Currently, more and more entrepreneurs are taking the decision to start an overseas expansion. However, starting a stationary business is sometimes risky, due to the relatively high initial costs. Therefore, entrepreneurs are turning their attention to e-commerce. However, the online sale of goods very often generates a lot of doubts related to taxation. In this article, we will try to bring you closer to this subject.
1. Intra-Community distance sales of goods (ITA)
At the outset, it must be emphasised that the sale of goods to the consumer or so-called B2C sales is accounted for differently from the sale of goods between businesses, i.e. B2B.
The CTSO by law applies to goods dispatched by a supplier from one EU country to another Member State.
CTSO is applied to B2C transactions, and includes delivery to:
- taxable persons who are not required to account for intra-Community acquisitions of goods,
- a legal entity that is not a taxable person and is not required to account for intra-Community acquisitions of goods,
- natural persons not engaged in commercial activities
The place of supply of goods is deemed to be the place where the shipment of goods is completed. VAT is therefore accountable at the place of supply.
Sales limits
The method of accounting for VAT depends on the value of the goods sold remotely. Key in this aspect is the €10,000 limit.
The limit includes:
- value of goods sold in other EU countries
- value of telecommunications, broadcasting and electronic services
The indicated limit applies in total to all sales made within the EU.
If the limit is not exceeded, the seller shall maybe:
- account for sales in the same way as domestic sales
- register voluntarily for VAT in the consumer's country
- register for VAT OSS, which makes it possible to account for sales to the above-mentioned entities from other EU countries
If the limit is exceeded, the seller shall be obliged to:
- registration as a VAT payer in each EU country where the goods are sold
- OSS VAT registration,
Limitations of the OSS VAT system:
- sales to consumers residing in Poland cannot be declared,
- a sale cannot be declared if the goods were delivered from a warehouse located in the same EU country as the consumer,
- sales of goods to traders.
2 Intra-Community supply of goods (ITA)
Intra-Community supply of goods refers to the transport of goods from the territory of Poland to other EU countries.
A WDT occurs if:
- the buyer of the goods has VAT status, granted by an EU member state other than Poland,
- the supplier has registered in Poland as a VAT-EU taxpayer,
- the supplier has documentary evidence that the goods have been exported from Poland to another EU country.
General principle of taxation.
As a general rule, in B2B transactions, VAT taxation occurs in the country of the buyer of the goods. In the country of the seller of the goods, the rate 0% or exemption with the right to deduct input tax is applied.
When the seller applies 0% VAT rate:
- the supply has been made to a purchaser holding a WDT identification number issued by the relevant Member State,
- The supplier has documentary evidence before the deadline for submitting the JPK settlement,
- The supplier is registered as an EU taxpayer when submitting JPK settlements.
3. intra-community acquisition of goods (ICT)
Intra-Community acquisition of goods consists in the acquisition of the right to dispose of goods, on the same basis as the to its owner. VAT relates to goods that are transported from another EU country to Poland. The purchaser and the supplier must be VAT payers.
VAT is considered to be tax neutral for the Polish entrepreneur. The Polish buyer is obliged to selfassess the VAT. As a rule, the Polish entrepreneur shows VAT to be paid and deducted. The counterparty from another country in such a case issues an invoice without the amount of VAT, with the notation "reverse charge".
In order to deduct input VAT, two conditions must be met simultaneously:
- the taxable person has received the DNT invoice within three months of the end of the month in which the tax liability arose,
- the amount of tax due from WNT is included in the JPK settlement.
4. Qucikflex package - call - off stock and chain transactions
Call-off stock
This procedure is based on allowing goods that have been transported to warehouses in another EU country, from which the foreign counterparty collects the goods, to be accounted for. Such an action under the legislation could not be accounted for as WDT. In the previous legal state, a Polish taxpayer had to show WDT in Poland and WNT abroad.
Due to the introduction of the call-off stock procedure, the Polish entrepreneur settles WDT when goods are taken from stock and the foreign counterparty settles WNT.
However, not everyone can use the call-off stock procedure. In order to use this procedure, a number of conditions must be met:
- the buyer and the supplier must be VAT-EU taxable persons,
- the place to which the goods are moved must not be the registered office or place of business of the supplier,
- transport must take place between two different EU countries,
- an agreement must be drawn up between the purchaser and the supplier, from which the purchaser's entitlement to remove the goods from storage will arise,
- the supplier must keep records of movements.
Goods can only be stored in a warehouse for 12 months. After the indicated period, the supplier is obliged to register for VAT in the country where the warehouse is located.
Chain transactions
Chain transactions must involve at least three entities. This transaction consists of at least two entities selling the same good, with the first seller delivering the good directly to the last buyer.
With chain transactions, the key is that only one supply can benefit from the 0% VAT rate.
As a general rule, where there are three entities of which the intermediary is most often based in the buyer's country. The Polish entrepreneur reports WDT in the transaction with the intermediary. The intermediary in the same transaction reports VAT. The transaction between the intermediary and the buyer is taxed as a so-called local transaction.
Entrepreneur! Feeling lost in the maze of tax and other regulations related to the cross-border sale of goods and services, how do you manage to comply with all the requirements? Call or write to our law firm! We will be happy to talk and support you in running your business!
