right or not.
An exception to the above rule is the transfer of goods that constitute gifts of small value or samples. Their transfer, even if the taxpayer was entitled to deduct VAT on their purchase (import or manufacture), in accordance with Article 7(3) of the VAT Act, is not subject to VAT, provided that the transfer is made for purposes related to the taxpayer’s business activity.
Small-value gifts, according to Article 7(4) of the VAT Law, are understood as goods transferred by the taxpayer to one person:
of a total value not exceeding the amount of PLN 100 (excluding VAT) in a tax year, if the taxpayer keeps records that allow establishing the identity of these persons;
the transfer of which is not included in the records referred to above, if the unit purchase price of the goods (excluding VAT), and when there is no purchase price, the unit cost of production, determined at the time of transfer of the goods, does not exceed PLN 20.
Thus, no VAT is levied on a gratuitous transfer of goods whose net unit price, determined at the time of the transfer, does not exceed PLN 20. VAT taxation will also not occur in the case of a transfer of goods with a net value of more than PLN 20, but less than PLN 100, but provided that additional records of the gifted persons are kept.
It should also be noted that according to the current position of the tax authorities, VAT is also not subject to taxation on the free transfer of goods in collective packaging, if the unit price of the individual goods does not exceed PLN 20 net. For example, in an individual interpretation dated May 13, 2021, ref. 0114-KDIP1-1.4012.121.2021.2.RR, the Director of National Tax Information stated that: “(…) in light of the cited provisions – Article 7(3) in connection with Article 7(4)(2) of the Act – the taxation with value added tax of the gratuitous transfer described in the application is not affected by the quantity of goods transferred by the Company to a single entity. In particular, in the analyzed case, it is irrelevant that the goods are transferred in bulk packaging, i.e., e.g., water or beverage containers or other similar assortment packaging, which may contain a larger number of goods at one time. What is relevant is the fact that the unit purchase price/cost of production at the time of transfer of a single advertising material does not exceed PLN 20 net (…)”.
On the other hand, the obligation to pay VAT on a gratuitous transfer of goods will occur if the unit price of the goods exceeds PLN 100 net.
In turn, a sample, according to Article 7(7) of the VAT Act, is understood to be a copy of goods identifiable as a sample, or a small quantity of goods, which allows the assessment of the characteristics and properties of the goods in their final form, while their transfer (handing over) by the taxpayer:
- is for the purpose of promoting such goods, and
- does not essentially serve the purpose of satisfying the needs of the final recipient of the goods in question, unless satisfying the needs of that recipient is inherent in the promotion of the goods and is intended to induce that recipient to purchase the promoted goods.
Transfer of non-consumable goods
It should be noted, however, that only such goods transferred free of charge that involve consumption are subject to VAT. Thus, goods given which, from the recipient’s point of view, have no consumption value for the person receiving them (e.g., leaflets, business cards, catalogs), remain outside the scope of VAT taxation (even if the taxpayer was entitled to deduct VAT on the purchase, import or manufacture of these goods).
The above position is confirmed by the tax authorities – for example, the Director of National Tax Information in an individual tax interpretation dated July 19, 2022, ref. 0112-KDIL1-3.4012.229.2022.1. AKS: “(…) gratuitous issuance to contractors (…) of advertising materials bearing the logo of a given brand and advertising slogans, for the purpose of advertising the Company’s products and their appropriate display, which have no consumption or use value for the contractors, is not/will not be subject to tax on goods and services”.
Tax base and documentation
The taxable base for gratuitously transferred goods, according to Article 29a (2) of the VAT Law, is the purchase price of the goods or similar goods, or, if there is no purchase price, the cost of production, determined at the time of delivery of the goods. The gratuitous transfer of goods is not an activity that requires documentation with an invoice. However, for internal purposes, it is possible to document it with an internal accounting document.
 Law of March 11, 2004 on Value Added Tax (i.e., Journal of Laws 2022.931).