On 29th of October, 2020, the Ministry of Finance published a draft act amending the act on tax on goods and services and some other acts (no. from the list: UC60, hereinafter: “VAT Act”), which is currently at the stage of giving opinions after obtaining public consultation positions. The VAT Act is to implement the provisions of the EU Council Directive 2017/2455 and the EU Council Directive 2019/1995 on the so-called e-Commerce VAT Package. The aim is to change the VAT collection system and to facilitate VAT settlement in cross-border e-commerce. Significant changes relate to the change in the rules of distance selling, the new VAT-OSS procedure, distance selling of imported goods (SOTI) and new VAT collection and payment obligations imposed on e-commerce platforms.
In the field of distance selling, the new regulations provide for the unification of the threshold for the supplier performing distance sales, which is to be the same throughout the EU and will amount to 10,000 EUR net and will apply to B2C sales in total to all EU countries. It is also planned to introduce a new definition of intra-Community distance sales of goods.
It is also planned to extend and modify the MOSS procedure, which is currently applied to telecommunications services, broadcasting services and electronic services, and to create a One Stop Shop (OSS). The VAT-OSS procedure is to be optional and it is to enable the settlement of VAT on intra-Community distance sales of goods or on all kinds of cross-border B2C services, the place of supply of which is an EU country.
The draft law on VAT also introduces a definition of distance selling of imported goods (SOTI, i.e. goods shipped from third countries to end consumers in the EU). The VAT exemption for the import of goods in shipments with a value not exceeding EUR 22 in all EU countries is to be repealed. In order to declare and pay VAT from SOTI placed in parcels with an actual value of up to EUR 150, a special import procedure is provided – the import One Stop Shop (IOSS). In the case of IOSS, the electronic interface supplier will charge and collect VAT when the goods are sold and declare and pay this tax globally via IOSS in the Member State of identification, and the goods will be VAT exempt upon import. In order to take advantage of the IOSS simplification, non-EU taxpayers will, as a rule, have to appoint an intermediary responsible, inter alia, for the payment of VAT from SOTI.
An important change is also a change that applies to entities that facilitate the sale of goods by using the so-called electronic interfaces, e.g. a trading platform, portal or application software (API). 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) in shipments with a real value not exceeding 150 EUR and intra-Community distance sales of goods (ESPO) or other than ESPO delivery of goods to the entity non-taxable person – only if the above-mentioned the transactions will be made by an entrepreneur who isn’t established, and in the absence of a seat, a permanent place of business in the EU. Entities will also be required to keep records of these transactions in electronic form. The operators of electronic interfaces will be able to take advantage of simplifications in the VAT settlement on the same terms as other taxpayers carrying out this type of transaction (OSS, IOSS procedures).
Currently, the draft law on VAT is still at the legislative stage. The planned date of entry into force of the new regulations is set for 1st of July, 2021.