Brexit - how to settle transactions with Great Britain?

Service-Tax

On December 31, 2020, Great Britain left the European Union. Until the end of 2020, there was a transitional period in which Great Britain was still treated as a country belonging to the European Union. However, from January 1, 2021, the rules of settlements with the United Kingdom were regulated. Let's check the consequences of the Brexit from 2021 on the background of tax settlements with Polish entrepreneurs!

Brexit - transitional provisions until the end of 2020

The transitional period introduced as a result of the aforementioned agreement provided that the relations between the European Union and Great Britain would be maintained on the current terms. This means that the United Kingdom, although it left the EU, was treated as an EU Member State until the end of 2020. Therefore, settlements with Great Britain continued as intra-Community settlements, and thus, until the end of 2020, the rules applicable to settlements with EU countries were maintained.

Purchase and / or sale transactions with Great Britain and Brexit

From January 1, 2021, a Polish entrepreneur making transactions with a UK contractor is obliged to treat him as a contractor from a third country, i.e. from outside the European Union. Therefore, when importing services from the UK, you must first register for EU VAT on the VAT-R form in section C.3. "Information on the performance of intra-Community transactions":

  • item 59 - it means an active VAT taxpayer who will make or make an intra-Community supply of goods, intra-Community acquisition of goods or will provide or provide services intra-Community, or will acquire or acquire services to which art. 28b of the Act, if these services would constitute an import of services for the taxpayer (both for those from the EU and from outside the EU);

  • item 61 - it is an exempt VAT payer who will import or import services (both from the EU and from outside the EU) or will provide or provide services intra-Community.

In addition, in item 62, the expected date of commencement of the performance of the activities listed in the above items should be indicated.

In the next stage of settling the transaction with Great Britain, it is necessary to distinguish whether the Polish entrepreneur acts as the buyer or the seller. The table below presents the method of recording purchases / sales depending on which party to the transaction is the Polish taxpayer.

VAT taxpayer active

Type of transaction

Tax records

Import of goods

The purchase invoice should be included directly in tax deductible costs. On the other hand, with the help of internal evidence, the cost of customs duty and excise duty (if accrued) is recognized in the tax records.

In terms of VAT, the settlement depends on 3 factors:

  1. Has the taxpayer made a declaration for the simplified import of goods, art. 33a.

Solution: The invoice must be entered simultaneously in the sales and purchase VAT register and the Polish VAT (usually 23%) must be charged in the period in which the customs debt was incurred. In the JPK_V7 file, such a transaction should have the designation "IMP" and be shown in item P_25 and P_26.

  1. Whether the clearance took place in Poland (ordinary import).

Solution: In addition to receiving the purchase invoice, the taxpayer should receive a SAD or PZC document from the customs office, which is the basis for the deduction of VAT and the recognition of the cost of duty and excise duty.

We deduct VAT on the basis of the customs document on the date of its receipt. In the JPK_V7 file, this transaction should have the designation "IMP" and be shown in item P_42 and P_43 (for the purchase of goods) or P_40 and P_41 (for the purchase of a fixed asset).

  1. Whether the clearance took place in an EU country (normal import, settled as intra-Community acquisition of goods).

Solution: In JPK_V7, this transaction is shown on the date of issuing the invoice or, if no invoice is available, then the intra-Community acquisition of goods should be provided on the 15th day of the month following the month in which the goods were delivered to be the subject of intra-Community acquisition in item P_23 and P_24 and P_42 and P_43 (for other purchases) or P_40 and P_41 (for the purchase of a fixed asset).

In the summary note, EU VAT is reported in part D.

Service import

The invoice must be included in the sales and purchase VAT register at the same time, and Polish VAT (usually 23%) should be charged.

In JPK_V7, the transaction is shown in item P_27 and P_28 and p_42 and P_43 (in the case of other purchases).

Provision of services

The invoice is issued without VAT, with the NO PODL rate. and with the annotation "reverse charge". In JPK_V7, the transaction is shown in item P_11.

Export of goods

The invoice is issued without VAT, with a 0% rate. This sale should be shown in JPK_V7 in item P_22.

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The taxpayer is exempt from VAT

Type of transaction

Tax records

Import of goods

The purchase invoice should be included directly in tax deductible costs.

Internal proof is used to recognize the cost of customs duty and excise duty (if charged) in tax records - when the taxpayer has received a PZC and SAD document from the customs office.

VAT settlement depends on 2 factors:

  1. Whether the clearance took place in Poland (ordinary import).

Solution: In the case of an exempt VAT taxpayer, the VAT charged on the customs document SAD / PZC is included in tax costs by means of an internal document.

  1. Whether the clearance was in an EU country (normal import, settled as intra-Community acquisition of goods).

Solution: In the case of a non-VAT, when goods are imported cleared in another EU country, it is possible to take advantage of the exemption regarding the disclosure of intra-Community acquisition transactions, if:

  • * the exempt VAT payer has not registered for the intra-community acquisition of goods;

  • intra-Community acquisition transactions in a given tax year did not exceed 50 thousand. zlotys.

In the case of a non-VAT, it is not possible to use the simplified import of goods, art. 33a.

* in order to be able to take advantage of the exemption from intra-community acquisition transactions, the prefix PL cannot be used before intra-Community acquisition transactions.

Service import

The invoice must be entered in the VAT register of foreign transactions and taxed with the domestic VAT rate (usually 23%). VAT is payable on the transaction, which, after being paid, constitutes the operating cost. The transaction is shown in the VAT-9M declaration in item 10 and 11 (if the taxpayer is reported to make WNT) or VAT-8 declaration in pos. 12 and 13 (if the taxpayer is not reported to make intra-Community acquisition of goods).

Provision of services

The invoice should be issued as a standard invoice (excluding VAT) with the note "reverse charge".

Export of goods

The invoice must be issued as a standard invoice (excluding VAT). In the case of a taxpayer exempt from VAT, there is no export of goods, but ordinary sales analogous to domestic sales.

Brexit on the seller's side in the wFirma.pl system

In order to issue an invoice for a contractor based in Great Britain, from 2021, go to the tab: REVENUE »SALE» EXHIBITION »EXIST AN INVOICE. In the window that appears, you need to complete the sales data. When entering the contractor's data in the NIP field, select OTHER from the list, and as the VAT rate:

  • do not suck - in the case of the provision of services;

  • 0% EXP. - in the case of delivery of goods.

Additionally, in the ADVANCED tab, it is possible to define the currency and the language of the invoice.

Other information on how to account for purchases (import of goods / import of services) from Great Britain in the wFirma.pl system can be found in the article: Brexit - how to settle transactions with Great Britain.