Issues relating to the application of the appropriate VAT rate for medical devices are a frequent subject of interpretation of tax legislation in individual cases concerning vat on goods and services as regards the rate of VAT.
First of all, it should be pointed out that, in accordance with Article 2(10) of the basic Regulation, it was found that the anti-dumping Article 5 (1) Article 1(1) of the Law of 11 March 2004 on the tax ing of goods and services (Journal of Laws of 11 March 2004). U. of 2011 No. 177, item. 1054), hereinafter referred to as 'the Law', the tax on goods and services is subject to:
- the supply of goods for consideration and the supply of services for consideration within the territory of the country;
- export of goods;
- import of goods;
- intra-Community acquisition of goods for consideration on the territory of the country;
- intra-Community supply of goods.
At the same time, the law defines goods as things and parts thereof, as well as all forms of energy. Due to the above regulations, the entities that most often ask the Directors of the relevant Tax Chambers (acting on behalf of the Minister of Finance) to grant a written interpretation of the tax rules in which the goods are medical devices are importers and distributors of these devices.
The basic rate of tax on each good, determined in accordance with Article 13(1) of Regulation (EC) No 1782/2003, shall be Whereas Article 41 (1) of Regulation (EEC) No 2 1 of the Act, is 22% (from 1 January 2011 to 31 December 2013). 23%, in accordance with Article 23%, Article 146a(1) of the Act). However, both in that law and in its implementing provisions, it provides either for the taxation of certain transactions at reduced rates or for exemption from tax. This is precisely the case under Article 87(3)(a) of the EC Treaty. Whereas Article 41 (1) of Regulation (EEC) No 2 Article 2 of the Act, which, for the goods and services listed in Annex 3 to the Act, sets the VAT rate at 7%. However, in view of the change in tax rates made on 1 January 2011, during the period from 1 January 2011 to 31 December 2013, the rate of tax referred to in Article 2(1)(b) of Regulation (EC) No 1254/1999 should be reduced by 1 January 2013. Whereas Article 41 (1) of Regulation (EEC) No 2 2 and in the title of Annex 3 to the Act, is 8% (Art. Article 146a(2) of the Act). This Annex, under heading 105, lists 'medical devices, within the meaning of the Law on medical devices authorised in the territory of the Republic of Poland, other than those listed in the other headings of the Annex – not deeming the symbol of the PKWiU'.
Admittedly, the difference in the amount of tax to be paid at a reduced rate is huge, bearing in mind that the application of that rate (which constitutes a de facto derogation from the principle of universality and equal taxation) is possible only in the case of goods or activities strictly defined in that law and in the implementing rules adopted on the basis of its authorisation.
In order to meet the above criteria, it is necessary, first of all, to classify the product in question as a medical device, which is independent of tax legislation and is governed by the Act of 20 May 2010 on medical devices (Journal of Laws of 20 May 2010). U. of 2010 No. 107, item. Article 679), which, in Article 679 of the Treaty establishing the European Community, provides for the following: Whereas article 2 (2) of Regulation (EEC) No Article 1(38) contains a legal definition of a medical device. Subsequently, the medical device in question must comply with all the requirements laid down for it and be placed on the market in Polish in accordance with the procedure laid down by the Medical Devices Act.
For example, it should be pointed out that orthopaedic footwear, which is a medical device registered in Switzerland, was considered to be subject to a reduced tax rate, distributed on the territory of Polish and being a complementary measure in the process of rehabilitation, treatment and prevention of spinal pain syndromes in the lumbar and knee, hip and ankle joints (ruling of 26 July 2012, Ippp3/443-576/12-2/RD).
Similarly, the supply of in vitro diagnostic medical devices was considered to benefit from the preferential 8% VAT rate. A different decision was taken in relation to the other goods supplied by the applicant:
- consumable materials subject to wear, exhaustion or degradation as a result of normal operation (filters, bulbs, electrodes, pumps, hoses or colouring ribbons, cleaning fluids, electrical wires, etc.) forming part of in vitro diagnostic equipment (components),
- spare parts which, during repairs, are inserted instead of broken components which form an integral and component part of in vitro diagnostic equipment,
- software-modifying software installed in in vitro diagnostic devices, enabling the in vitro diagnostic device to work together with others or to improve the functionality of the medical device in question.
The Director of the Tax Chamber in Łódź stated that 'although consumable materials are subject to wear, exhaustion or degradation as a result of normal operation (filters, bulbs, electrodes, pumps, hoses or colouring ribbons, cleaning fluids, electrical wires, etc.) they are part of in vitro diagnostic devices (components) and spare parts which are inserted instead of broken components during repairs are an integral and component part of in vitro diagnostic equipment, but do not constitute a specific medical device, since they can be sold separately. Software that modifys software installed in in vitro diagnostic devices, which allows an in vitro diagnostic device to work together with others or to improve the functionality of a medical device, cannot be regarded as a medical device. The afore called software is intended solely to improve the functioning of a medical device, but is not in itself a medical device.'
Consequently, the supply of the above goods is subject to a basic VAT rate of 23%, since it concerns only parts, elements of medical devices which do not constitute separate medical devices, and a different interpretation of the law in that regard would constitute a broad interpretation which cannot be applied to the exception of preferential tax rates (ruling of 20 April 2012, No IPTPP2/443-53/12-4/AW).
The sale of corrective glasses was also considered to benefit from a reduced 8% tax rate, medical goggles and safety goggles for use at the computer in accordance with a medical prescription or other order, in particular that lenses and spectacles bearing the CE conformity mark are used for their performance, which means that they constitute medical devices within the meaning of the Medical Devices Act (ruling of 31 August 2011, No ITPP2/443-801/11/AP). A similar decision was taken in the case of supplies of surgical instruments used in prosthetic activities, classified as medical devices, ruling of 8 December 2011, No IBPP2/443-1024/11/RSz).
It should be noted that all interpretations of the tax legislation concern the specific facts presented by the applicant and the legal situation in force at the date of the event in the facts presented. However, notwithstanding this, the tax authorities are in no way competent to test or assess whether the product in question meets the definition of a medical device or whether the conditions relating to the placing on the market of the device have been met. As the authority is always closely bound by the description of the facts provided in the application, the applicant is at risk of any erroneous or imprecise presentation of a description of the facts in the application. That an individual interpretation produces tax consequences only if the actual facts of the case which are the subject of the interpretation coincide with the description of the facts given by the applicant.
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