VAT OSS - rules for settling VAT as part of the e-commerce package
In order to reach the largest possible group of buyers, Polish entrepreneurs use various types of platforms and online stores, such as Allegro or Amazon. Thanks to this, they sell their goods and services on foreign markets. The sale of electronic goods or services to private individuals from another EU country carries a number of tax obligations. From July 1, 2021, along with the so-called With the e-commerce VAT package, regulations simplifying these settlements have entered into force. It happened, inter alia, by implementing the VAT OSS procedure. Let's check what it is, when it is worth using it, what simplifications are associated with it and how to get started!
What is VAT OSS?
VAT OSS (One Stop Shop) is a VAT settlement procedure that has replaced the current one - VAT MOSS (Mini One Stop Shop). From July 1, 2021, the MOSS VAT procedure, which concerned the sale of electronic, broadcasting and telecommunications services (the so-called TBE services) to private persons from another EU country, was extended to mail-order sales of goods for these entities (the so-called ESPO), creating the procedure EU VAT OSS.
VAT OSS is an electronic one-stop shop that simplifies VAT settlements, thanks to which sellers do not have to register for VAT in each country of the buyer separately, even after exceeding the limit of foreign sales. One registration to VAT OSS is enough!
The EU VAT OSS procedure can be used by both active VAT payers and non-VAT payers. Registration for VAT OSS does not interfere with registration for VAT-EU and does not result in the loss of the right to VAT exemption, because sales settled under the OSS VAT are not taken into account when verifying the sales limit for VAT exemption.
When is it worth using VAT OSS?
Registration for the VAT OSS is completely voluntary and depends on the seller's decision. When making mail order sales of goods or providing services to private individuals from another EU country, they must respect the sales limit.
The limit of sales to private persons from another EU country under the VAT OSS procedure is EUR 10,000. In the case of Polish sellers, converted into PLN, this limit is PLN 42,000.
Until the sales limit is exceeded, Polish entrepreneurs tax their transactions in the same way as domestic sales - using the Polish VAT rate. After exceeding the sales limit, they are obliged to tax the transaction with the VAT rate applicable to the buyer's country.
Until July 1, 2021, after exceeding the mail order sales limit in a given EU country, the Polish taxpayer had no option - he had to register for VAT in the country where the limit was exceeded. It was connected not only with the registration obligation, but also registration and reporting, i.e. VAT settlement in another EU country. This in turn made it necessary to use the services of accounting offices that had knowledge of tax regulations in other countries, but it was associated with additional costs for the seller.
The VAT OSS procedure simplifies the settlement process, because after exceeding the distance selling limit in the EU, the seller can still settle VAT in the Polish tax office - so he is able to do it himself, i.e. without the help of accounting offices from other EU countries.
In the VAT OSS procedure, the seller, exceeding the sales limit in the EU, is still obliged to issue invoices with a foreign VAT rate, but this tax and the settlement declaration are submitted to the Polish tax office in Polish.
The above method of settling foreign VAT has already been used under the MOSS VAT procedure, which, however, only covered the sale of electronic, broadcasting and telecommunications services to private persons from another EU country.
The value of the sales limit in the EU includes both mail order sales and the provision of services to all EU countries together.
Mr. Łukasz sells goods by mail order to private persons from the EU - mainly from Germany and France. So far, he has been monitoring the sales limit in each country so that he does not have to register for VAT abroad. In 2021, it plans to expand its sales to electronic services. Can Mr. Łukasz still avoid the obligation to register for VAT in other EU countries?
From July 1, 2021, sales limits for private individuals from other EU countries have been unified. Until the sales value of PLN 42,000 (including the total sale of goods and services) in the EU is exceeded, Mr Łukasz will issue invoices with Polish VAT. After exceeding the sales limit, he can register for VAT OSS, issue invoices with German VAT rates without the obligation to register for VAT in Germany and pay foreign VAT in the Tax Office in Poland.
How to register for VAT OSS?
Each EU Member State has its own online OSS portal for foreign VAT settlements, in which entrepreneurs can register. Registration for VAT OSS takes place through one VIU-R form intended for OSS. This form is sent via the governmental platform of the Member State of identification or the accounting systems to the tax office, e.g. to a company. In the case of sellers established in Poland, the Member State of identification is Poland, and the competent tax office for registering for VAT OSS and for submitting declarations and paying VAT is the Head of the Second Tax Office Warszawa-Śródmieście. The VIU-R registration form may be submitted only in electronic form. In order to send it, the entrepreneur must use a qualified electronic signature - it is not possible to send the form using a trusted profile or verify the amount of income. If the taxpayer does not have his own qualified signature, he may appoint an attorney for this purpose, however, this involves submitting a special power of attorney PPS-1 to the Second Tax Office Warsaw-Śródmieście and paying the stamp duty in the amount of PLN 17. In the case of submitting the VAT-R form at his tax office, the entrepreneur may, for example, send the print by post or electronically with a qualified signature or his own trusted profile.
Pursuant to Art. 28k paragraph. 7 of the VAT Act, an entrepreneur may register for VAT OSS by the 10th day of the month following the month in which the delivery was made, in connection with which the sales limit was exceeded.
In order to generate the VIU-R form in the in-company system, go to the tab: START »TAXES» VAT TAX »ADD A DECLARATION» VIU R APPLICATION
In the field OSS PROCEDURE STARTING, enter the date of sale from the VAT invoice issued with the foreign VAT rate. Due to the fact that the VIU-R form may be submitted by the 10th day of the following month, it is possible to enter a date earlier than the date of completing the form in this field - the so-called "Reverse registration".
Mr. Aleksander runs an online store and sells goods to private individuals from other EU countries. On July 20, 2021, he made a transaction to the Czech Republic, which exceeded the sales limit of PLN 42,000. Until when can Mr. Aleksander register for the VAT OSS procedure so that he does not have to register for VAT in the Czech Republic?
If, by August 10, 2021, Mr.Alexander has submitted the VIU-R registration form to the Head of the Second Tax Office Warszawa-Śródmieście, he will not have to register for VAT in the Czech Republic. A transaction that has exceeded the limit should, however, be taxed at the Czech VAT rate.
Taxpayers exempt from VAT who want to use the EU VAT OSS procedure are required to submit the VAT-R registration form in order to be included in the register of VAT taxpayers, but with the indication that they benefit from the exemption.
Registration for the VAT OSS does not result in the loss of the right to VAT exemption.
Non-VAT users on the VAT-R form should in part C.1. mark the legal basis of the VAT exemption (i.e. by selecting the appropriate field 28-31), and then complete the date of the first sale in field 39. Due to the fact that, as a rule, taxpayers using the VAT exemption do not have to submit the VAT-R form to inform the office on this fact, before registering for VAT OSS, should enter in the VAT-R form in field 39 the historical date, i.e. before the date of submitting the form, understood as the date of commencement of business activity exempt from VAT.
The VAT-R registration form should be submitted to the competent tax office of the enterprise (in the case of natural persons due to their place of residence), while the VIU-R registration form should be submitted to the Second Tax Office Warszawa-Śródmieście.
How to settle VAT in the VAT OSS procedure?
When using the VAT OSS procedure, entrepreneurs are obliged to tax sales with the VAT rate applicable in the buyer's country. Such a transaction does not increase the tax base in the JPK_V7 file sent to the Ministry of Finance for Polish VAT settlement, because invoices are not shown in JPK_V7. Foreign VAT is settled in a separate VIU-DO declaration, which is submitted in electronic form to the Head of the Second Tax Office Warszawa-Śródmieście.
VIU-DO declaration is submitted only for quarterly periods until the end of the month following the given quarter (even if it is zero). Submitting VIU-DO declarations for the settlement of the VAT OSS procedure does not release entrepreneurs from sending JPK_V7 files to the Ministry of Finance.
Pursuant to Art. 130c of paragraph 1. 2 of the VAT Act, the VIU-DO declaration submitted in connection with the use of the OSS VAT procedure should be sent by the end of the month following the end of the quarter. Moreover, this period expires at the end of the month also when this day falls on a Saturday, Sunday or holiday (so there is no shift to the next working day). However, the currency in which the transactions in the declaration are shown is the euro. Pursuant to Art. 130c of paragraph 1. 7 of the VAT Act, if payments for the supply of goods or services were made in currencies other than euro, their conversion into euro is based on the exchange rate published by the ECB on the last day of a given accounting period, and if it is not published on that day - exchange rate published the next day.
Ms Danuta sells goods to private persons from other EU countries. In June 2021, she registered for the VAT OSS procedure. By when does he have to submit the first VIU-DO declaration?
The VIU-DO declaration is submitted for quarterly periods. This means that Ms Danuta will submit the first declaration in the third quarter (because the VAT OSS procedure is valid from July 1, despite earlier registration), until October 31. In 2021, this deadline is Sunday. It is not postponed to the first working day, November 2. The VIU-DO declaration must be submitted by October 31st at the latest.
If errors have been made in the submitted VIU-DO declaration, they are corrected e.g. by issuing a correcting invoice in the current VIU-DO declaration, where the appropriate Member State of consumption (buyer country), the accounting period and the VAT amount for which an adjustment is made. Pursuant to Art. 130c of paragraph 1. 5a of the VAT Act, the seller is obliged to make the correction no later than within 3 years from the date of submission of the VIU-DO form, in which the errors were found.
In a situation where in a given quarter the entrepreneur has not made a sale settled under the OSS VAT procedure, he is still obliged to submit the VIU-DO form. In this case, you should submit the so-called zero declaration.
What are the benefits of VAT OSS?
As we can read in the explanatory memorandum to the bill introducing the e-commerce VAT package: "By definition, the OSS (similar to MOSS) aims to simplify the VAT obligations imposed on taxpayers supplying goods and providing services to non-taxable persons (consumers) in the territory of EU [...] ". These simplifications consist, inter alia, in on:
abolishing the obligation to register for VAT in other EU countries when the limit of mail order sales to private persons is exceeded;
unifying the sales limit for the sale of electronic, broadcasting and telecommunications goods and services for each EU country;
the possibility of settling foreign VAT at the Polish tax office;
the possibility of submitting a single VAT declaration in electronic form, on which foreign sales carried out in all EU countries are settled;
VAT settlement in the OSS VAT procedure for quarterly periods until the end of the month following the given quarter.
Summing up, the introduction of the VAT OSS procedure is an extension of the existing rules applicable under the VAT MOSS. As a result, entrepreneurs can make VAT settlements in a simpler way in the event of foreign sales. The VAT OSS procedure is one of the new simplifications for taxpayers, introduced under the so-called e-commerce package.
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How to issue a sales invoice in the VAT OSS procedure?
In the in-company system, it is possible to register for VAT OSS, as well as to issue invoices under this procedure and keep the OSS VAT register, and send VIU-DO declarations after the end of the quarter. To enable the function, go to the tab: SETTINGS »TAXES» VAT TAX and select the option:
REGISTERED VAT IN OSS - when the subject of sale are only services for private persons from other EU countries;
VAT REGISTERED IN OSS and FOREIGN SHIPPING SALE - if the subject of sale are goods in the shipping system or goods and services.
In order to issue an invoice under the VAT OSS procedure, go to the tab: REVENUE »SALE» EXHIBITION »INVOICE, select the buyer, that is a private person from another EU country, and then apply the foreign VAT rate appropriate for the buyer's country. As a result, an additional OSS sub-tab will appear, in which you must select the type of sale.
If you are selling goods, choose the ESPO - Mail-Order Sale of Goods option. If the subject of sale is electronic, broadcasting or telecommunications services, you must select the specific type of service provided from the list.
The invoice issued in this way will be entered in the OSS VAT register in the tab: RECORDS »REJ. SELLING OSS.
On the basis of the data contained in the OSS VAT sales register, a VIU-DO declaration should be generated. To do this, go to the tab: START »TAXES» VAT TAX »ADD DECLARATION» VIU TO DECLARATION. The VIU-DO declaration can be sent directly from the system with the use of one's own qualified signature (or the signature of an appointed representative). To do this, select the generated VIU-DO form and select the SEND / EXPORT »SEND TO OFFICE option from the top menu.