Businesses offering special “3 for the price of 2” offers to their customers will not be able to save on VAT. According to the tax authorities, this kind of promotion cannot be categorised as a discount.

In such situations, the tax authorities demand VAT to be paid on the free-of-charge transfer of goods. They do not allow tradesmen to lower the tax basis in accordance with Article 29a section 7 point 2 of the VAT act, which applies to discounts and price reductions granted when sales are made. (Before 2014, these provisions were included in Article 29 section 4.) 

The tax authorities change their approach – Marta’s Ignasiak opinion

A few years ago, promotion campaigns such as “3 for the price of 2” were considered as discounts by the tax authorities. Once the amendments to the tax regulations were implemented, any free-of-charge transfer of goods which used to be a basis for a tax deduction became subject to VAT. At the same time, the tax authorities demand that business entities determine whether they are making a chargeable (e.g. for PLN 0.01) or a free-of-charge transfer of goods.   

Author: Mariusz Szulc
Source: Dziennik Gazeta Prawna

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