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9 July 2021

VAT e-commerce law – what to expect from July 1st?

From July 1st, 2021, the VAT law on cross-border e-commerce activities between businesses and consumers (B2C transactions) will change. The VAT e-commerce package will introduce, among others, the extension of procedures related to OSS One Stop Shops and new rules concerning ESPO transaction limits.

The changes will primarily affect entrepreneurs providing electronic, telecommunications, and broadcasting services (in short: TBE services), companies selling goods online to individual customers (B2C transactions) in the territory of the European Union. The legislative change will also affect companies intermediating in online transactions, i.e. popular e-commerce platforms, which will be subject to the new obligation to settle VAT on transactions and reporting to tax authorities.

VAT e-commerce – project assumptions

The basic assumption of the project is to tighten the VAT settlement system in the e-commerce industry. But also to improve cross-border sales via the Internet and standardize VAT systems in the European Union.

In practice, the project will introduce a new EU One Stop Shop (OSS) procedure, which will replace the existing Mini One Stop Shop (MOSS). Additionally, the Import One Stop Shop (IOSS) procedure will be introduced.

The OSS procedure is the intra-Community distance sales of goods and domestic deliveries via internet that will include an extended catalog of services (B2C). The IOSS will aid in tax relief settlements in the case of distance sales of goods imported from third countries (non-EU) in a shipment with a value not exceeding 150 EUR.

Therefore, with the use of OSS procedures, entrepreneurs will be able to register in a chosen EU Member State, which will allow them to declare and pay VAT on all distance sales of goods and in the case of cross-border services to customers within the EU. For the non-EU transactions, it will be possible to establish an EU intermediary, with the authority to collect and settle VAT for a given transaction.

Moreover, registration in the new VAT OSS procedures will allow taxpayers to submit a single VAT declaration, once every quarter of the year.

New transaction threshold and WTSO

However, the crucial change from the point of view of e-commerce taxpayers seems to be the introduction of a new, EU-wide limit for the value of transactions.

As of July 1st, it will amount to 10,000 EUR net – which, as of the publication date of the article, equals 45,000 PLN. If the threshold is exceeded, the taxpayer/seller is eligible for VAT in the EU Member State where the party to the transaction (the buyer of the goods) is registered.

The law also provides for the abolition of the VAT exemption for shipments from outside the EU below the value of 150 PLN but tries to compensate it with the IOSS procedure, which will support the preparation of the declaration and payment of the VAT due.

The new regulations will also introduce terminological changes. With the entry into force of the e-commerce VAT package, the current term “mail-order sale” will be replaced by Intra-Community Distance Sales of Goods, abbreviated in Poland as WTSO.

VAT e-commerce – registration for OSS and IOSS

The podatki.gov.pl website offers the possibility to apply for OSS procedures since April 1st, 2021. The notification is the first step that starts the registration procedure, which will end with identification (in the case of the EU procedure) and assigning an identification number (in the case of the non-EU procedure and the import procedure).

The applicant’s eligibility will be confirmed after the entry into force of the law (after July 1st, 2021) and after verification performed by the tax authority.

(Legal assumptions)

The project introduces the so-called e-commerce VAT package resulting from the provisions of Council Directive (EU) 2017/2455 amending Directive 2006/112 / EC and Directive 2009/132 / EC as regards certain value-added tax obligations for the provision of services and distance sales of goods and Council Directive (EU) 2019/1995 amending Directive 2006/112 / EC as regards provisions on distance selling of goods and certain domestic supplies of goods.

Note: On June 25th this year, the Senate adopted an amendment to postpone the entry into force of the provisions on the VAT e-commerce to September 1st, 2021. Therefore, the law will return to the Sejm, which will decide on the adoption of said amendment.

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ARPI Accounting is a part of ARPI Group, a Norwegian holding which started to operate in Poland in 2001.

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