Foreign transactions, EU VAT and currency settlements
Accounting for foreign transactions requires correct classification of the transaction, VAT treatment, reporting obligations, evidence for the 0% VAT rate and translation of amounts expressed in foreign currencies.
Accounting for foreign transactions
Foreign transactions require not only correct posting of the invoice, but also proper identification of the transaction type, VAT rate, reporting obligations, documentation supporting preferential VAT treatment and the method of translating values expressed in foreign currencies.
The sale of goods to a customer in the European Union is accounted for differently from exports outside the EU, purchases of goods from another member state, import of goods, intercompany transactions or settlements in foreign currencies.
At TOP Outsourcing, we support companies in ongoing accounting and tax treatment of foreign transactions, including intra-Community supplies of goods, intra-Community acquisitions of goods, exports of goods, import of goods, intercompany transactions, IC sales lists and foreign-currency settlements.
Our goal is not only to post the invoice correctly, but also to reduce risks related to an incorrect VAT rate, missing evidence supporting the right to apply the 0% VAT rate, incorrect reporting in the IC sales list, wrong foreign-currency translation or discrepancies between Polish accounting books and group reporting.
Intra-Community supply of goods
An intra-Community supply of goods generally occurs when goods are transported from Poland to another European Union member state to a customer holding a valid EU VAT number.
If the statutory conditions are met, such a transaction may be subject to the 0% VAT rate. One of the key conditions is having documents confirming that the goods were actually dispatched from Poland and delivered to the buyer in another EU member state.
In practice, the most common and most important transport document for an intra-Community supply is the CMR, the international consignment note. The CMR should be consistent with the invoice, order, goods specification and other documents relating to the delivery.
For intra-Community supplies, we pay particular attention to the active EU VAT number of the customer, correct reporting in JPK_VAT and the IC sales list, completeness of transport documentation and consistency of the documents with the actual course of the transaction.
The documentation may include, among other things, the CMR, a specification of the individual items of cargo, the order, commercial correspondence, transport documents, payment confirmation or confirmation of receipt of the goods by the buyer. The key point is that the documents jointly confirm the actual movement of goods from Poland to another EU country.
Export of goods outside the European Union
Export of goods covers supplies in which goods are transported outside the territory of the European Union. Here too, the 0% VAT rate may be applied, provided that the taxpayer has documents confirming the export of goods outside the EU.
In practice, customs documentation is crucial. Current customs systems use messages from the CC family, in particular CC-599 / CC-599C as confirmation of export. The documentation may also include CC-529 / CC-529C, connected with the start of the export procedure. Previously, the terms IE-529/IE-599 were commonly used in this context, but today they are historical terminology.
For exports, we verify whether the documents provided by the client relate to the correct transaction, MRN number, customer, goods and value, and whether they allow the 0% VAT rate to be applied safely.
As with intra-Community supplies, the responsibility for obtaining and providing evidence supporting the right to apply the 0% VAT rate remains with the client. TOP Outsourcing reviews the documents received, indicates missing items and informs the client when the documentation may be insufficient.
IC sales list – when does it need to be filed?
The IC sales list covers selected intra-Community transactions. In practice, it is filed mainly when, in a given month, transactions such as intra-Community supplies of goods, intra-Community acquisitions of goods or certain services provided to taxpayers from other EU member states occur, where the place of taxation is the customer's country.
Important: import of services is not reported as such in the IC sales list. Purchasing services from a foreign contractor may require proper VAT settlement in Poland and may be connected with registration for EU VAT purposes, but it does not automatically mean that the transaction is reported in the IC sales list.
The IC sales list is filed electronically, generally monthly, by the 25th day of the month following the month in which reportable transactions occurred. As a rule, a nil IC sales list is not filed unless a correction of that period is expected.
As part of our accounting service, we verify whether a given transaction should be reported in the IC sales list, whether the contractor has the proper EU VAT number, whether the data is consistent with JPK_VAT and whether there are discrepancies between invoices, the VAT register and the summary information.
Foreign-currency settlements and exchange rates
Transactions in foreign currencies require correct translation into Polish zloty. This applies to sales invoices, purchase invoices, including intra-Community supplies and acquisitions, exports and import of goods, as well as payments.
In practice, foreign invoices are most often translated using the rate appropriate for VAT settlement in order to keep the invoice, VAT register, JPK_VAT and accounting books consistent. This approach reduces the risk of discrepancies between VAT records and accounting books and simplifies ongoing settlements. In some cases, however, the rules directly require separate rates for VAT and for CIT settlement.
At TOP Outsourcing, we ensure that foreign-currency transactions are recorded consistently: from invoice posting, through payment settlement, to the calculation of FX differences. We also verify whether the exchange rate used on the invoice and in the accounting books is consistent with the adopted settlement method and, where needed, explain to the client the differences between the invoice value, payment and accounting settlement.
Foreign-currency valuation for statutory accounts and group reporting
At year-end, and for companies reporting to a group often also at month-end or quarter-end, we prepare valuation of foreign-currency items. This primarily concerns receivables, liabilities, bank accounts, loans, intercompany settlements and other items expressed in foreign currency.
For statutory accounting purposes, we prepare the valuation in accordance with Polish accounting rules. If the group requires monthly or quarterly valuation or valuation based on its own reporting rates, we can also prepare data for the group reporting package, consolidation or management reporting.
For foreign-owned companies, we also help reconcile differences between valuation under Polish accounting books and valuation prepared for group purposes. This keeps local settlements compliant with Polish regulations while ensuring that data submitted to headquarters is consistent with the owner's expectations.
How we help clients
At TOP Outsourcing, we support companies throughout the process of accounting for foreign transactions: from identifying the transaction type, through accounting and tax treatment, to documentation review and reporting preparation.
In particular, we help in areas such as:
- accounting for intra-Community supplies and acquisitions, exports, import of goods and foreign transactions,
- verification of IC sales list obligations,
- checking EU VAT numbers of contractors,
- review of documents supporting the 0% VAT rate for intra-Community supplies and exports,
- control of CMR and transport documentation for intra-Community supplies,
- verification of customs messages for exports,
- correct translation of invoices in foreign currencies,
- settlement of payments and FX differences,
- valuation of receivables, liabilities and foreign-currency bank accounts,
- preparation of foreign-currency valuation for statutory and group reporting purposes,
- reconciliation of Polish accounting books with group reporting.
As a result, the client receives not only posted invoices, but also ongoing information about documentation, tax and reporting risks.
Who is this service for?
Our support is aimed primarily at companies that conduct foreign sales or purchases, deliver goods to customers in the European Union, export goods outside the EU, settle invoices in foreign currencies or report financial data to a capital group.
The service is particularly useful for companies that:
- regularly carry out intra-Community supplies, intra-Community acquisitions or export transactions,
- issue or receive invoices in foreign currencies,
- have settlements with foreign contractors,
- enter into transactions with related parties abroad,
- report currency data to a group,
- need control of documentation supporting the 0% VAT rate.
Foreign transactions are an area where a small documentation error may have material tax consequences. That is why accounting should not be limited to posting the invoice, but should also identify on an ongoing basis transactions that require additional documentation or particular caution.
FAQ – foreign transactions, IC sales lists and currencies
Frequently asked questions on intra-Community supplies and acquisitions, exports, CMR documents, customs messages, IC sales lists, foreign-currency invoices, FX differences and currency valuation.
What is an intra-Community supply of goods?
An intra-Community supply of goods is a sale of goods from Poland to a customer in another European Union member state, where the goods are actually transported to another EU country. If the statutory conditions are met, the transaction may be subject to the 0% VAT rate.
What documents are needed for the 0% VAT rate on an intra-Community supply?
The key document is most often the CMR, the international consignment note. Other useful evidence may include the goods specification, order, commercial correspondence, payment confirmation, transport documents or confirmation of receipt by the buyer. The documents should jointly confirm that the goods were dispatched from Poland and delivered to the purchaser in another EU member state. A positive VIES check of the customer's VAT number is also required.
What documents are needed for the 0% VAT rate on exports?
For exports, the key evidence is the document confirming that the goods left the European Union. Currently, these are customs messages from the CC family, in particular CC-599 / CC-599C. The documentation may also include CC-529 / CC-529C, connected with the start of the export procedure. The older terms IE-529/IE-599 used to be common, but they are now historical terminology.
Who is responsible for evidence supporting the 0% VAT rate for intra-Community supplies and exports?
The client, as the taxpayer carrying out the transaction, is always responsible for obtaining and providing the evidence supporting the right to apply the 0% VAT rate. TOP Outsourcing reviews the documents received, indicates missing items and informs the client when the documentation may be insufficient for safe application of the 0% rate.
When does the IC sales list need to be filed?
The IC sales list is filed when, in a given month, transactions subject to reporting occurred, such as intra-Community supplies, intra-Community acquisitions or certain services supplied to EU VAT taxpayers where the place of taxation is the customer's country. The information is filed electronically, generally monthly, by the 25th day of the following month. As a rule, a nil IC sales list is not filed unless a correction of that period is expected.
Is import of services reported in the IC sales list?
No. Import of services is not generally reported in the IC sales list as such. It may, however, require proper VAT settlement in Poland and, in certain cases, prior registration for EU VAT purposes. For purchases of services from foreign suppliers, we therefore review both the VAT treatment and potential registration obligations.
How are invoices in foreign currencies translated into PLN?
Foreign-currency invoices are translated using the rate appropriate for the given transaction. In practice, the rate adopted for VAT settlement is most often used to keep the invoice, VAT register, JPK_VAT and accounting books consistent. In certain situations, however, the rules may require a different exchange rate for VAT than for CIT. We then settle the payment and any foreign-exchange differences.
Do you prepare year-end foreign-currency valuation?
Yes. We prepare balance-sheet valuation of receivables, liabilities, bank accounts and other foreign-currency items at year-end. We can also prepare monthly or quarterly valuations for group reporting, consolidation packages or management reporting.
Do you help reconcile foreign transactions with the group?
Yes. We help reconcile foreign transactions, foreign-currency settlements, intercompany balances, FX differences and data reported to the group. For foreign-owned companies, we can prepare data in the format required by headquarters or the consolidation package.
Settle foreign transactions without VAT and currency chaos.
Contact us and see how we can help organise foreign-transaction settlements in your company.