Tax Practice wins dispute before Supreme Administrative Court over VAT rate on ice cream scoops and sandwiches

The Tax Practice has successfully represented a chain involved in the retail sale of, inter alia, bread, biscuits, sandwiches and ice cream. The company applied for a number of binding rate information, wishing to confirm the applicability of the 5% VAT rate to a selected range of goods.

For several products (purchased from an external supplier), the Director of the National Tax Information Office upheld the company's position and confirmed the correctness of applying the 5% VAT rate. However, regarding sandwiches made on-site and placed in a refrigerated counter for sale, and ice cream sold by the scoop, the NTIO Director concluded that the supply of goods should be classified under section 56 of the Polish Classification of Goods and Services 2015 and consequently be subject to the 8% VAT rate.

The dispute concerned the so-called new VAT rate matrix, therefore the legal regime applicable from 1 July 2020.

The Voivodship Administrative Court in Gliwice partially agreed with the company and partially with the NTIO Director. As regards sandwiches made on-site, it upheld the applicant company's view, while with regard to ice cream it shared the position of the NTIO Director.

On 18 December 2024, the Supreme Administrative Court, as a result of a last resort appeal prepared by DZP's Tax Practice, overturned the judgment of the VAC in Gliwice and the 2nd instance decision of the NTIO Director in the ice cream case and dismissed the authority’s last resort appeal in the sandwich case.

The SAC pointed out that in both cases there were no services supporting the supply of goods, and therefore such sales should not be treated as services related to food, classified under section 56 of the Polish Classification of Goods and Services.

According to the SAC, in the case of ice cream, the mere portioning and scooping and the serving of the ice cream to the buyer is not processing of the product as a result of which the ice cream becomes fit for direct consumption (case no. I FSK 88/22).

In the case of sandwiches, however, the SAC pointed out that they are not made on an individual client's order, but are a product composed in a specific, fixed way, sold like any other product. In the SAC's view, in this case too, no additional services are performed that would differentiate the sale of sandwiches in a bakery from the sale of sandwiches in markets or other retail outlets (case no. I FSK 557/22).

The key adviser in the case and counsel before the SAC was attorney-at-law Jan Czerwiński, who was supported by attorney-at-law Artur Nowak, tax adviser Renata Łapińska and Dawid Biedrzycki from the Tax Practice.

This judgment is extremely important not only for DZP's client, but also for other entities selling similar products, as it is one of the first SAC judgments concerning food products and VAT rate, rendered in relation to the currently applicable legal regime, i.e. the new VAT rate matrix.