Service-Tax

VAT Mini One Stop Shop - reporting and settlement obligations

The sale of applications, virtual games or access to websites, and therefore broadly understood telecommunications, broadcasting and electronic services to people who do not conduct business activities from other EU countries, requires a special tax settlement procedure. What is VAT Mini One Stop Shop (VAT MOSS)? Are taxpayers required to use this procedure?

Place of providing services to consumers

According to the general rule contained in Art. 28c of the VAT Act, the place of providing services to consumers, i.e. entities not conducting business activity, is the place where the service provider has his registered office, permanent place of business or permanent residence, or habitual residence.

There are, however, some exceptions. One of them is telecommunications, broadcasting and electronic services provided to consumers from other EU countries. Pursuant to Art. 28k paragraph. 1 of the VAT Act:

"The place of supply of telecommunications, broadcasting and electronic services to non-taxable entities is the place where such entities are established, have their permanent address or usually reside." A Polish entrepreneur providing telecommunications, broadcasting or electronic services to private individuals from the European Union is obliged to tax them in the buyer's country. Example 1.

Ms. Ewa provides electronic services to natural persons not operating from France. Where should Ewa tax the sale?

As a rule, specific rules apply to electronic services provided to EU consumers. So Mrs. Ewa should tax the sale in France.

Is registration in the buyer's country required?

If the place of taxation of sales is the country of the buyer, it would seem that registration for VAT will be necessary in each country where these services will be provided. However, some simplifications have been introduced, i.e. the VAT Mini One Stop Shop procedure, thanks to which the taxpayer can settle foreign tax in the country where he has his registered office or permanent place of business - if he is not established in the EU.
If the seller of the service is not established in the territory of the EU - but only a few permanent places of business, he has the option of reporting in which country he will apply special VAT accounting rules. Example 2.

Mr. Krzysztof runs a business based in Poland. Provides telecommunications services to consumers from Germany, the Czech Republic and Ireland. Does Mr. Krzysztof have to register for VAT in these three countries in order to settle VAT?

No, Mr. Krzysztof does not have to register for VAT in Germany, the Czech Republic and Ireland to settle the transaction. He can use the Mini One Stop Shop VAT procedure and settle foreign VAT in Poland. The Mini One Stop Shop VAT procedure is optional. The trader therefore has the right to apply it, but does not have to do so. An entity that does not want to take advantage of the opportunities offered by VAT MOSS may settle the tax in each of the countries where it will provide telecommunications, broadcasting or electronic services to natural persons who do not conduct business activity. You will then need to register in each of these countries and pay VAT there.

Example 3.

Ms Magdalena runs a business in which she provides television and radio broadcasting services to consumers in Spain. Magdalena does not want to use the special method of VAT settlement of the Mini One Stop Shop. So how should she account for the tax?

If Ms Magdalena does not use VAT MOSS, then she should register for VAT in Spain and issue invoices in accordance with the rules applicable in that country. It will therefore be necessary to know the Spanish regulations.

Limit PLN 42,000 and VAT Mini One Stop Shop

Telecommunications, broadcasting and electronic services, as a rule, require a specific method of accounting, which may discourage some entrepreneurs. Therefore, a limit has been introduced, to which the settlement of such sales is carried out on a domestic basis, and VAT is settled in Poland. The limit is PLN 42,000 net. This is a convenience for active VAT entities where such sales are incidental. Taxpayers exempt from VAT are not entitled to the exemption for not exceeding the limit. Thus, they apply VAT MOSS on the first transaction to private persons from other EU countries, if they provide them with telecommunications, broadcasting or electronic services.
You can read more about this in the article: MOSS procedure - how does it work for a taxpayer exempt from VAT?
Art. 28k sec. 2 point 3 of the VAT Act
"The provision of paragraph 1 shall not apply if the following conditions are jointly met:
[...] the total value of the services referred to in para. 1, provided to the entities referred to in paragraph 2, less the amount of tax, did not exceed the amount of EUR 10,000 during the tax year or in the previous tax year or its equivalent expressed in the national currency of the Member State referred to in paragraph 1 In the case of a service provider with a registered office of business, and in the absence of such a registered office - permanent residence or usual place of residence, only in the territory of the country, the equivalent in euro of the amount in euro amounts to PLN 42,000 ”. Example 4.

Ms Ewelina runs a programming activity. Recently, it has expanded its scope of activities to include electronic services for consumers in other EU countries. The value of sales for electronic services is PLN 20,000 net. Can Ms Ewelina settle VAT in Poland?

Yes, due to the fact that the sale of electronic services to natural persons who do not operate in the EU did not exceed PLN 42,000 net, Ms Ewelina may settle VAT in Poland.

Exceeding the limit during the year

If the limit of PLN 42,000 for telecommunications, broadcasting or electronic transactions provided to private persons from other EU countries is exceeded, the entity loses the right to settle VAT in Poland. In such a situation, there are two options to choose from:

registration for the Mini One Stop Shop VAT and settlement of foreign tax via the National Tax Administration in Poland;
VAT registration in the consumer's country and tax settlement on the terms of that country.

Pursuant to Art. 28k paragraph. 3 of the VAT Act, if the limit is exceeded during the accounting year, then the transaction for which the limit was exceeded should be taxed in accordance with one of the above methods.

Example 5.

Mr. Marek runs a company and sells access to online platforms. Sales in 2019 amounted to PLN 37,000 excluding VAT. In December 2019, Mr. Marek sold further accesses to consumers in Italy in the amount of PLN 7,000 net. Can Mr. Marek tax this transaction in Poland?

Mr. Marek cannot tax transactions in Poland because he has exceeded the limit of PLN 42,000. In such a situation, the transaction for consumers in Italy should be taxed either under the special VAT MOSS procedure or by registering in Italy and settling VAT there.

How to register for the VAT Mini One Stop Shop?

Applications for the VIU-R form for the VAT Mini One Stop Shop should be made by the 10th day of the month following the month in which the transaction subject to VAT MOSS took place. The competent office will be the Second Tax Office Warszawa-Śródmieście.

Example 6.

Ms Maja sold online games in December 2019 and wants to settle accounts in accordance with the MOSS procedure. By when should she submit the notification?

If the sale took place in December 2019, the VIU-R application should be submitted by January 10, 2020.

More information about the VAT Mini One Stop Shop can be found in the article: New MOSS procedure - VAT settlement rules

Start a free 30-day trial period with no strings attached!

Taxpayer's obligations under VAT MOSS

Taxpayers carrying out transactions subject to VAT MOSS are required to submit quarterly VIU-D declarations by the 20th day of the month following the quarter to which it relates. Pursuant to Art. 130c of paragraph 1. 3 of the VAT Act, even if the 20th day of the month falls on Saturday or a public holiday, the VIU-D declaration and payment of the liability must also be submitted by that day. The deadline is not moved as for other declarations to the first business day. The declaration must be submitted to the Second Tax Office Warszawa-Śródmieście and the resulting tax liability must be paid. It should be remembered that the amounts in the declaration are expressed in euro and the liability is also payable in this currency. Art 130c sec. 7. the VAT Act
"Where payments for the provision of telecommunications services, broadcasting services or electronic services have been made in currencies other than euro, their conversion into euro shall be the exchange rate published by the European Central Bank on the last day of the relevant accounting period, and if not published in on that day - exchange rate published the next day ".

In summary, a taxpayer who provides telecommunications, broadcasting or electronic services to non-business individuals does not need to register in all countries where these services are provided. It is possible to apply a special VAT Mini One Stop Shop (VAT MOSS) procedure and then the tax is settled through the Tax Administration in Poland.

VAT Mini One Stop Shop in the wFirma.pl system

To issue an invoice in the wFirma.pl system under the MOSS VAT procedure, you must first make the appropriate settings. To do this, go to the SETTINGS »TAXES» VAT TAX tab and select the VAT REGISTERED IN MOSS option.

To issue an invoice, use the tab: REVENUE »SALE» EXHIBITION »INVOICE, where in the COUNTRY field, enter the country of the buyer, and in the NIP field, select the NONE option and complete the remaining information. Then select the appropriate VAT rate for this country and fill in the required fields in the MOSS tab.