Changes in e-commerce VAT
As we have already written here, on 01/07/2021 a number of changes regarding electronic commerce and import, the so-called small parcels to the European Union. The e-commerce VAT package is to adapt the VAT collection system to EU regulations and simplify VAT settlements in cross-border e-commerce between entrepreneurs and consumers, the so-called B2C. Below, we have indicated the differences that result from the changes introduced.
Before 1 July 2021
After 1 July 2021
|Before 01.07.2021, the supplier who makes distance sales (transactions with consumers from other EU countries – so-called B2C) which don’t exceed the threshold determined separately by each member state has the right to choose how sales are taxed in the country to which the goods are shipped. Exceeding this threshold, he is obliged to register for VAT purposes in the country to which the goods are delivered (the so-called country of destination) and to settle VAT there.||The main change in e-commerce is the introduction of a harmonized threshold across the EU, which is supposed to be set at EUR 10,000. It will cover B2C total sales to all EU countries.
Once this limit is reached, sales will be taxed in the member state where the goods are delivered. By applying the VAT-IOSS procedure you will be able to avoid the need for VAT registration.
|As indicated in Article 2 (23) of the VAT Act, distance sales from the territory of the country i.e.
“The supply of goods dispatched or transported by or for the benefit of a taxable person in respect of goods and services from the territory of a country to the territory of a member state other than the territory of the country which is the state of destination for the goods dispatched or transported, provided that the supply is made to:
(a) a Value Added Tax taxable person or a legal person other than a Value Added Tax taxable person who is not required to account for the intra-Community acquisition of goods referred to in Article 9; or
(b) other than those referred to in point (a), a non-taxable person”
Example: sale of goods by an entrepreneur who is established in Poland to a natural person (consumer) residing in France.
|From 01.07.2021 the procedure of intra-Community distance sales of goods and supplies of goods (pol. WSTO – wewnątrzwspólnotowa dostawa towarów na odległość) will be introduced.|
|As defined in Article 2 (24) of the VAT Act, distance sales within the territory of the country i.e.
“The supply of goods dispatched or transported by or on behalf of a Value Added Tax taxable person from the territory of a member state other than the territory of the state of destination for the goods dispatched or transported, provided that the supply is made to:
(a) a taxable person or a legal person not a taxable person within the meaning of Article 15 who is not required to account for the intra-Community acquisition of goods referred to in Article 9; or
(b) other than those referred to in point (a); an entity which is not a taxable person within the meaning of Article 15 and is not required to account for intra-Community acquisitions of goods as referred to in Article 9;”
Example: an entrepreneur established in Portugal selling goods to individuals (consumers) living in Poland.
|The VAT e-commerce package introduces distances sales of goods imported from third territories or third countries (pol. SOTI – transakcje sprzedaży na odległość towarów importowych).
|For the import of goods in consignments of a value not exceeding EUR 22-exemption from VAT.||Abolish the VAT exemption for imports of goods in consignments of less than EUR 22 throughout the EU.|
|Using the VAT-IOSS procedure, you will be able to declare and pay SOTI VAT on shipments with an actual value of up to EUR 150. In order to benefit from the VAT-IOSS simplification, non-EU operators will, in principle, have to identify the intermediary responsible, among others, for the payment of VAT on SOTI. VAT exemptions will be introduced for imports of goods in consignments of an actual value not exceeding EUR 150 if VAT is settled in the VAT-IOSS procedure.|
|A further simplified procedure will be introduced to account for VAT on imports of goods in consignments of an actual value not exceeding EUR 150 if the VAT-IOSS procedure is not applied. It will be available to entities declaring goods to customs authorities (postal operators within the meaning of the Postal Law, e.g. couriers, postal operators, taxpayers having the status of the authorized trader within the meaning of Article 38 of the EU customs code, e.g. customs authorities), which are responsible for collecting VAT from the persons for whom the goods are intended and declaring this tax in the monthly declaration and making a payment of this tax collected.|
|In certain cases, Internet platforms will be considered as involved in transactions, i.e. those that deliver goods. They will have to collect and pay VAT.|
From 01.07.2021, the concept of mail-order (B2C) will be standardized and replaced by “intra-Community distance sales of goods” (pol. WSTO).
WSTO means the delivery of goods dispatched or transported by or on behalf of the supplier. It will also be the case when the supplier participates indirectly in the transport or dispatch of goods from the territory of a member state other than the target member state or transport of the goods to a buyer who is:
– a taxable person for goods and services or a legal person who is not a taxable person for goods and services and who is not obliged to account for the intra-Community acquisition of goods,
– a Value Added Tax taxable person or a legal person other than a Value Added Tax taxable person who is not required to account for an intra-Community acquisition of goods corresponding to an intra-Community acquisition of goods, or
– any other non-taxable person, taking into account that the goods supplied are not new means of transport or goods referred to in Article 22 (1) (2) of Act on Goods and Services Tax.
There will be a single EU-wide transaction limit of EUR 10 000.
Once a taxpayer has exceeded the threshold of EUR 10 000 for all B2C sales in the EU, their deliveries will be subject to VAT in the buyer’s country at the rate applicable there. Thanks to the WSTO, the taxpayer will be able to choose how to settle VAT between:
- registering for VAT in the country of the buyer. In this case, the sale will be settled in accordance with the VAT rates, in the settlement declarations according to the rules in force in each country.
- register for the OSS (one-stop shop) procedure. The taxable person shall make such declaration to the competent head of the tax office and shall make the VAT declarations, whether or not the supplies of goods and services covered by the union procedure (OSS) have taken place in the month concerned, by the end of the month following the month of sale.
B2B transactions will be carried out on the existing basis.
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