I. Changes in income tax for individuals not conducting business activity: Raising to PLN 30,000 the annual amount of income tax-free from personal income tax for…
All EU member states, including Poland, are currently facing the serious challenge of implementing the new VAT rules for the e-commerce industry. The core purpose of the changes is to tackle large-scale online VAT evasion across the EU. What can we expect? Increasing prices for goods imported from non-EU countries, as well as for courier and logistics services.
Assumptions of the e-commerce package
Currently, most EU countries apply a tax exemption for overseas small-value shipments (up to €22). Too-liberal laws have resulted in a growing scale of abuses in this field, especially in an era of rapid growth in international online trade. European consumers receive huge numbers of parcels imported from third countries that are undervalued by sellers so they can benefit from the exemption. As a result, VAT is not paid into state budgets, even for more expensive packages. The EU estimates €5 billion of VAT is lost each year due to non-compliant practices of online sellers using global shopping portals such as AliExpress, Amazon and eBay.
This is why introduction of appropriate changes and simplification of the taxation system for online trade has now become a top priority for governments and authorities across the EU. The deadline for national implementation of the new legal solutions is 30 June 2021, so there is not much time left. In Poland the main assumptions of the e-commerce package proposal are as follows:
- Abolishing in all EU countries the VAT exemption for so-called small parcels worth up to €22 and bought online from non-EU countries
- Significantly extending the scope of B2C transactions subject to the simplified one-stop shop (OSS) procedure (e.g. for the sale of goods imported from third countries like China to EU consumers in parcels with a real value not exceeding €150—in this respect the procedure will function as an import OSS, the so-called import one-stop shop (IOSS))
- Introducing a VAT exemption for the import of goods from outside the EU by online sellers in shipments with a value not exceeding €150, if VAT is declared and settled in IOSS
- Making online marketplaces responsible for collection and payment of VAT on certain sales made to EU consumers through intermediating commercial platforms.
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Obligation to collect VAT
It seems that under the forthcoming regulations the most significant changes will apply to online marketplace facilitators. This means that in certain cases they will be forced to assume the burden of paying VAT on behalf of sellers who are usually not established in the EU, which is the main source of problems in the process of enforcing VAT liabilities. It will be much easier to enforce tax payment from one entity, instead of dozens of small suppliers established outside the EU. This should boost VAT revenue from online sales and increase the efficiency of the EU tax administration. The Polish Ministry of Finance indicates that thanks to the proposed solution, revenues to the national budget may increase by as much as PLN1.2 billion annually. In the ministry’s opinion, such online marketplace facilitators have more resources than the base suppliers who sell through online platforms, so it will be much easier for them to meet the VAT collection requirements.
From 1 July 2021, new obligations may also apply to courier companies and postal services, which will have to collect and pay the VAT due for shipments with a value up to €150, when the supplier of the goods decides not to use IOSS. This will also mean additional administrative obligations, like keeping special import records.
Pursuant to the proposed EU regulations, the MOSS special procedure will be updated and extended, which will greatly simplify the tax obligations of EU entities conducting online businesses. Thanks to the new one-stop shop (OSS) procedure, taxpayers providing specific services or delivering goods to European consumers will not have to be VAT-registered in all member states where their e-recipients are located. Instead, they will be able to declare and pay VAT in just one country of their choice.
Revolution in e-commerce
Looking ahead, the new year will bring a real revolution for all entities operating in the e-commerce industry. Experts already predict price increases for goods imported from non-EU countries, as well as for courier and logistics services. Nevertheless, the changes are widely anticipated by national fiscal authorities and by distance sellers themselves, whose tax existence should soon be much easier. A draft of the Polish implementing regulations has been circulated for public consultation. Comments can be submitted through 19 November 2020. The changes are to enter into force on 1 July 2021.
Senior VAT Consultant