EU VAT OSS procedure applied by intermediaries
In July, the legislator introduced significant changes to e-commerce. They are to organize e-commerce trade between different countries of the European Union. One of the biggest changes is the introduction of the VAT OSS procedure. It makes it possible to settle VAT in one country of the European Union for the provision of services and supplies of goods to consumers from various EU countries.
VAT OSS procedure
As we have already described above, the VAT OSS procedure allows for the settlement of VAT due on certain activities to the Member State of consumption via the Member State of identification. In this case, we settle VAT in one country.
The EU procedure is addressed to an entrepreneur with a registered office or permanent place of business in the territory of the European Union, in order to declare and pay VAT due on account of:
intra-Community distance sales of goods (ESPO);
services to consumers (B2C), for which the place of supply is a Member State where he has no seat or a fixed establishment; services to the consumer, for which the place of supply is the Member State where the trader is established, cannot be declared under the EU procedure, but must be declared in the national tax return of the relevant Member State.
Under the OSS VAT procedure, taxpayers may declare and settle the VAT due for the provision of, inter alia, of the following services:
services in the field of culture, arts, sports, science, education, entertainment and similar services, such as fairs and exhibitions, and services ancillary to these services;
accommodation services in hotels or similar facilities;
real estate and movable property valuation services;
real estate services;
transport equipment rental services;
services auxiliary to transport services such as loading, unloading, reloading or similar operations;
restaurant and catering services;
telecommunications, broadcasting and electronic services.
The above-mentioned procedure can therefore be used by entrepreneurs selling goods (mainly via the Internet), but also providing services to natural persons outside the country.
An entrepreneur who intends to use the VAT OSS procedure must register in only one Member State, the so-called the Member State of identification.
The Member State of identification is the Member State where the trader is established.
A taxpayer who registers for the OSS VAT procedure will be obliged to settle the VAT due on all activities covered by this procedure only within its framework.
Input tax settlement
In the case of the VAT OSS procedure, the tax is settled in the country of identification. For this purpose, we keep separate records and submit an additional declaration. Taxpayers are wondering how to deduct input tax on purchases related to sales outside the country (ESPO and EU B2C services).
The taxpayer purchases gift packaging for various occasions from a producer in Poland. The taxpayer runs an online store which he sells in six European Union countries. He registered for the VAT OSS procedure in Poland. How is he supposed to account for input tax related to packaging purchases?
In the case of using the VAT OSS procedure, input tax is not shown in the declarations submitted in this procedure. We show the expenses incurred for running a business in the Member State of national identification in the national tax declaration. Thus, the taxpayer declares and accounts for the tax charged in our country.
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VAT OSS procedure applied by intermediaries
The agency contract is not a contract called civil law. Brokerage is an intermediary activity that may include, inter alia, giving a party to a contract an opportunity to conclude it, contacting the other party and negotiating the terms of consideration for and on behalf of the customer, the purpose of such activity is to do whatever is necessary, that the two parties conclude the contract and that the intermediary himself has no interest in its content.
The essence of the EU VAT OSS procedure is the settlement of VAT on activities performed for non-taxable buyers from all over the EU via only one Member State.
An intermediary taxpayer can use this procedure just like other economic operators.
To be able to use it, the broker must register. Let us remind you that the application is submitted using the VIU-R form
The tax authority to which the intermediary should apply for the procedure is the Head of the II Tax Office Warszawa-Śródmieście. After the intermediary has submitted the notification, the tax authority confirms the notification. The broker receives a number by means of which the taxpayer is identified for VAT purposes.
If an intermediary uses this procedure, he should submit a declaration by the end of the month following the end of each quarter.
This period also applies when the last day of the month falls on a Saturday or a statutory holiday (see Art. 130c of the VAT Act).
The amounts in VIU-D declarations must be expressed in euro (see Art. 130c (6) of the VAT Act). If payments for the supply of goods or services are made in currencies other than euro, we convert them to euro.
The intermediary, on the date of submitting the VIU-D declaration, is obliged to pay (in euro) the amounts of VAT to the bank account of the competent tax office.
In summary, a taxpayer who is an intermediary may settle the tax in the OSS procedure. For this purpose, it must meet a number of statutory requirements.