How to check the tax status of an EU customer?


Harmonization of EU regulations contributes to the development of international trade. However, it is often problematic to determine the place of taxation in the case of an entrepreneur from the European Union, especially when he is not registered for VAT purposes, but only provided a declaration on running a business. EU law provides for a number of evidence that allows the verification of foreign entities. Here are some tips to help you determine where you are taxed.

1. Determining the place of taxation of services

The main issue to be determined when determining the place of taxation of services is the determination of the purchaser of the service. It must be stated whether it is a taxpayer or a non-taxable person. This is important because different tax regulations apply depending on the entity.

Determining the place of taxation for the taxpayer

Most often, the place of taxation of the service is the place where the taxpayer who is the recipient of the service has its registered office (this is mentioned in Article 28b of the VAT Act). The exceptions are some types of services listed in separate regulations. They include, among others real estate, transport, catering and tourism services.

On the other hand, in a situation where the taxpayer provides services outside the place of business, but it is a fixed place of business, it should be considered the place of supply.

If the taxpayer has no fixed place or seat of business, the place of the benefit is his or her permanent address or habitual residence.

On the other hand, when the services are provided only for the personal purposes of the taxpayer or its employees (including former employees, partners, shareholders, members of a cooperative and their household members, members of legal entities or members of an association), the place of taxation is determined according to the criteria of non-taxable entities. .

Determining the place of taxation for a non-taxpayer

As a rule, the place of taxation is the place of taxation of the supplier. The place of supply of services should be considered to be the provider's fixed establishment where the provider carries out the services from a fixed place other than his establishment.

On the other hand, where the supplier has no fixed place of business and no place of business, the place of taxation should be his permanent place of residence or habitual residence.

2. Definition of a taxpayer

It is worth noting that under Polish law, a taxpayer is not only an entity registered as a VAT payer. Pursuant to the Act on Value Added Tax, a taxpayer should be considered to be entities that independently conduct economic activity in the field of every activity of producers, traders, service providers, entities acquiring natural resources, farmers and freelancers.The definition of a taxpayer also includes entities that do not qualify for the above-mentioned, but are identified for tax purposes as well as for value added tax. Moreover, pursuant to Art. 28a of the Act, shall be considered a taxpayer in relation to all services provided to him: "(...) who also conducts business or conducts transactions that are not considered taxable supplies of goods or services in accordance with Art. 5 sec. 1 ".

It should be emphasized that the EU directives require that each taxpayer and legal entity that uses intra-Community purchases of goods subject to VAT, have an individual identification number. Pursuant to Art. 215 of Directive 2006/112 / EC of the Council on the common system of value added tax, the above number should contain a prefix compliant with the ISO-3166 alpha 2 code intended to identify the Member State.

3. Solutions confirming the tax status

Problems related to the lack of a VAT number necessary to classify an entity as a payer or a non-payer can be solved by the EU Council Implementing Regulation laying down implementing measures for Directive 2006/112 / EC on the common system of value added tax. It indicates references to the VAT Directive defining the taxpayer as an entity engaged in economic activity. Therefore, when determining the tax status of the audited entity, it is sufficient to check whether the entity conducts economic activity. It follows directly from the regulations that registration for VAT purposes is not required.

Moreover, in Art. Pursuant to Article 18 of the EU regulation, the conditions that allow the classification of the status of an entrepreneur are set, which include:

  • presentation of the VAT identification number, as well as its verification,

  • failure to have an individual VAT identification number by the customer who has already submitted the appropriate application and provides the service provider with appropriate evidence confirming his status.

It should be noted that the regulation does not explicitly indicate the conditions necessary to have the status of a payer, but are helpful in verifying the entity. Therefore, it cannot be assumed that, in the absence of relevant information, the entity is not a taxpayer. This is only possible if the service provider shows that he has not obtained an identification number.