VAT services for distance sellers of goods and services

Not every entity can take advantage of the solutions offered by the EU’s e-commerce package. If taxable activity is conducted in the country of completion of transport, the taxpayer will still have an obligation to settle VAT in the given country.

As in the case of B2B transactions which are treated as intra-Community supply of goods and intra-Community acquisition of goods, respectively, in the country of completion of transport, and also if the taxpayer has a local warehouse in another country, even if the taxpayer does not have a permanent place of business or establishment it is still required to register for VAT purposes.

There are different rules for taxpayers who offer services, rather than goods, online.

Undertakings providing services by electronic means must count on having to take into account the tax regulations of the state in which their customers are based—the place of taxation of the transaction is the place where the service recipient has its business location.

This rule applies in sectors such as:

• Computer games.
• Websites.
• Subscription services.
• Applications.
• Content streaming.

It should be borne in mind that the regulations provide for a number of exceptions to this rule, e.g. for real estate services, lodging, passenger transport, restaurant and catering services, and short-term rental of vehicles.

• Who is subject to the VAT registration obligation?
• How long does the VAT registration process last?
• What are the statutory deadlines for filing VAT settlements?
• What VAT rates are applied in distance sales to Poland, Czechia, Hungary, Romania and Slovakia from other EU countries?
• Does an e-commerce seller have to open a bank account in the country where it conducts its VAT registration?

• What is VAT OSS?

VAT OSS (One-Stop Shop) is a single quarterly declaration enabling a supplier making distance sales (B2C transactions) to settle VAT in all EU member states.

OSS is analogous to the system in place before, VAT-MOSS (Mini One-Stop Shop), but expands the existing procedure to include intra-Community distance sale of goods and all other cross-border services.

• OSS declaration in a nutshell

Where?

With the tax authorities of your member state of identification—as a rule, the state in which the taxpayer is established

How?

Via a dedicated website, divided into EU member states, applying the proper VAT rate for the given member state

Who?

VAT payments are transferred by the tax authorities of the member state of identification to the tax authorities of the member state of consumption.

When?

The deadline for filing the VAT-OSS deadline is the end of the month following each quarter.

• Is OSS registration mandatory?

Use of the procedure is not mandatory. However, VAT-OSS cannot be used selectively: joining VAT-OSS imposes on the taxpayer a duty to settle within OSS all services and supplies that can be the subject of this procedure.

Partial settlement in VAT declarations for OSS and partial settlement in national tax declarations of the member states of consumption is prohibited.

• Who can use OSS?
  • Distance sellers of goods to natural persons from other EU member states.
  • Providers of telecommunications, broadcasting and electronically supplied (TBE) services.
  • Service providers—VAT-OSS also permits settlement of sales of other services provided to foreign (EU) consumers where the place of taxation is in the place of consumption, i.e. real estate services, short-term rental of vehicles, restaurant and catering services, access to cultural events, and lodging.
• What is the sales threshold in the case of OSS registration?

EUR 10,000 net is the new sales threshold, replacing the previous sales limits in each member state.

Calculation of the threshold of EUR 10,000 includes the combined sum of intra-Community distance sales of goods and TBE services provided to consumers in the EU.

For undertakings with a business location only in Poland, the equivalent of EUR 10,000 has been set at PLN 42,000.

Below that threshold, undertakings making distance sales of goods to individuals in the EU can still be subject to VAT in the member state where they are established, applying the national rules.

• What is VAT IOSS?

The Import One-Stop Shop (IOSS) is a new special procedure available for sellers from outside the EU who supply goods with a value not exceeding EUR 150. Thanks to the single VAT declaration for such goods, an exemption of such goods from the VAT on imports is possible (in which case the VAT rate applied is the rate in force in the EU member state to which the

goods are delivered). To apply the IOSS procedure, all of the goods must be located outside of EU territory at the time of receipt of payment.

Important! According to the regulations, firms from outside the EU are required to appoint a fiscal representative during registration in IOSS.

• What is the role of the fiscal representative?

The fiscal representative is jointly liable for VAT obligations. Its other duties include:

• • Registration of sellers from the EU and outside the EU in the IOSS system.
  • Filing VAT IOSS declarations.
  • Paying VAT on distance sales.
  • Representing the client before the tax authorities.
  • Maintaining the relevant registers for VAT purposes.
  • Conducting know-your-customer procedures before signing the contract.

In Poland, the following data are required for IOSS registration by an intermediary:

• • Taxpayer’s name.
  • Address with postal code.
  • E-mail address.
  • Taxpayer’s website address.
  • Tax identification number (NIP) issued in Poland or in the country of establishment or regular place of business.
• Is bank security required?

Yes. Under the regulations, to secure clients’ obligations, a fiscal representative is required to submit a bank guarantee or pay a security deposit.

The guarantee should be issued by a bank established in the European Union. The conditions for release of the bank guarantee are agreed individually and set forth in the service agreement signed with the client.