The Sejm will soon take up a package of EU solutions regarding e-commerce in VAT. European Union countries are obliged to implement the provisions of a number of directives and executive regulations into their local tax laws by 1 July 2021. The main objective is to tighten VAT in this case in the field of e-commerce.
The draft focuses on a number of very important changes in the field of e-commerce. First of all, it introduces the notion of distance intra-community sale of goods and distance sale of goods imported from third countries into the glossary of the VAT Act.
A distance intra-Community sale of goods shall mean the supply of goods dispatched or transported by or on behalf of the supplier, including where the supplier participates indirectly in the transport or dispatch of the goods, from a Member State other than that in which dispatch or transport of the goods to the customer ends. In this case, the customer is to be a non-taxable person for VAT purposes (B2C) as well as the customer (being a taxable person or a non-taxable legal person).
These new definitions will replace the previously known distance selling from the country and distance selling within the country. As with mail order, certain groups of goods, for example new means of transport, will also be excluded from such sales. Interestingly, in contrast to the mentioned distance selling, it is also possible to deliver excise goods, but only in the case of intra-Community sales, not import sales. However, in order to be sold in the EU, they must first be released for free circulation.
Once the taxpayer exceeds the threshold of EUR 10,000 for all B2C sales in the EU, their supplies are subject to VAT in the country of consumption at the rate applicable there. Currently different thresholds apply for each European country.
In addition, the amending act introduces the concept of an electronic interface, i.e. a portal or platform that facilitates sales. In this case, the taxpayer who is an intermediary in the sale through such an electronic interface is deemed to have made the supply in his own name. The operator of such interface will be able to use a special EU procedure, as other taxpayers, which will be discussed later.
As there is a certain deviation and consequent pursuit of the principle of taxation at the place of consumption, the place of supply of such goods is the place where their dispatch or transport to the purchaser ends, which is added in Article 22 for more details. There are also exceptions to this rule under certain conditions.
Reorganisation – OSS
Next, it is worth focusing on the extension and modifications introduced to the MOSS procedure, the so-called Mini One Stop Shop. This procedure makes it possible to declare and account for VAT on certain cross-border transactions, as a rule, in the Member State of establishment (identification) of the service provider via a dedicated web portal, without the need to register and perform reporting and accounting obligations in the country of the service recipient.
The main advantage of the MOSS procedure is the abolition of the obligation to register for VAT in the countries where the final recipients are located, which should be regarded as a major simplification. This procedure is now to be transformed into a One Stop Shop (OSS) procedure. This is to allow and lead to electronic registration in one country, accounting for VAT in one quarterly return and ‘at the end of the day’ this leads to cooperation between EU tax authorities. As before, the competent authorities in this respect will be the Head of the Second Tax Office Warszawa-Śródmieście and the Head of the Tax Office in Łódź. Entities previously operating under the MOSS will automatically be transferred to the OSS, so there will be no need for re-registration for these entities. For the purposes of the changes, a new VAT-OSS return will be created for beneficiary entities to be sent at the end of each quarter.
Due to the continuing pandemic, the changes will be implemented from 1 July 2021, rather than 1 January as originally envisaged.