In the last few days, changes in VAT concerning the e-commerce sector constitute a topic that has been very interesting for entrepreneurs selling in the EU. Particular attention is paid, among others, to the mysterious terms: OSS, IOSS, as well as the new role of electronic interfaces in trade via the internet. We will try to bring you closer to this topic.

1. Implementation of EU solutions

On 1 July 2021, the Act of 20 May 2021 amending the Act on tax on goods and services and certain other acts (Official Journal of 2021, item 1163), hereinafter referred to as the amending act, entered into force. he regulations included in this Act constitute the implementation of EU regulations. Indeed, on 5 December 2017, the Council of the European Union adopted the VAT e-commerce package. It consists of the following legal acts:

  • Council Directive (EU) 2017/2455 of 5 December 2017 amending Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations for supplies of services and distance sales of goods;
  • Council Regulation (EU) 2017/2454 of 5 December 2017 amending Regulation (EU) No 904/2010 on administrative cooperation and combating fraud in the field of value added tax;
  • Council Implementing Regulation (EU) 2017/2459 of 5 December 2017 amending Implementing Regulation (EU) No 282/2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax.

The package of legal acts presented above has been supplemented with implementing regulations:

  • Council Directive (EU) 2019/1995 of 21 November 2019 amending Directive 2006/112/EC as regards provisions relating to distance sales of goods and certain domestic supplies of goods;
  • Council Implementing Regulation (EU) 2019/2026 of 21 November 2019 amending Implementing Regulation (EU) No 282/2011 as regards supplies of goods or services facilitated by electronic interfaces and the special schemes for taxable persons supplying services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods;
  • Commission Implementing Regulation (EU) 2020/194 of 12 February 2020 laying down detailed rules for the application of Council Regulation (EU) No 904/2010 as regards the special schemes for taxable persons supplying services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods.

The main objective of the VAT e-commerce package is to level the playing field for EU enterprises in relation to these ones from third countries. Until now, entrepreneurs from third countries have been able to make supplies to the EU without VAT and avoid registering for VAT purposes in the EU.

2. Intra-Community distance sales of goods

2.1 Definition of intra-Community distance sales of goods

The amending act repealed the concepts of “distance sales from the territory of the country” and “distance sale within the territory of the country”. They were replaced by the concept of “intra-Community distance sales of goods”. This term should be understood as the supply of goods sent or transported by or on behalf of the supplier, including situations where the supplier participates indirectly in the transport or dispatch of the goods, from the territory of a Member State other than that one where the dispatch or transport of the goods to the customer ends and the person acquiring them is:

a. a taxable person for the purposes of the tax on goods and services or a legal person being not taxable one for the purposes of the tax on goods and services who aren’t obliged to settle the intra-Community acquisition of goods, either

b. a taxable person for the purposes of value added tax or a legal person who isn’t a taxpayer of value added tax, who aren’t required to settle the intra-Community acquisition of goods corresponding to the intra-Community acquisition of goods or

c. a non-taxable entity

– provided that the goods supplied aren’t new means of transport or goods which are installed or assembled, with or without a trial run, by the person supplying them or by an entity acting on his/her behalf.

It clearly results from the quoted definition that intra-Community distance sales of goods apply to B2C transactions and don’t concern B2B relationships.

2.2 Place of delivery for intra-Community distance sales of goods

According to the provisions, in the case of the intra-Community distance sales of goods, the place of delivery is considered to be that one where the goods are located at the time when dispatch or transport of the goods to the customer ends (Article 22 of the Act of 11 March 2004 on tax on goods and services (i.e. OJ 2021, item 685, as amended), hereinafter referred to as the VAT Act). This rule doesn’t apply to works of art, collectors’ items, antiques and second-hand goods if their tax base is determined in accordance with the principles set out in Article 120(4) and (5) of the VAT Act (Article 22(1a) of the VAT Act). It also doesn’t apply in the event that the following conditions are cumulatively fulfilled:

  1. the supplier has a place of business and in the absence of such a head office – the permanent domicile or habitual residence, only in the territory of one Member State;
  2. the goods are dispatched or transported to the territory of a Member State other than that one where the taxpayer has a head office/permanent domicile/habitual residence;
  3. the sum of total amount of supplies of goods made within the intra-Community distance sales of goods, as well as telecommunications, broadcasting and electronic services provided cross border to consumers, less the amount of tax or value added tax, didn’t exceed, during the tax year or the previous fiscal year, the amount of EUR 10,000 or its equivalent expressed in the national currency of the Member State referred to in point 1 (In Poland, this amount is PLN 42,000) (Article 22a(1) of the VAT Act).

The threshold of EUR 10,000 concers the sum of the total value of supplies of goods made within the intra-Community distance sales of goods and the value of telecommunications, broadcasting and electronic services provided to consumers. As long as the value of the transactions doesn’t exceed this threshold, they will be taxed in the State where the taxpayer has the head office or, in the absence thereof, has the permanent domicile or habitual residence. Only after exceeding the indicated threshold, transactions will be taxed in the country of consumption. However, it should be noted that if the intra-Community distance sales of goods don’t exceed EUR 10,000, the taxpayer may decide to tax the transaction in the country of consumption.

3. Distance sales of goods imported

3.1 Definition of distance sales of goods imported

The concept of “distance sales of goods imported” constitutes another novelty. The legislator defines it as: the supply of goods dispatched or transported by or on behalf of the supllier, including situations where the supplier participates indirectly in the transport or dispatch of the goods, from the territory of a third country to a purchaser in the territory of a Member State who is:

a. a taxable person for the purposes of the tax on goods and services or a legal person being not taxable one for the purposes of the tax on goods and services who isn’t obliged to settle the intra-Community acquisition of goods, either

b. a taxable person for the purposes of value added tax or a legal person who isn’t a taxpayer of value added tax, who aren’t required to settle the intra-Community acquisition of goods corresponding to the intra-Community acquisition of goods, or

c. a non-taxable entity

– provided that the goods supplied aren’t new means of transport or goods which are installed or assembled, with or without a trial run, by the person supplying them or by an entity acting on his/her behalf.

As with intra-Community distance sales of goods, distance sales of goods imported apply only to B2C transactions.

3.2 Place of delivery for distance sales of goods imported

As a rule, in the case of distance sales of goods imported, the place of delivery is that one where the goods are located when dispatch or transport to the buyer begins. However, this rule isn’t absolute – the place of delivery may be also that one where dispatch or transport of the goods ends (country of destination). This occurs in the event that the goods are imported into the territory of an EU Member State other than the one in which dispatch or transport of the goods ends (Article 22(1)(1b) of the VAT Act). The place of delivery is also that one where dispatch or transport of the goods ends, even if the goods are imported into the territory of the Member State in which dispatch or transport of the goods ends, provided that the tax or value added tax on the supply of these goods is to be declared under the special scheme of the IOSS (Article 22(1)(1c) of the VAT Act).

4. OSS (One-Stop Shop)

4.1 MOSS in the OSS

The OSS (One-Stop Shop) replaces the current MOSS (Mini One-Stop Shop). The MOSS allowed entrepreneurs providing telecommunications, broadcasting and electronic services to consumers in EU Member States where they dind’t have their head office to declare and pay VAT. On the other hand, the OSS is comprehensive. Its purpose is to enable an entrepreneur selling goods and services to consumers in an EU country other than the one in which it has the head office to declare and pay VAT in one general declaration.

It should be noted here that the OSS isn’t always an advantageous solution. In the event that the supplier stores goods in foreign warehouses belonging to third parties, movements in the stock can’t be settled under the OSS. They shall be taxed in the country where these stock transfers take place.

Entrepreneurs who previously benefited from the MOSS use the OSS from 1 July 2021. Re-registration isn’t required.

4.2 Optional nature of the OSS

The OSS concerns B2C relationships and is optional. Therefore, the taxpayer can, at its own discretion, either register for VAT in individual EU countries where it provides services or use the OSS procedure.

As a rule, the entrepreneur will have to choose which procedure to use only when the value of net transactions with consumers from other EU countries exceeds the equivalent of EUR 10,000. Until the value of sales under the intra-Community distance sales of goods doesn’t exceed the aforementioned amount, the taxpayer will be subject to the obligation to pay VAT in the State where he/she conducts an economic activity. However, it should be noted that the taxpayer may decide to use the option of taxation in the country of consumption even before the value of the intra-Community distance sales of goods exceeds EUR 10,000. We have written about it previously.

4.3 Registration with the OSS and its effects

A taxpayer who has decided to use the OSS registers in the country where he/she has the head office office or fixed establishment (This is the so-called country of identification). Applications can only be submitted electronically. In Poland, the appropriate portal for registration is the website podatki.gov.pl.

Registration in the country of identification will be valid for all sale transactions for consumers in other EU Member States. It isn’t necessary to repeat it in different EU countries.

Thanks to registration in the OSS, the taxpayer gains the possibility to submit one VAT return in the country of identification, regardless of how many EU countries he/she sold in. The declaration shall be submitted on a quaterly basis, by the end of the month following each quarter. It contains information on sales made to consumers from each EU country and on being subject to local VAT rates.

The taxpayer is also obliged to pay the tax in the country of identification.

It should be emphasised that the taxpayer must declare and pay VAT in the OSS for all services or supplies which are subject to this procedure. He/She can’t declare and settle the tax selectively – partly in the declaration appropriate for the OSS, and partly in the national tax returns of the Member States of consumption.

The taxpayer is obliged to keep a record of all sales qualifying for the OSS for 10 years.

4.4 Union and non-Union procedure

In the OSS, the taxpayer can use the Union and non-Union schemes.

The EU procedure applies in the event that the settlement of the VAT due in the Member State of consumption occurs via the Member State of identification, provided that:

a) the taxable person makes the intra-Community distance sales of goods, either

b) the taxpayer facilitates the supply of goods by means of an electronic interface where the dispatch or transport of the goods to be delivered begins and ends within the territory of the same Member State, or

c) the taxable person has his/her place of business or fixed establishment in the EU, but hasn’t his/her place of business or fixed establishment within the territory of the Member State of consumption and provides services to non-taxable persons.

The non-Union scheme can be used by an entrepreneur who hasn’t a place of business or fixed establishment in the EU, but provides services to consumers subject to VAT in the EU. This procedure allows VAT due to the Member State of consumption on the supply of services to be accounted for through the Member State of identification.

5. IOSS (Import One-Stop Shop) and import scheme

5.1 Procedure for consignments outside the EU of a value not exceeding EUR 150

The IOSS system (Import One-Stop Shop) and the associated import scheme constitute another novelty. It applies to VAT on distance sales of goods imported in consignments with an intrinsic value not exceeding EUR 150. In this case, the declaration and payment of VAT due on the sale of goods will take place in the Member State where the entrepreneur has declared to the IOSS (Member State of identification).

It should be emphasised that the schemes in question may be used by both entrepreneurs with a place of business in the EU and those without a head office in the EU, if they perform distance sales of goods imported of an actual value of up to EUR 150. At the same time, the IOSS is optional – the taxpayer isn’t obliged to use it.

Registration with the IOSS is valid for all distance sales of goods imported made to EU buyers.

In the event of the application of the IOSS scheme, the importation of goods will be exempt from VAT. This exemption doesn’t concern goods being subject to excise duty.

5.2 Intermediary

A non-EU taxpayer who wants to settle VAT under the IOSS scheme, must be represented in the country of registration by an intermediary, established by means of written agreement. The intermediary acts in the name and on behalf of that taxpayer.

It results from Article 138c(2) of the VAT Act that an intemediary may be an individual, a legal person or an organisational unit without legal personality which jointly fulfils the following conditions:

  1. he/she is registered as an active VAT payer;
  2. he/she has his/her place of business or fixed establishment in the territory of the country of identification;
  3. for the last 24 months, he/she hasn’t been in arrears with payments of individual taxes constituting state budget revenue, exceeding separately in each tax respectively 3% of the amount of tax liabilities due in individual taxes (the share of arrears in the amount of tax is determined in relation to the amount of payments due for the settlement period to which the arrears relate);
  4. for the last 24 months, a natural person who is a taxpayer, and in the case of taxpayers who aren’t individuals – a person who is a partner in a civil or commercial company without legal personality, a member of the managing authorities, chief accountant, hasn’t been finally convicted under the Act – the Fiscal Penal Code for committing a fiscal offence;
  5. he/she is authorised to provide professional tax consulting services in accordance with the provisions on tax advice or to provide bookkeeping services in accordance with the provisions on accounting.
5.3 VAT return and records of transactions

The VAT return for monthly periods is submitted to the tax office of the country where the registration to the IOSS has taken place by electronic communication. It shall be submitted by the end of the month following each subsequent month. The obligation in question is incumbent on the taxpayer regardless of whether distance sales of goods imported, covered by the import scheme, occurred.

As part of the import scheme, VAT will be charged at the rates applicable in the consumer’s country, but payment of VAT declared in the return should be made in the State where the registration to the IOSS took place.

An entrepreneur who has registered with the IOSS is obliged to keep records of all eligible IOSS sales for 10 years. He/She is also required to provide the person declaring goods for customs clearance at the EU border with the information required for customs clearance in the EU, including the VAT-IOSS identification number.

6. New obligations for postal operators and couriers

If the collection of VAT hasn’t taken place under the IOSS, this obligation rests on the postal operator within the meaning of the Act of 23 November 2012 – Postal Law (OJ 2020, items 1041 and 2320), as well as on the entity with the status of authorised entrepreneur within the meaning of Article 38 of the Union Customs Code.

It’s the responsibility of the postal operator/courrier to declare the goods subject to distance sales of goods imported placed in consignments with an actual value not exceeding the PLN equivalent of EUR 150, to the customs authorities in the territory of the country of destination of the consignment and to show the tax collected on the import of these goods in monthly declarations submitted via electronic means of communication. He/She is also obliged to calculate and collect the tax in the correct amount from the person for whom the goods are intended, no later than at the time of delivery of the consignment to that person, and to make payment of this tax. On the other hand, the person for whom the goods are intended is required to pay the tax.

The tax collected by the postal operator/courier should be paid to the competent authority by the 16th day of the month following that one in which the tax was collected.

It should be emphasised that the postal operator/courrier performing the duties in question is acting on its own name and on behalf of the person for whom the goods are intended.

The postal operator/courier is to keep records of imported goods covered by this procedure in electronic form. The records are kept for a period of 10 years, calculated from the end of the fiscal year in which the tax liability for the importation of goods arose

7. New role of electronic interfaces

7.1 New obligations

As of 1 July 2021, electronic interfaces became entities “participating”‘ in the supply of goods and responsible for collecting VAT on sales to the consumer. The obligation in question concerns situations where the electronic interface facilitates:

  • distance sales of goods imported in consignments with an actual value not exceeding the equivalent in PLN of EUR 150,
  • delivery within the EU (including intra-Community distance sales of goods) by an entrepreneur who doesn’t have a place of business or a fixed establishment in the territory of the EU, regardless of the value of the transaction.
7.2 What does it mean that the electronic interface “facilitates”?

It results from Article 5 b of Regulation that an electronic interface “facilitates” transactions if it enables establishing contact between the buyer and the supplier who offers goods for sale via an electronic interface and this leads to the delivery of goods through that interface.

Electronic interface – the taxpayer doesn’t facilitate the supply of goods if all of the following conditions are fulfilled:

a) this taxable person doesn’t specify, directly or indirectly, any conditions under which the supply of goods is made;

b) this taxpayer isn’t, directly or indirectly, involved in authorising the charge to the customer in respect of the payment made;

c) this taxable person doesn’t, directly or indirectly, participate in the ordering or delivery of the goods.

It should be noted here that the new obligations won’t apply to electronic interfaces performing only one of the following functions:

a) processing of payments in relation to the supply of goods;

b) offering ot advertising goods;

c) redirecting or transferring buyers to other electronic interfaces through which goods are offered for sale, without any further intervention in the supply of those goods.

7.3 Legal fiction

In Article 7a of the VAT Act, the legislator decided to introduce a legal fiction. It results in the division of one transaction into two consecutive supplies of goods:

a) between the original supplier and the electronic interface (B2B) and,

b) between the electronic interface and the consumer (B2C).

B2B delivery will be taxed at 0%. On the other hand, a B2C delivery will be taxed in the buyer’s country at the VAT rate applicable there. Consequently, the electronic interface, and not the actual seller, will pay VAT on the sale charged to the purchaser in an EU Member State. Therefore, the electronic interface should collect VAT from the buyer on the supply of all goods destined to an EU Member State, electronically submit the monthly VAT return and make the monthly payment of the VAT declared.

7.4 Other obligations of electronic interfaces

The electronic interface should be configured in such a way that it displays the amount of VAT to be paid by the buyer in the EU at the latest after the end of the ordering process. Moreover, the invoice generated by the system should include the price paid by the purchaser in EUR.

The electronic interface is also intended to work with the actual seller of the goods so that the information required for customs clearance in the EU, and in particular the VAT-IOSS identification number, reaches the EU customs clearance where the goods will be imported.

Moreover, for 10 years, the electronic interface is required to keep records of all eligible sales it has facilitated..

8. Legal notice

The study is a work within the meaning of the Act of 4 February 1994 on Copyright and Related Rights (OJ 2006, No. 90, item 631, consolidated text, as amended). Publishing or reproducing this study or its part, quoting opinions, as well as disseminating in any other way the information contained therein without the written consent of Crede sp. z o.o. is prohibited.

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