The e-commerce market is constantly expanding. Not surprisingly, online sellers are increasingly eager to enter other European Union markets with their sales as well, in order to further increase their turnover.
However, when sellers want to expand their offerings to other EU countries, they become subject to new tax obligations that they must fulfill. As of July 1, 2021, this is simpler. Why? Since then, the so-called VAT package for e-commerce has come into effect, which slightly simplifies the tax settlement rules for international sellers. This happened, among other things, through the implementation of the VAT OSS procedure.
What is VAT OSS?
VAT OSS One-Stop-Shop is a procedure that involves simplified VAT settlement for entrepreneurs selling, among other things, digital goods and services online in the European Union. It is worth noting that taking advantage of this system is voluntary and you can join it of your own accord.
Who can benefit from the VAT OSS?
A taxpayer with a registered office in one of the EU countries not classified as a supplier, carrying out CTSO (distance intra-Community sale of goods) transactions or the provision of services to non-taxpayers of EU member states where he does not have a place of business.
A non-established taxpayer in an EU country performing CTSO.
Operators of electronic interfaces (based in the EU or outside the EU) facilitating the supply of goods (so-called recognized suppliers) making:
- distance sales of goods in the EU,
- Certain domestic deliveries of goods.
What is the sales limit?
VAT OSS reduces and unifies the thresholds for consignment sales to EU countries, at this point the limit is 10 thousand euros in value of supplies of goods and services to customers from other EU countries on an annual basis.
What is included in the limit?
The value of supplies of goods sold to consumers from other European Union countries
The value of telecommunications, broadcasting and electronic services (so-called TBE services) provided to consumers from other European Union countries.
Until the sales limit is exceeded, Polish entrepreneurs tax their transactions as they would domestic sales – applying the Polish VAT rate. Once the sales limit is exceeded, they are required to tax the transaction at the VAT rate appropriate to the buyer’s country.
How to register for VAT OSS?
According to the wording of the amended VAT Act, an entrepreneur has the option to register for VAT OSS by the 10th day of the month following the month in which the supply was made, in connection with which the sales limit of EUR 10,000 was exceeded.
For sellers with a place of business in Poland, the competent place to register for VAT OSS and to submit returns and pay VAT is the Head of the Second Tax Office Warsaw-Śródmieście.
In order to register for the VAT OSS procedure, it is necessary to fill out several documents and send them to the tax office. As of April 1, 2021, the notification can be made via the platform at podatki.gov.pl.
How does the VAT OSS procedure affect Amazon sellers?
It is still the seller’s responsibility to fulfill any tax obligations in the countries from which and to which it delivers/ships its goods.
Certainly, the introduction of the VAT OSS system has had the effect of making tax settlement much simpler. This is especially true for those who sell by mail order in the FBM model, i.e. they fulfill the order themselves. In this case, the seller only needs to register for the general VAT OSS, and does not need to register for VAT in each buyer’s country.
Is it worth using VAT OSS?
If you want to start selling internationally within the European Union and don’t want to worry about how to properly account for tax, using the VAT OSS procedure can prove to be a salvation for e-commerce sellers. VAT OSS saves a lot of time and money by making it easier for us to settle the taxes due regardless of the direction of the goods we are shipping.
If you’d like to find out if VAT OSS is worth using in your case, please contact us.
