E-commerce VAT package – new e-commerce rules as of 1 July 2021

On 20 May 2021, the Polish Parliament adopted a draft amendment to the VAT Act concerning the introduction into the Polish legal order of the EU VAT e-commerce package covering VAT sealing changes in cross-border trade between businesses and consumers.

The amendments have been made in order to implement the provisions of EU directives adopted by the (EU) Council in December 2017 (2017/2455) and in November 2019 (2019/1995) amending Directive 2006/112/EC (the VAT Directive), most of which will be effective as of 1 July 2021.

Currently, in the Polish VAT system, there are no regulations that directly regulate the method of making settlements and proceedings in relation to the supply of goods or services purchased or provided through e-commerce.

Within the VAT Act, there are solutions applicable to both “traditional” trade and e-commerce. These are distance selling from and within the country, provision of services referred to in Article 28k of the VAT Act (telecommunication, broadcasting, or electronic services), and MOSS, i.e. special procedure for VAT settlements for EU and non-EU taxpayers.

Main solutions in the VAT e-commerce package include:

• repeal of the provisions governing distance selling and introducing instead the so-called Intra-Community Distance Selling of Goods (IDSG);
• replacement of the MOSS special procedure by One-Stop-Shop (OSS) and extension of the scope of services covered by it;
• introduction of the so-called non-EU procedure applicable to the provision of services under Article 28k of the VAT Act to consumers;
• introduction of distance selling of imported goods (SOTI), settled under the so-called import procedure;
• imposition of VAT obligation on taxpayers who facilitate the supply of goods using an electronic interface (e.g. trading platform);
• removal of VAT exemption for the importation of goods in consignments of a value not exceeding EUR 22 throughout the EU;
• implementation of e-TOLL tax relief.

Intra-Community distance selling of goods (IDSG)

As part of the EU legislative changes, a definition of distance intra-community distance selling of goods (IDSG) has been introduced to the VAT Directive, as well as a uniform sales limit throughout the EU – EUR 10,000 (PLN 42,000) for taxpayers supplying goods as part of IDSG and providing telecommunication, broadcasting and electronic services. The amendments also provide for the introduction of new rules for determining the place of supply of goods.

IDSG will apply to goods, including excise goods, located within the EU (released for free circulation or manufactured in the EU). As for distance selling, the IDSG will not apply to certain groups of goods:

• new means of transport;
• goods that are installed or assembled, with or without a trial run, by the supplier or by an entity acting on the supplier’s behalf;
• works of art, collectors’ items, antiques, second-hand goods – under certain conditions.

VAT-OSS, VAT-IOSS

From 1 July 2021, taxpayers who provide services or supplies to consumers in the EU will not have to register for VAT in all Member States where these services or supplies are made. They will be able to declare and pay VAT in one Member State (the Member State of identification) through the OSS.

New regulations do not change the existing rules for determining the place of supply of services, but only introduce a simplified procedure for declaring output VAT.

The amendments include the extension and modification of the existing special MOSS procedure to:

• certain services provided to consumers whose place of supply is regulated in a particular manner (services whose place of supply is the territory of the Member State of consumption);
• intra-Community distance selling of goods;
• certain supplies of goods in a Member State made by electronic interfaces facilitating such supplies,

– that is a one-stop-shop (OSS), and

• sales to EU consumers of goods imported from third countries in consignments of an actual value not exceeding EUR 150 (SOTI),

– that is an import OSS, the so-called Import-One-Stop-Shop (IOSS).

“New” VAT taxpayer

The proposed amendment includes the imposition of VAT payment obligation on taxpayers who facilitate, by using an electronic interface (e.g. trading platform, portal):

• the sale to EU consumers of goods imported from third countries in consignments of an actual value not exceeding EUR 150, or
• delivery of goods within the EU by a trader not established in the EU to consumers.

The new regulations cover operators of electronic interfaces regardless of whether they have their registered office or permanent place of business within the EU or in the territory of a third country.

Removal of the threshold for VAT exemption for the importation of goods in consignments

Currently, direct-to-consumer shipments with a value of less than EUR 10/22 may benefit from VAT exemption.

As a result of amendments to the VAT Directive, this exemption has been repealed and a new VAT exemption has been introduced for the importation of goods in consignments of a value not exceeding EUR 150, making this exemption conditional on the declaration of VAT under IOSS.

e-TOLL tax relief

The proposed amendments provide for the implementation of the e-TOLL tax relief, which is intended to reduce the cost of adapting a vehicle to use the electronic highway tolling system.

The tax relief will allow deducting from income the costs of acquisition of e-TOLL system devices and their maintenance incurred in 2021, up to the amount of PLN 500 (net) per each taxpayer’s vehicle.