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VAT exemption and VAT OSS - will the procedure apply?

Currently, I run a sole proprietorship and I am exempt from VAT. So far, I have been monitoring the limit of mail order sales for individual countries, so as not to exceed it. I wonder if the VAT exemption and VAT OSS are excluded and can I use this procedure for settling foreign VAT?

Eryk, Zielona Góra

VAT OSS is a new procedure that replaced the VAT MOSS, valid until June 30, 2021, and extended the catalog to include the sale of goods. It is independent of whether the taxpayer is an exempt or active VAT taxpayer.

VAT OSS applies to all taxpayers (VAT or without):

established in the European Union, carrying out:

intra-Community supplies of services to natural persons in the territory of an EU country other than that in which the seller is established;
distance sales of goods to EU countries;

non-EU based distance sales of goods to EU buyers;
electronic interface operators (based in the EU or outside the EU) facilitating the delivery of goods (so-called recognized suppliers) performing:

distance selling of goods in the EU;
certain domestic deliveries of goods.

VAT OSS allows you to settle accounts in the Member States through a simplified procedure, i.e. one registration, one declaration and one tax office, instead of carrying out each of these activities separately for each Member State in which the sale takes place.

The procedure can be used voluntarily by registering with the VIU-R form and submitting the VAT-29 declaration before exceeding the sales limit - PLN 10,000. EUR (converted into PLN 42 thousand). It is also possible not to register and register for the VAT OSS procedure only when the limit is exceeded. Until then, the sale is taxed with the Polish domestic VAT rate.

Registration for the VAT OSS from July 1, 2021 is made using the VIU-R form (version 3). Pursuant to Art. 28k paragraph. 7 of the VAT Act, the taxpayer has the right to 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.

Example 1.

In a situation where in 2021 Mr.Eryk did not exceed the limit of 42 thousand. PLN for distance sales of goods to EU countries, may voluntarily register to the VAT OSS or, if he does not want to - issue ordinary national sales invoices until the limit is exceeded.

Limit of 42 thousand PLN (10,000 EUR) is the total value for sales to private persons throughout the EU, regardless of the value of sales in a given EU country.

Example 2.

Considering the situation in which Mr.Eryk would sell goods to private persons from Germany, France and the Czech Republic on July 1, 2021 (assuming that mail order sales did not take place before), then the total sales from these Member States are included in the limit. For example, if sales to Germany were 10,000 Euro, to France and the Czech Republic 2 thousand each, in total, the EU private sales limit of 10 thousand would be exceeded. euro and it would be necessary to register for VAT OSS or for each of these countries separately.

The important information is that VAT OSS is applied in all member states. It cannot be decided that VAT OSS will be available only for selected countries.

Example 3.

On July 1, 2021, it was calculated that the sale of goods to natural persons from EU countries has already exceeded the sales limit for the purposes of VAT OSS. Therefore, you can register for VAT for individual countries where the limit has been exceeded or register for VAT OSS. In both cases, sales invoices must be issued with the VAT rate applicable to the country of the buyer. Under the VAT OSS, VAT is settled at the Polish tax office. If Mr.Eryk decides not to use the VAT OSS procedure, but only to register for VAT in individual EU countries, then separate VAT declarations should be submitted in each of them.

If the taxpayer is already registered for VAT in an EU country, there are no obstacles to using VAT OSS, as long as sales for companies are taxed as part of VAT registration in another country (i.e. in a situation where we have a warehouse, e.g. in Germany and we send goods to a contractor from Germany).

Example 4.

Assuming that the taxpayer would be VAT registered in Germany due to having a warehouse there, but would not be registered in Greece due to not exceeding the limit (the second country where goods are sold), then from July 1, 2021, he would have two options: after exceeding the limits of 10,000 EUR (42 thousand PLN) to register in each of the individual EU countries or register for VAT OSS. The taxpayer must bear in mind that under the OSS, he records sales transactions to German private persons, and under the VAT registration in Germany, he only reports sales to companies (only if the shipment was from a warehouse in Germany).

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VAT exemption and VAT OSS - moment of registration

The deadline for registration for VAT OSS is presented in the table below.

Deadline for registration for VAT OSS using VIU-R form
A taxpayer who has not exceeded the limit, but wants to tax the sale subject to OSS with the use of VAT OSS	The deadline is on the 10th day of the month after the month when the sale begins
The entrepreneur has exceeded the limit and wants to tax it using VAT OSS	Deadline until the 10th day of the month after the month of exceeding the limit

VAT exemption and VAT OSS - tax settlement step by step

To sell under the OSS procedure:

register as a VAT taxpayer exempt on the VAT-R form, which is submitted to your own tax office (only exempt taxpayers who have not submitted such a notification before);
fill in the VIU-R form - notification, indicating the purpose of the notification: registration;
send the form electronically to the Second Tax Office Warszawa - Śródmieście (the application can be sent using your own qualified signature or a representative, but in the case of a representative, you must submit UPL-1 and PPS-1 to the office and pay stamp duty in the amount of PLN 17);
make sales with foreign VAT rates adequate to the country of the buyer;
keep records for the purpose of settling foreign VAT, which is the basis for drawing up a settlement declaration;
settle VAT using the VIU-DO declaration, which must be drawn up and sent by the end of the month following the end of the quarter. This date is not postponed if it falls on a Saturday, Sunday or holiday. The transactions in the declaration are shown in the euro;
pay the tax on the last day of the month following the completed quarter. The deadline is already postponed if it falls on Saturday, Sunday or a holiday.

If there are no sales under OSS in a given month, there is an obligation to submit zero VIU-DO quarterly declarations anyway.

The tax is paid to the bank account of the NBP tax office O / O Warszawa:

for payments from Poland - 84 1010 1010 0165 9315 1697 8000 - account kept in EUR;
for payments from abroad - PL 84 1010 1010 0165 9315 1697 8000.

Example 5.

If Mr.Eryk registers for VAT OSS from July 1, 2021, then the first VIU-DO declaration is submitted for the third quarter of 2021 to October 31, 2021. It should be noted that in 2021 this date falls on Sunday, but it is not postponed. On the other hand, the payment of the tax on this declaration will fall on November 2, 2021, because this date is shifting due to falling on Sunday and at the same time a statutory holiday, which falls on November 1, 2021.