Changes to VAT on e-commerce

The Act is intended to implement into the Polish legislation the provisions of Council Directive (EU) 2017/2455 and Council Directive (EU) 2019/1995 concerning the so-called e-commerce VAT package. The draft bill is currently being reviewed and has not yet been submitted to the Sejm.

VAT e-commerce - key changes

• Uniform registration threshold across the EU

  At present, a supplier who sells by mail order (transactions with consumers from other EU countries, the so-called B2C) may, up to the threshold set separately by each Member State, opt for taxation of sales in the country of dispatch. Once the threshold is exceeded, the supplier is obliged to register for VAT purposes in the country to which the goods are delivered (the so-called country of destination) and settle VAT in that country.

  The e-commerce package provides for setting up a turnover threshold for distance selling, uniform for all member states, up to which it will be possible to settle VAT in the supplier's country and at the rate applicable there. The threshold is to be EUR 10 000 net and will apply to B2C sales to all EU countries in total (currently it cannot be lower than EUR 35 000 and higher than EUR 100 000 for a given country). Once this threshold is exceeded, the supply of goods will be subject to VAT in the country of consumption, which will mean the need to register for VAT in another Member State.

  Furthermore, there will be a new definition of transaction - intra-Community distance sales of goods. Currently in the VAT Act there is a definition of distance selling, constructed separately for supplies of goods from the territory of Poland and separately for supplies within its territory.

• New VAT-OSS special procedure

The draft bill provides for the extension and modification of the MOSS procedure, which currently applies to telecommunications services, broadcasting services and electronically supplied services, and the creation of a One Stop Shop (OSS).

The use of the VAT-OSS procedure will be optional. In this way, it will be possible to settle VAT on intra-Community distance sales of goods (WSTO) or on all types of cross-border B2C services, the place of supply of which is the EU country of consumption (not only, as until now, e.g., for electronically supplied services).

Thanks to this special procedure, i.e., settling VAT under the VAT-OSS system, it will be possible to avoid registering in many Member States to which goods or services are sold. The essence of the VAT-OSS will constitute the introduction of a VAT return containing data on sales made to consumers from different Member States, which will be submitted only to the tax authorities of the taxpayer making transactions covered by the special scheme in his country of identification, i.e., the country in which this taxpayer has a registered office or permanent place of business.

Those who opt for the procedure will submit a single quarterly return to the tax authorities of the country of their choice, electronically via a dedicated 'one-stop-shop' web portal (using the VAT rates applicable in the consumer's country). Taxes paid by the businesses benefiting from the simplification will be transferred by the tax authorities of the Member State of identification to the authorities of the Member State of consumption.

• Distance selling of imported goods (SOTI)

  The draft bill also provides for a new definition of distance selling of imported goods, i.e., goods sent from third countries to final consumers in the EU (SOTI). Currently such sales are not identified - they are simply importing of goods subject in some cases to VAT exemption.

  Under the new procedure, taxpayers without a registered office within the EU will be obliged to appoint an EU intermediary who will be responsible for collecting and settling VAT on these transactions. For deliveries with a value of up to EUR 150, traders will be able to benefit from the VAT exemption on imports of goods if they choose to use the VAT-OSS system, which is also designed for SOTI (Special Import Procedure - Import One Stop Shop IOSS).

  The IOSS procedure will introduce VAT simplifications for taxpayers making SOTI by allowing them to:

• electronically register for VAT in the Member State of identification;
• declare and pay VAT due in a monthly electronic return in the Member State of identification.

If the seller does not opt for the IOSS procedure, he will be able to use another simplification procedure for the import of goods for dispatches of a value not exceeding EUR 150. The tax will be collected from the person to whom the goods are addressed by the person making the customs declaration (e.g., postal operator, courier company), who will pay this collected VAT from the addressee to the customs authorities by making a monthly payment (special procedure USZ).

• Changes for internet platforms

The draft bill provides for new obligations for platforms intermediating in online purchases between EU consumers and non-EU suppliers or suppliers who offer goods imported from outside the EU. The e-commerce package envisages that online platforms may in certain situations be treated as if they themselves were involved in these transactions and were delivering the products they offer on their websites.

These entities will be required to collect and pay VAT in the case of:

• sales to EU consumers of goods imported from third countries (SOTI) made via parcels of an actual value not exceeding EUR 150;
• Intra-Community distance sales of goods (WSTO) or other than WSTO supply of goods to a non-taxable person - only in the event that the above transactions are carried out by a trader who has no registered office or, if there is no registered office, a permanent place of business within the EU.

Operators of electronic interfaces will also be obliged to keep records of these transactions in electronic form. They will also be entitled to benefit from simplifications in VAT settlements, on the same principles as other taxpayers performing this type of transactions (OSS, IOSS procedures).