On 13 April 2021, the Polish Parliament received a draft amendment to the VAT (hereinafter: Amendment), the so-called e-commerce package, which we have already mentioned in previous articles. Its implementation is fast approaching, so the regulatory issue of the proposed changes needs to be brought closer. It should be keep in mind that if the project is implemented, the taxpayer will have to familiarize himself with the new legal regulations, which will be followed by other obligations. It is therefore worth analyzing whether the company will be obliged to perform additional activities or change the manner of accounting.

Distance selling of imported goods – definition

Firstly, it is worth clarifying what is meant by distance selling of imported goods in light of the draft VAT amendment. As indicated in Article 138a (2), it is a distance sale of imported goods, i.e. goods dispatched or transported by or on behalf of the supplier, with the exception of goods subject to excise duty, in consignments of an actual value not exceeding the amount expressed in PLN and equivalent to EUR 150.

Special procedure – what does it mean?

As indicated in the explanatory memorandum to the amendment, chapter 9, which sets out the special procedure for distance selling of imported goods, refers to the Import One Stop Shop (IOSS). This procedure is a simplified procedure allowing VAT settlements for goods imported from countries outside the EU.

Having regard to the above, it is also worth noting the concept of the import procedure, which refers to settlement of VAT due on distance sales of imported goods to the Member State of consumption through goods to the Member State of consumption through the so-called country of identification. Such a state of identification, in the light of the amendment and Article 130a point 2b, is a member state in which the taxpayer has the seat of business activity, permanent place of business activity or the state where dispatch or transport of the goods commences.

The IOSS procedure that is being introduced is primarily intended to simplify VAT settlements for SOTI taxpayers, including, i.e. automation of the process of registering for tax purposes in the Member State of identification and filling of returns and payment of the VAT due, compared to monthly returns filed electronically.

The taxpayer, of course, has the right not to use the IOSS procedure, but the resulting benefits support the use of procedure.

Who may use the import procedure?

A taxpayer who makes distance sales of imported goods and:

1. has established his business or has a fixed place of business within the EU;
2. has established his business activity or has a fixed establishment in the EU territory or is not established in the EU territory and is represented by an intermediary;
3. has established his business in the territory of a third country with which the EU has concluded a mutual assistance agreement similar in scope to Council Directive 2010/24/EU of 16 March 2010 concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures and Regulation (EU) No 904/1010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax.

Moreover, the taxpayer in question can apply this procedure to all distance sales of imported goods.

Intermediary – conditions to keep in mind

In order to be able to apply the above procedure in the case of an entity that is not established within the EU, it will be necessary to appoint an intermediary. As indicated in the explanatory memorandum to the draft of the amended act, this obligation will not apply to an entity that will have its registered office in a third country, provided that with such a country, the EU has concluded an agreement on mutual assistance and additionally records distance selling of imported goods (SOTI).

So who can be an intermediary and what conditions must be met? First of all, it can be a natural person, legal entity or organizational unit without legal personality that meets the following conditions:

1. registered as an active VAT taxpayer;
2. having the seat of business activity or a permanent place of business activity in the territory of the country, which is selected to submit an information declaration on the intention to use the special import procedure;
3. for the last 24 months has not been in arrears with payments of taxes constituting the income of the state budget, exceeding separately in each tax respectively 3% of the amount of due tax liabilities;
4. has not been legally committing of a fiscal offence for the last 24 months;
5. is entitled to provide professional tax advice or bookkeeping services.

However, it should keep in mind that a taxpayer may not appoint more than one intermediary, and the above condition must be met jointly. Moreover, as indicated in Article 138d (2) of the Amendment, the intermediary is jointly and severally liable for tax obligations together with the taxpayer.

Referring to the advantage of the application of the IOSS procedure, it is worth pointing out that in relation to tax obligations on imported goods, the tax is collected at the time of importation by the customs authority. However, in a situation where the IOSS procedure is applied, the operator will not only have the opportunity to charge and collect VAT at the time of sale of the goods, but will also have the opportunity to declare and pay the tax through the IOSS in the state of identification. The above translates into a many benefits, including an expedited process for customs authorities due to the fact that a given import will be subject to VAT exemption as a result of the tax already paid at the time of sale, or no possibility to under-declare the amount of the shipment. The additional benefit, which may be enjoyed not only by the taxpayer or the state authorities, but also the final customer, is primarily faster delivery of the goods in question. It is worth noting that the IOSS procedure is not an obligation, so it is a free right to decide whether to use the simplification.