Trade on the Internet - a tax issue
Online commerce and traditional commerce are different in many ways. However, they also have one thing in common - the tax envelope. This issue should not be neglected. Before an entrepreneur decides on this form of business, he should become familiar with its conditions and tax obligations.
Types of taxation for persons running a business
Internet activity is subject to the same tax rules as traditional business activities.
a) Income tax on general principles - there are two tax thresholds:
- up to PLN 85,528, the tax is 18 percent. minus the tax reducing amount PLN 556.02
- over PLN 85,528 the tax is PLN 14,839.02 + 32% surplus over PLN 85,528.
Pursuant to Art. 27 of the PIT Act, calculating the tax-free amount has changed dramatically. According to Art. 27 sec. 1b:
When calculating income tax advances:
1) for taxpayers whose income does not exceed the first tax threshold - the amount reducing the tax is PLN 556.02 per year;
2) in the case of taxpayers whose income exceeds the first tax threshold - advance payments are not reduced by the amount that reduces the tax referred to in point 1. In this case, the final amount of the tax reduction will be settled in the annual tax return.
b) Flat tax - 19 percent income tax rates. However, it should be remembered that the exclusions in this regard have been regulated. This applies, inter alia, to situations where the taxpayer obtains income from the provision of services to the former or current employer, corresponding to the activities he performed or carries out in the tax year - as part of the employment relationship.
The 32% rate does not apply here. in the event of a sudden financial success of the enterprise, but also there is no tax-free amount. In addition, natural persons using 19 percent. the rates are not entitled to joint settlement with a spouse or a single-raised child. They also cannot deduct from income subject to the 19% rate. tax credits, e.g. for the Internet or for children.
If we decide to apply a flat tax, it is necessary to submit an appropriate declaration on the choice of such and not another type of taxation by January 20 of the tax year. However, the resignation from this form of taxation should also be reported in writing by January 20.
In the case of flat tax, the annual tax return is submitted on the PIT-36L form.
Taxpayers taxed with personal income tax according to general rules and with a flat tax must keep accounting books or a tax book of revenues and expenses. The selection criterion in this case is revenue. Books of accounts - apply to natural persons, civil law partnerships of natural persons, general partnerships of natural persons and partnerships, if their revenues for the previous tax year were at least in the Polish currency equivalent to the amount specified in euro in the accounting regulations. The accounting principles set out in the Act may also be used from the beginning of the next financial year, if the net revenues from the sale of goods, products and financial operations for the previous financial year are lower than the Polish currency equivalent of EUR 1.2 million. However, the tax office must be notified in advance.
c) Lump-sum income tax on certain revenues earned by natural persons:
- tax card - here it is possible to exempt from keeping records, filing tax returns and making advance payments for income tax. On the other hand, there is an obligation to issue invoices or bills and store their copies in the order of numbers from the period of 5 tax years, counting from the end of the year in which they were issued;
- lump sum on recorded revenues - paid without reducing the revenue by the tax deductible costs.
It is responsible for taxpayers whose value of taxable sales did not exceed the total amount of PLN 200,000 in the previous tax year. When this amount is exceeded, the exemption ceases to apply and the surplus is subject to taxation (after one year, the taxpayer may again apply for the exemption).
Art. 113 sec. 13 of the VAT Act specifies the catalog of taxpayers who are not eligible for exemption due to the turnover limit. And so - from the first sale, active taxpayers should be those who:
- make deliveries:
- articles of precious metals or with the participation of these metals,
- goods subject to excise duty, within the meaning of the provisions on excise duty, with the exception of:
- electricity (PKWiU 126.96.36.199),
- tobacco products,
- passenger cars other than those mentioned in point (a) e, classified by the taxpayer, pursuant to the provisions on income tax, as fixed assets subject to depreciation,
- buildings, structures or parts thereof, in the cases referred to in Art. 43 sec. 1 point 10 lit. a and b of the Act,
- construction areas,
- new means of transport;
- provide services:
- in the field of consultancy, with the exception of agricultural consultancy related to the cultivation and breeding of plants as well as animal breeding and breeding, as well as related to the preparation of a development plan and modernization of a farm,
not having a registered office in the territory of the country.
VAT and internet payment systems
When the payment for the goods takes place before its shipment, then the tax obligation arises upon its receipt - it may be an advance, prepayment, advance payment or installment.
On the other hand, when receivables are paid to taxpayers by online payment platforms, the situation is two-fold:
- In the case of online payment systems that pay receivables once in a while (sometimes even once a week), sellers often ship the goods (the buyer has not requested an invoice) before the actual moment of receiving the money (i.e. the receipt of the payment is the actual moment of their receipt, not the moment of posting the receivables on the taxpayer's account in the online payment system). And then the tax obligation arises on the day on which the goods are sent by post or courier to the buyer (the payment date does not affect the moment when the tax obligation arises). On the other hand, when the delivery of the goods is confirmed by an invoice, then the tax obligation arises at the time of issue (no later than seven days after the delivery of the goods).
- Meanwhile, when the seller, in accordance with the contract concluded with online payment platforms, can pay the receivables at any time, then the moment of receipt of the receivables and the emergence of the tax obligation is the moment of their booking on the seller's account in the online payment system, after the payment, the seller can immediately transfer the receivables to his account banking, i.e. it usually takes place before the goods are released.
Internet trade and VAT on shipping costs
Shipping costs should not be treated as a separately taxed activity subject to VAT, so they must:
- increase the tax base of the goods shipped (the basic VAT rate in 2017 is 23%) - which means that these costs are taxed at the rate appropriate for the given goods - or
- remain outside the scope of VAT (excluding shipping costs from the taxable amount of goods) - in this case, the buyer grants the seller a power of attorney (it does not require a written form, it is enough to accept the regulations of the online store or the terms of the online auction), which authorizes him to conclude a contract with the post office or company courier service on behalf of the buyer, i.e. shipping costs, in this case they are not recorded by cash registers and are not indicated as a separate item in the invoice issued to the buyer (they may be indicated in it in the form of an annotation).
Revenue and Internet Mail-Order Sales
Income related to business activity is considered to be due income (even if it has not actually been received yet) after deducting the value of the returned goods and granted discounts and discounts (Article 12 (3) and (3a) of the PDOP Act). Therefore, the date when the revenue arises is the date of delivery of the goods, full or partial performance of the service and the sale of the property right - but no later than the date of invoice or payment of the amount due. However, revenues do not include:
- received payments and advances for the supply of goods and services - even if these amount to 100% receivables - which will be made only in the next settlement periods (this way, you prevent a situation in which an income is generated without the possibility of taking into account the costs, i.e. the value of the goods sold).
If the transaction takes place at the turn of the year, i.e. the money is received in December, and the shipment is made in January, then the revenue does not arise until January, because the seller has not yet received the payment in December.
Important note about cash registers
It is necessary to record the turnover with cash registers. The penalty for not registering is:
- fine of up to 180 daily rates (Article 62 § 1 of the Fiscal Penal Code),
- in addition, the tax authority determines - for the period until the start of keeping the records of turnover and the amounts of tax due using cash registers - a tax liability in the amount of 30% the amount of input tax on the purchase of goods and services (Article 111 (2) of the VAT Act).
If, for reasons beyond our control, we do not have a cash register, we are obliged to purchase a reserve cash register, and if we do not have one, we cannot sell.
Taxpayers who start recording turnover have the option to deduct from the tax the amount of each purchase of cash registers in the amount of as much as 90% of its purchase price, but it cannot exceed PLN 700.
Meanwhile, after meeting the following conditions, there is a possibility of exemption from the obligation to use a cash register:
- shipment delivery of goods (post office or courier) not covered by the limit;
- provision of services for which payment is made in full by mail, bank (also online payment systems) or a cooperative savings and credit union, however, from the records of evidence documenting the transaction, it must be clear to what specific transaction the payment was made;
- the applicant must keep detailed records of proofs of payment, on the basis of which it is possible to establish the details of the natural person not running a business or of the flat-rate farmer on whose behalf the goods were shipped.
It should be remembered, however, that the exemptions do not apply to the supplies and services listed in § 4. 1. Exemptions from the obligation to record, do not apply in the case of:
a) liquefied gas,
b) engine parts (PKWiU 28.11.4),
c) internal combustion engines of a kind used for propulsion of vehicles (PKWiU 29.10.1),
d) bodies for motor vehicles (PKWiU 29.20.1),
e) trailers and semi-trailers; containers (PKWiU 29.20.2),
f) parts of trailers, semi-trailers and other vehicles without mechanical drive (PKWiU 188.8.131.52),
g) parts and accessories for motor vehicles (excluding motorcycles) not elsewhere classified (PKWiU 184.108.40.206),
h) internal combustion reciprocating internal combustion engines of a kind used in motorcycles (PKWiU 30.91.3),
i) radio, television and telecommunications equipment, excluding electron tubes and other electronic components as well as parts for apparatus and devices for sound and image manipulation, antennas (PKWiU ex 26 and ex 27.90),
j) photographic equipment, excluding parts and accessories for photographic equipment and accessories (PKWiU ex 26.70.1),
k) articles made of precious metals or with the participation of these metals, the supply of which cannot benefit from the exemption from tax referred to in Art. 113 paragraph. 1 and 9 of the Act of March 11, 2004 on tax on goods and services, hereinafter referred to as the "Act",
l) recorded and unsaved digital and analog data carriers,
m) products intended for use, offered for sale or used as motor fuels or as additives or admixtures to motor fuels, regardless of the PKWiU symbol,
n) tobacco products (PKWiU 12.00), alcoholic beverages with an alcohol content above 1.2% and alcoholic beverages containing a mixture of beer and non-alcoholic beverages with an alcohol content exceeding 0.5%, regardless of the PKWiU symbol, excluding goods delivered to on board airplanes,
o) perfumes and toilet waters (PKWiU 220.127.116.11), excluding goods delivered on board airplanes;
- subject to par. 4 sec. 2.
2) provision of services:
a) passenger transport in road communication, with the exception of transport mentioned in item 15 and 16 of the Annex to the Regulation,
b) transport of people and their hand luggage by taxis,
c) repair of motor vehicles and mopeds (including tire repair, fitting, retreading and regeneration),
d) as regards replacement of tires or wheels for motor vehicles and mopeds,
e) in the field of tests and technical inspections of vehicles,
f) in the field of medical care provided by doctors and dentists, with the exception of services provided by persons listed in item 51 of the Annex to the Regulation,
g) legal, with the exception of the services specified in item 28 of the Annex to the Regulation,
h) tax consultancy,
i) related to catering (PKWiU 56), only: - provided by stationary catering establishments, including seasonally, and - food preparation services for external recipients (catering),
j) hairdressing, cosmetic and cosmetology.
- subject to par. 4 sec. 3.
The issue of invoices and bills
Their issuing is obligatory (this does not apply, however, to the issuing of invoices to natural persons who do not conduct business activity, in the case of such persons, invoices are issued only if they wish to do so). A taxpayer who fails to meet this obligation is subject to a fine of up to 180 daily rates. On the other hand, if the taxpayer issues an invoice or bill in an unreliable manner, he or she is threatened with a fine of up to 720 daily rates or imprisonment for a period not shorter than one year, or both penalties jointly. A fine for a fiscal offense may also be imposed on an entrepreneur who does not keep the issued or received invoice, bill or proof of purchase of goods.
A special type of invoices are e-invoices (more and more popular, especially in the case of online trading). New rules on e-invoicing have been in force since 2011. Well, the Minister of Finance implemented the provisions of the Council Directive 2010/45 / EU of July 13, 2010, which amend Directive 2006/112 / EC on the common system of value added tax with regard to the provisions on invoicing - the main point is that e-invoices are becoming a real alternative to paper invoices.
Invoices may be sent in electronic form only if:
- first, both parties agree to it,
- secondly, when the invoices retain their authenticity of origin (certainty as to the identity of the invoice issuer, delivering goods or services - NIP, name, address) and the integrity of the content (i.e. certainty that the invoice does not change any data it should contain - tax base , tax amount, invoice number). From 2011, it is not necessary to secure the e-invoice with a secure electronic signature (however, the issuer must choose a different, appropriate form of securing the invoice being sent and the electronic way that he will send it, so that it is impossible to make changes to it - e.g. PDF, RTF form , XPS, doc. Shared on the provider's server or website or sent by e-mail). In addition, the storage of e-invoices currently does not require a paper printout, while the corrections of e-invoices do not have to be in electronic form, they can be in any form.
If the buyer does not pick up and pay for the goods sent by post or courier (and the goods are immediately sent back to the seller along with an invoice that has not yet been introduced into legal circulation - the transaction has not taken place), then the invoice can be canceled without the need to prepare its corrections - the original invoice and its copy are crossed out and an appropriate annotation: "CANCELED", which prevents their re-use. Such canceled invoice should be kept together with a copy and annotation. In other cases, it is necessary to issue a correction.
They are issued by taxpayers who are exempt from the obligation to pay VAT, and therefore also from issuing VAT invoices and submitting VAT declarations. The invoice is issued no later than on the 15th of the month following the month of sale. However, if the request for receipt of the invoice was submitted 3 months after the service or the release of the goods, the taxpayer is not obliged to issue it.
A special type of accounts are e-accounts (beneficial for people running businesses on the Internet), which do not require an electronic signature or stamp from the issuer of the invoice.
Internet company office
The location of the office
Internet companies can run their business in private real estate. However, they should check beforehand that it will not change the way they are used. These changes include, for example, the conversion of part of the property into a warehouse. Before making these changes, you must notify them to the competent authority. A number of documents are attached to such a declaration. In the event of failure to provide the relevant documents, the use of the facility or part of it is suspended until their delivery, and after the deadline (in the case of compliance with this obligation), the amount of the legalization fee is set. The change must take place within 30 days to two years from the time of a positive decision issued by the relevant authority.
Taxation of the office
If it is not possible to separate the residential part of the property from the part used for business purposes, the commune council determines the amount of the tax rate on the real estate of buildings, which may not exceed PLN 0.75 per 1 m2 per year.
The normal tax rate on real estate related to running a business and on residential buildings or parts thereof intended for business purposes is a maximum of PLN 2.66 per 1 m2 of usable floor space.
Cost of getting income
They are, among others: rent, charges for electricity, gas, heating, water and Internet (the contract with the supplier must be signed with the taxpayer's company) and interest on a housing loan. After including the above-mentioned expenses as tax costs, the principle of proportionality applies (unless meters are installed in the room intended for business activity) - the division of costs into those related to housing expenses and those related to running a business (and these are tax deductible costs) with taking into account the ratio of the area intended for business activity to the entire flat area. Including some equipment - which is also used for private purposes - as tax deductible costs must be justified and this applies, for example, to microwave ovens, refrigerators, audio equipment, etc.
Internet sales to foreign taxpayers
Intra-Community supply of goods
EU VAT registration is required for:
- active VAT taxpayers making intra-Community acquisition or intra-Community supply of goods and services.
On the other hand, EU VAT registration does not require:
- sale of taxable goods in Poland due to the place of its supply as a domestic supply;
- sales not subject to taxation in Poland.
In addition, mail-order sales from the country (delivery of goods sent or transported by a VAT taxpayer or on its behalf from the territory of the country to the territory of the country of destination of the goods shipped or transported, i.e. another Member State), we deal with when the delivery is made to:
- a taxpayer of value added tax or a legal person that is not a taxpayer of value added tax, who are not required to settle intra-Community acquisition of goods;
- and any other entity that is not a taxpayer of value added tax.
Individual countries are required to set limits for mail order sales, which may not be lower than 35,000 euro and higher than 100,000 euro. As soon as the turnover exceeds the limit set by a given country, the supply will be taxed in the country of destination until the end of the year and for the entire next year (then we are dealing with an intra-Community supply of goods). This situation requires registration in a given country. On the other hand, when the limit is not exceeded and when the clients are only natural persons or business entities that are not obliged to settle VAT, the supplier taxes transactions in Poland.
To sum up, if we sell goods to EU taxpayers, then we are dealing with an intra-Community supply of goods taxed at the 0% VAT rate, provided that the following conditions are met:
- the buyer is an active EU VAT payer in another Member State,
- the goods leave the country from which they were shipped, and the seller has proof of this,
- seller and buyer use a valid EU VAT number.
Sales to taxpayers outside the Community
These types of transactions are treated as exports of goods. As in the case of intra-Community delivery of goods, the VAT rate is reduced to 0% (of course, you must also meet the relevant conditions here, e.g. you must have relevant documents regarding the export of goods outside the EU).
Trading via the Internet is a good business idea because it currently creates the so-called New Economy, i.e. an economy without state borders. Before we decide on this type of income, we should carefully consider all the pros and cons. First of all, let's consider whether we will handle the tax issue on our own. The choice of taxation should be well thought out - if the annual income does not exceed PLN 85,528, it is more profitable to settle according to the 18% rate than the flat tax, because only after this threshold is exceeded, the 32% rate applies.
Online commerce continues to grow and improve, slowly becoming an important part of trading, but the truth is that it is not for everyone. People who have no idea about the tax issue and do not have a business sense, do not know what the current market situation looks like, do not know anything about technological innovations and who do not have any business plan, should skip running an online store.