New VAT e-commerce rules – a bill of amendment to the VAT Act
At the end of October, the Ministry of Finance, Funds and Regional Policy published a bill of amendment to the VAT Act and some other acts, which adapts the Polish regulations to the EU law known as VAT e-commerce package. The legislative changes are intended, without limitation, to seal VAT collection in cross-border e-commerce, to facilitate tax payments in connection with cross-border sales of goods and services via the Internet to consumers in the EU, and to combat fraud.
Majority of the regulations are planned to take effect on 1 July 2021. An exception is made for regulations on provision of information for the purpose of registration by taxable persons who intend to benefit from the planned specific schemes – they are to take effect earlier, i.e. on 1 April 2021.
In our previous publications, we have already informed about the entire package of changes to VAT prepared by the EU legislator: SPRAWDŹ
Presented below are the most essential changes resulting from the bill.
Supply of goods: a new way to settle “distance” transactions
As a uniform definition of “intra-EU distance sales of goods”, and “distance sales of imported goods” is introduced, the existing definition of mail-order sales from and to Poland will be removed from the VAT Act.
Additionally, the amendment provides for an obligation to collect and pay VAT with respect to the following transactions:
- distance sales of goods imported from third countries in consignments of a value of maximum EUR 150 to EU consumers.
- supply of goods on the territory of the EU by suppliers not established in the EU.
to taxable persons who facilitate transactions using their electronic interface (electronic interface operators). An essential part of distance transactions, both with respect to goods purchased in the EU and outside the EU, is made using various types of e-commerce platforms. By the force of the amended regulations, these platforms are to be obliged to settle VAT on transactions made by the deemed supplier (so-called underlying supplier) to the final customer. In this respect, the regulations provide for a legal fiction whereby supply occurs between the deemed supplier and an electronic interface operator, and supply is made by the electronic interface operator to an entity which is the final buyer of the goods.
Extension of the existing MOSS
The legislator proposed an extension and change of the MOSS (Mini One Stop Shop) scheme, which is currently used with respect to telecommunication services, television and radio broadcasting services and electronically supplied services, and which facilitates settlement of VAT on services provided in various countries in a single Member State.
The scheme is to be extended (now being One Stop Shop) to include:
- other services provided to consumers,
- intra-EU distance sales of goods,
- supply of goods in a Member State made via electronic interfaces which facilitate such supply (e.g. online shops).
Although the directive does not contain a definition of services to be covered by it, the Polish bill offers a more precise explanation of the term in Article 130a(1) of the VAT Act, and provides that services covered by the IOSS scheme are to mean services provided to consumers whose place of performance is the territory of the Member State of consumption.
Taxable persons will be free to choose the OSS scheme, but VAT on all relevant services and goods will have to be settled under this scheme. It will not be possible to settle some transactions using national returns applicable in Member States, and some using the OSS.
Taxable persons who facilitate certain supplies of goods and provision of services made in the EU to entities which are not taxable persons (consumers) using an electronic interface will be obliged to maintain and provide access, at the request of tax authorities, to records containing certain information regarding transactions and entities which execute them.
Unified limit for the use of OSS
At the moment, Member States have various thresholds on mail-order sales, which, when exceeded, give rise to the obligation to be registered as a VAT payer in the country to which the sales are made. The bill provides for a single threshold of EUR 10,000 net per year throughout the EU. The limit will be calculated as the sum total of the overall value of supplies of goods made as intra-EU distance sales of goods and of certain services provided to consumers. After the amount is exceeded, the taxable person can choose to either register and pay the tax due in each Member State to which the goods are dispatched or to register in the OSS scheme in one place and file returns concerning other countries of sale there.
Import One Stop Shop (IOSS)
A new scheme will be established for distance sales of goods imported from third countries in consignments of an intrinsic value of maximum EUR 150 to EU consumers, known as Import One Stop Shop.
IOSS can be used by suppliers who are taxable persons established in the EU as well as those established in third countries.
Under the system, the supplier (taxable person) that sells low value goods located in a third country or territory to EU consumers will charge and collect VAT at the time of selling the goods and will declare and pay the tax globally via IOSS in the Member State of identification (i.e. the Member State which the taxable person chooses for the purpose of notification of the intention to use the scheme).
To use the IOSS, taxable persons not established in the EU will have to appoint an intermediary to act for them and on their behalf, i.e. to file returns and pay VAT. The amendment provides for joint liability of the intermediary and the taxable person for compliance with these obligations. The obligation to appoint an intermediary does not apply to a taxable person established in a country with which the EU has concluded an agreement on mutual assistance. The VAT Directive does not set out the rules for appointment of intermediaries, except that it requires an intermediary to have a place of business or a permanent establishment in the EU. The Member States may establish their own rules or requirements for taxable persons who want to operate as intermediaries in IOSS.
The planned Article 138c of the VAT Act lays down the rules to be satisfied by an entity wishing to act as an intermediary, such as registration as an active VAT payer and no tax arrears.
If the above scheme is not used, the tax on consignments can be collected and paid by a postal operator (within the meaning of the postal law). In this situation, the VAT rate will always be 23%. However, if a consumer does not agree to this solution, e.g. where the goods concerned are subject to a reduced tax rate, a customs declaration will have to be filed according to the general rules.
The use of IOSS will be a condition for benefitting from the VAT exemption implemented by the amendment, which is to apply to goods included in consignments of a value of maximum EUR 150 (not applicable to goods liable to the customs duty).
The above rules will now be subject to further legislative procedures. If you have any other questions concerning the bill, you are welcome to contact us