New VAT rules for e-commerce
Pursuant to EU directives, Poland is obliged to introduce amendments to the VAT Act regarding the so-called VAT e-commerce package as of 1 July 2021. Will we make it? It will turn out at the end of June, as the amendment has not yet been discussed in the Senate.
If we fail to do so, chaos may arise, as these regulations provide for completely new rules for the taxation of international trade in B2C relation. Moreover they should be introduced in a uniform way and at the same time in all the EU member states.
The EU e-commerce package is a set of VAT regulations that aims at tightening of the VAT system and fighting fraud in international B2C trade, as well as partially simplifying VAT settlements.
What is changing?
The amendment introduces new taxation rules for the sale of goods and the provision of services to consumers from other EU countries, including via online platforms, as well as changes in VAT settlements on the import of small-value shipments (up to EUR 150).
The new rules apply to four groups of transactions:
- Intra-Community distance sales of goods to consumers in the EU (also via online platforms);
- Distance selling of goods imported from third countries to EU consumers (also via online platforms);
- Domestic delivery of goods made via online platforms by non-EU entities;
- Provision of services to consumers for whom the place of taxation is the country of consumption – not only telecommunication, broadcasting and electronic services, but also, for instance, services related to real estate located outside Poland (construction, renovation, valuation), restaurant and catering services, services in the field of culture, art, sport, science, education and entertainment.
As a rule, the place of taxation in the above cases of sale of goods to consumers (except import) will be the place of the seat / residence of the purchaser. This implies the obligation to register for VAT purposes in those countries to which the goods are sold.
However, there will be significant simplifications in settling VAT on sales of goods and services to consumers from other Member States ensuing from the introduction of uniform rules within the EU, the One Stop Shop (OSS) and Import One Stop Shop (IOSS) schemes as alternatives to registration for VAT in individual countries. The OSS/IOSS registration will make the settlement of VAT on sales to all Member States possible under a single declaration submitted in the country of establishment, but according to VAT rates applicable in individual countries. This system will be analogous to the current MOSS.
Who is affected by the changes?
A significant group of taxpayers.
Especially those who sell their goods to consumers in other Member States. So far, the sales thresholds for registrations in other countries were high (usually around EUR 35,000 in a given country). From July 1, this threshold will amount to EUR 10,000 and will apply – what is worth to highlight here – to the total level of sales to consumers to all EU countries.
This means that the new rules will affect a wider range of cross-border B2C traders than the current distance selling procedure.
The new regulations pose a serious challenge that requires a proper preparation. These affect the following groups of taxpayers:
- suppliers of goods to consumers in other EU countries, both the goods dispatched from the EU and those imported from third countries, including those sold via online platforms; these will be mainly online stores, but also all suppliers who sell goods to EU consumers by means of online platforms;
- entities providing services to consumers, for which the place of taxation is the country of consumption,
- online platforms intermediating in the sale of goods to consumers (e.g. online sale platforms, auction portals, some online stores),
- courier companies, post offices, some customs agencies – which will be obliged to collect and settle VAT in certain import situations.
The new regulations are extensive and complicated, therefore, in the series of subsequent alerts we will inform you about the principles of individual regulations and mechanisms introduced within the e-commerce VAT Package, pointing out the resulting practical aspects for taxpayers. We will also discuss these issues during our webinar, which will be held on June 9, 2021 at 10. We cordially invite you to participate!
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If you are interested in obtaining further information and their impact on your activity please contact:
Tomasz Michalik Tomasz.Michalik@mddp.pl tel. 501 733 720
Janina Fornalik Janina.Fornalik@mddp.pl tel. 660 440 141
or your MDDP advisor.