The VAT e-commerce special schemes

The new provisions modify the existing VAT special schemes laid down in the VAT Directive (non-Union scheme, Union scheme) and add a new one (import scheme). A summary of the most important law changes in the field of e-commerce can be found in the previous article and the electronic platforms as deemed supplier have been also already described here. This text summarizes the provisions of the e-commerce law regarding the special schemes.

The Mini One Stop Shop (MOSS) is an electronic system allowing taxable persons supplying telecommunications, broadcasting and electronic (TBE) services to consumers in the EU to declare and pay VAT due in all EU Member States in one single Member State. As from 1 July 2021, MOSS is extended to all B2C services taking place in Member States where the supplier is not established, to intra-Community distance sales of goods and to certain domestic supplies of goods …

27/08/202127/08/2021

VAT e-commerce: the electronic interfaces as deemed suppliers

A summary of the most important law changes in the field of e-commerce can be found in the previous article. The special schemes, a.o. OSS and IOSS, have been also described here. This text summarizes the provisions of the e-commerce law regarding electronic interfaces.

In order to help better understand the new law, the European Commission Directorate – General Taxation and Customs Union issued the Explanatory Notes on VAT e-commerce rules. According to these notes, the taxable person facilitating the supply of goods through the use of an electronic interface such as a marketplace, platform, portal or similar means is the deemed supplier in case of:

distance sales of goods imported from third territories or third countries in consignments of an intrinsic value not exceeding EUR 150, frequently referred to as low value goods – Article 14a(1), or
supplies of goods within the Community by a taxable person

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27/08/202127/08/2021

VAT e-commerce EU law changes

From 1 July 2021, a number of amendments to Directive 2006/112/EC (the VAT Directive) apply affecting the VAT rules applicable to cross-border business-to-consumer (B2C) e-commerce activities.

In order to help better understand the new law, the European Commission Directorate – General Taxation and Customs Union issued the Explanatory Notes on VAT e-commerce rules. According to these notes the changes address challenges arising from the VAT regimes for distance sales of goods and from the importation of low value consignments, namely:

As EU businesses selling goods online to final consumers located in other Member States need to register and account for VAT in the Member State of the consumer when their sales exceed the distance sales threshold, i.e. EUR 35 000/100 000. This imposes a significant administrative burden on traders and impedes the development of intra-EU online trade.
Since a VAT exemption is granted for the import of low value goods

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13/03/202113/03/2021

VAT on sale and rent of private flats and commercial space

This publication regards the VAT on sale and rent of private flats and commercial space. The assumption is that the taxpayer is a company with legal personality, that is an active VAT payer in Poland.

The following questions have been answered below:

Which VAT rate should be applied?
What about rental? If the company or subsidiary will rent space and flats, how is the VAT settled?
What in case of sale, is there a VAT on the notarial deed? How is the VAT settled?
Is there any VAT that cannot be deducted from commercial activities (rent, sale)?
What is the settlement of VAT during construction (no or low sales)?
How does the VAT settlement between 23% (such as paid to the general contractor) and 8% (sale to a private person) look like?

Ad. A. Which VAT rate should be applied?

REPLY:

The legislator in art. 41 paragraph 12-12c of the …

10/10/202012/10/2020

The MLI Convention and the taxation of pensions from abroad in Poland

The MLI Convention changed the method of avoiding double taxation in some of the agreements concluded by Poland on the avoidance of double taxation (abbreviation: DTT). The exemption with progression method has been replaced by the credit method.

Consequences of the MLI Convention for pensions from abroad

How does the adoption of the new method affect the tax obligations of people receiving foreign pensions and what are the obligations of the bank as a payer in such a situation?

It should be noted that in order to avoid double taxation, most agreements concluded by Poland adopted the principle of applying the exemption with progression method. This means that if a given benefit is taxed in the other state (i.e. the given treaty allows for taxation of the benefit in the source state), then the amount of this benefit is tax exempt in Poland.

However, the notification of the application of …

06/01/2020

Does Your tax residency change when You move to Poland?

This post is meant for people, who have doubts regarding their tax residency. The advice is based on a case of a person, who moved from the UK to Poland.

Let’s assume, that in the last years You had a tax residency in the UK, that the employer is based in the UK and that You moved to Poland in 2019.

You obtain income from employment and You aren’t an entrepreneur.

In order to answer the question whether Your tax residency changes when You moved to Poland in 2019, we have to look in the articles of the Double Taxation Convention between UK and Poland, signed in 2006.

You shall show in one country in the annual tax declaration Your worldwide income (earned in all countries in which You worked in a given year) and that means You have a tax residency in that country.

Article 12 ‘Income from employment’

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10/04/2019

Private car of an employee used for business purposes – a possibility of a payment to the employee without social insurance contributions

I’ve been asked about a possibility of payments to the employee without social insurance contributions. Here is an explanation of the tax implications and rules regarding the use of a private car of an employee for business purposes, with a distinction between the local trips and the business trips to another municipality:

Local trips

The refunds incurred by an employee for using a private car for business purposes in local trips are exempt from ZUS. That’s the most common possibility for payments to the employee without ZUS.

The amount of these refunds is determined on the basis of:

lump sum

records of the vehicle’s mileage filled in by the employee.

The simplest option, which doesn’t require writing down each kilometer of the private car use for business purposes, is solution 1: The lump sum.

The lump sum solution requires establishing by the employer a monthly mileage limit for local …

26/01/201910/03/2019

Becoming a farmer in Poland – a possibility to optimize the tax burden?

Yes, it would be a good possibility to optimise the tax burden, but we have to check if you meet the conditions. Farmers in Poland don’t pay any income tax, they pay only agricultural tax, which is based only on the area of agricultural land – however, that’s the case if the size of activity is lower, than the sizes envisaged for the special departments of agricultural production – art. 2, paragraph 1 of the Natural Persons Income Tax Act:

“The provisions of the Income Tax Act do not apply to: 1) income from agricultural activities, with the exception of special departments of agricultural production”.

So first of all we have to check if you perform agricultural activities. The definition is in art. 2 paragraph 2 of the Natural Persons Income Tax Act:

“2. Agricultural activities, as defined in paragraph 1 point 1, is the activity consisting in the production …

26/01/201926/01/2019

Customers are not paying – uncollectable debts

As a general rule, debts written off as uncollectable cannot be considered as tax deductible. However, in certain situations, the provisions of Polish tax law provide some exceptions. According to these provisions, only strictly defined uncollectable debts (which based on the tax law were firstly booked as taxable revenues) may be considered by the taxpayer as a tax-deductible cost, provided that:

a) their uncollectability was properly documented (e.g. by a court decision),

b) their uncollectability may be considered probable (e.g. debtor’s death).

The difference between a) and b) is that in a) you can simply deduct the uncollectable debt from the tax revenues and forget about it, but in b) you can deduct the uncollectable debt from the tax revenues temporarily and if the uncollectability is not properly documented before the expiration of the right to claim this debt, the taxpayer must treat the debt as a taxable revenue at …

25/01/201925/01/2019

Exit tax

Introduction of exit tax to the Polish tax system results from an obligation to implement the Directive (UE) 2016/1164, adopted in 2016. The mentioned directive establishes provisions in order to prevent tax avoidance practices, which may have indirect impact to functioning of the internal market, so called the ATAD Directive.

A crucial assumption of the exit tax is taxation of unrealized profits in connection with moving one’s assets to another country, also those which are part of a permanent establishment.

The tax is also due in case of change of the residency status of a taxpayer, which deprives Poland from taxation of income from sale of the individual’s assets. This is not required by the ATAD Directive – the Polish law in this issue goes beyond the requirements of the ATAD Directive and implements taxation of natural persons, who change their residency.

In accordance with the provisions introduced as of …

09/01/201922/01/2019

Employee becomes self-employed – conditions and restrictions

I receive questions about a problem returning like a boomerang: can employees go on self-employment and start their own business? The answer is the one that most often falls from the tax advisor’s lips: “Yes, but it is not that easy…” 🙂 or “It depends …” 🙂

So – it is possible, but…in this case it is important to know that a freelancer can not issue invoices for a former employer for the same activities that he has carried out under an employment contract.

Condition of this solution (so that no problems arise with the tax office and social insurance institution ZUS)

A freelancer can not have an agreement with his formal employer for the same activities that he has performed as an employee. So he should have a contract with another company and this contract must involve other activities than the employee has carried out for his formal employer.…

24/12/201810/03/2019

Tax system in Poland compared with other OECD countries in 2018

According to a report published by the Tax Foundation, Poland was ranked 33rd in terms of competitiveness and tax neutrality among 35 countries belonging to the Organization for Economic Cooperation and Development (OECD). Only Italy and France proved less competitive than Poland. For the fifth year in a row Estonia is the most competitive country. According to the authors of the ranking, Estonia owes it mainly to corporate tax (20 per cent), which applies only to paid profits and flat tax rate for income of natural persons (20 per cent). The top ten also included Latvia, New Zealand, Luxembourg, the Netherlands, Switzerland, Sweden, Australia, the Czech Republic and Austria. Relatively well Poland only fell in the category of corporate taxation (9th place in the subcategory). In terms of consumption taxation, Poland took the last (35) place. What is the subject of the assessment? Here are the explanations of the authors:…

01/12/201808/02/2019

Changes of the corporate and personal income tax law in Poland in 2019

There are some revolutionary changes of the corporate and personal income tax law in Poland, which might influence Your business. The President of Poland signed a bill amending the income tax acts. Some regulations are valid as of the beginning of 2019.

The new regulations regard the following issues:

Transfer Prices

new thresholds for TP requirement – PLN 10 M for tangible and financial transactions, PLN 2 M for other transactions. The change was aimed at reducing documentary obligations, however, it may involve a documentary obligation for taxpayers who currently do not have such obligation due to revenues or costs below EUR 2 million. According to the regulations being changed, the taxpayer who concludes the above-mentioned types of transactions with the indicated values, are required to prepare local transfer pricing documentation, even if the sum of its revenues or costs does not exceed EUR 2 million;
no need to show

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