VAT e-Commerce package in 2021

On October 29, 2020, the Ministry of Finance announced a draft amendment to the law on the tax on goods and services, which is due to enter into force on July 1, 2021. work on its implementation is due to the need to implement the EU rules on the sale of goods at a distance, which provide for several changes regarding the way VAT is paid on goods and services in e-commerce.

As a result of the work of the European Commission, the EU Council adopted the so-called VAT e-Commerce package with the main objective to facilitate cross-border trade and tighten the VAT collection system. The project involves a number of changes, the most interesting of which are those affecting the operation of various types of transaction platforms. This applies to the sale of goods to consumers residing in the EU, which belong to entrepreneurs who do not have their registered office or permanent place of business in the EU.

The implementation work on the project stems from the need to implement EU VAT e-commerce rules, which mainly consist of:

Council Directive (EU) 2017/2455 of 5 December 2017
Council Directive (EU) 2019/1995 of 21 November 2019

VAT e-Commerce – main solutions:

defining the concept of intra-community distance sales (WSTO) and distance sales of goods imported from third countries (SOTI),
extension and modification of the special procedure for telecommunications, broadcasting or electronic services, the so-called MOSS in the OSS,
application of the VAT exemption only for the import of goods in consignments of an actual value not exceeding EUR 150, but only in case of registration and use of the IOSS system,
abolition of VAT exemption for imports of goods in low-value consignments up to EUR 22,
requiring electronic platforms providing certain services within the EU to maintain and make available on request to the competent tax authority a register of transactions and their operators.

VAT e-Commerce package – objectives:

better implementation of the principle of taxation of goods and services at the place of consumption,
fight against VAT fraud,
improve the efficiency of goods and services tax collection for cross-border e-commerce in the B2C relationship,
ensuring fair competition for EU entrepreneurs,
simplification of administrative procedures related to VAT accounting.

Harmonized VAT registration threshold across the EU:

Currently, companies selling goods at a distance to non-taxable persons from other EU member states must register for VAT purposes and the taxation of their sales in the country of consumption after exceeding the threshold set in that country. The e-commerce package foresees a harmonized turnover threshold of EUR 10 000 for mail-order sales for all member states.

Changes to internet platforms:

From 1 July 2021, the external platforms intermediating in the distance trade between EU consumers and non-EU suppliers or suppliers that will offer imported goods from outside the EU will face several new tax clearance obligations. They will be obliged to keep electronic records of the concluded transactions. At the request of the tax authorities, it will have to be made available if the dispatch or transport of goods begins or ends on the territory of Poland, as well as if the place of provision of services is located in Poland.

IOSS – Import One-Stop Shop

MOSS – Mini One-Stop Shop

OSS – One-Stop Shop

SOTI – Distance sales of goods imported from third countries

WSTO – Intra-Community distance sales