VII AGa 1093/18
Court of Appeal of Warsaw




[CLOUT Case no. 1978; abstract prepared by Maciej Zachariasiewicz, National Correspondent and Aleksandra Pilipiuk]

In 2008, an agreement was concluded between a Romanian seller (the plaintiff) and a Polish buyer (the defendant) for the sale of mixing plant equipment at the net price of EUR 524,216.40. The contract was concluded orally following negotiations that did not take into account the VAT amount. The Romanian tax authorities carried out an inspection and considered that the sale was subject to VAT at the rate of 19 per cent and not 0 per cent as envisaged by the parties. Therefore, on 22 October 2008, the plaintiff issued a corrected invoice with the addition of the 19 per cent VAT to the net price, amounting to a gross price of EUR 623,817.52 (with the VAT amounting to EUR 99,601.12).
After its issuance, the invoice was entered into the books by the seller and the VAT was paid. Striving for an amicable settlement, the parties began talks regarding the possibility for the seller to recover the VAT while the buyer would apply for a tax refund that could be then transferred to the seller. By letter of 2 March 2009, the buyer applied to the tax authorities in Romania for a VAT refund invoking the VAT invoice issued by the seller, however, the application turned out to be ineffective.
The seller brought an action before the District Court (first instance) against the buyer for the payment of the VAT amount plus statutory interest, claiming that the latter had paid only the net price and refused to pay the full price.

The District Court considered that pursuant to article 53 CISG, the economic burden of the tax is to be borne by the buyer, while the seller is the taxpayer, and held in favour of the seller.
Referring to article 55 CISG, the District Court concluded that if the price in the sales contract is not clearly indicated, it is considered that the parties referred to the price customary at the time of conclusion of the contract for goods sold in similar circumstances in a given field of trade. Thus, it is a matter of establishing the market price, and the market price is always the net price plus the VAT. It is customary that the buyer bears the economic burden of the VAT.

The buyer appealed alleging violation of articles 53, 55 and 9 CISG. It contended that it was erroneous to assume that it was customary for the buyer to pay the VAT, given that the circumstances of the present case were not typical (change of legal classification of the contract challenging its qualification as an intra-community supply of goods exempted from VAT). According to the buyer, no usage determined in such circumstances which party would bear the risk of reclassifying the contract for tax purposes (or, at least, the court had not made any determination as to the existence of such a usage).

The Court of Appeal (the Court) considered this allegation as unfounded and confirmed the decision of first instance. While it acknowledged that the circumstances of the case were not typical, as contended by the buyer, since the seller first charged a VAT at the 0 per cent rate and then corrected the invoice indicating the 19 per cent rate, the Court considered that this alone did not preclude the usage according to which VAT was an element of the price paid by the buyer. It therefore held that the buyer had to bear the economic burden of the transaction in this regard. The Court noted that this usage was a consequence of the principle of neutrality of VAT for the taxpayer which had been repeatedly recognized as a fundamental right of the taxpayer in the jurisprudence of the Court of Justice of the European Union.




CLOUT Case no. 1978, A/CN.9/SER.C/ABSTRACTS/215.}}