Dropshipping and tax obligation in income tax

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Dropshipping is becoming more and more popular in trade. According to the definition, it is a logistics model found in online sales, which consists in transferring the shipping process from the seller to the supplier of the goods. This means that the owner of the online store acts as an intermediary between the buyer and the supplier of the goods. This type of solution eliminates the costs associated with the storage of goods or the employment of additional employees. However, a question arises: how should income tax be properly accounted for with this sales model? It turns out that the issue of PIT settlement in dropshipping depends on the content of the contract concluded between the parties. In addition, it is worth noting that the provisions regarding dropshipping settlement do not refer directly, you should use the general provisions and interpretations issued.

Dropshipping as a commercial brokerage

Dropshipping is the most common solution for typical commercial brokerage. It consists in the fact that the owner of the online store is an intermediary in the sale transaction by collecting orders from customers, which in effect are carried out by a third party - wholesalers (domestic or foreign). In this situation, the sales agent's income is the commission earned, which must be properly documented.

The above position is confirmed by the tax interpretation issued on January 13, 2012 by the Director of the Tax Chamber in Poznań with the reference number ILPB1 / 415-1183 / 11-2 / TW, where we read: The information provided in the application shows that the Applicant intends to provide commercial brokerage services. In this activity, the profit (income within the meaning of Article 14 of the Personal Income Tax Act) will be the commission obtained on this account - the difference between the amount transferred by bank transfer from the customer and the amount transferred to the supplier. Therefore, in a situation where - as indicated by the Interested Party - his role will be limited to brokerage, the income will be the value of the commission, for which, as the Applicant stated, a VAT invoice will be issued.

The position on this matter was also taken by the Director of the Tax Chamber in Bydgoszcz in the interpretation issued on May 22, 2014 (reference number ITPB1 / 415-188 / 14 / WM):
The information provided in the application shows that the Applicant intends to provide commercial brokerage services, inter alia, through online auctions based on a logistics model called dropshipping. The applicant indicated that the goods will not constitute his property, he will not receive a VAT invoice and a receipt confirming the purchase, he will also not be an importer, he will not bring the goods on his own or on behalf of anyone, and his participation in the transaction will be limited to intermediation in payments and orders .

For this reason, the Applicant will charge a commission, the difference between the amount transferred by bank transfer from the customer and the amount transferred to the supplier.
Therefore, in such a case, the revenue referred to in Art. 14 sec. 1 of the Personal Income Tax Act, which should be taken into account when determining the tax base, will be the amount due for the service provided, i.e. the Applicant's commission.

Taking into account the above ruling of the tax authorities, the commission received constitutes operating income. The broker does not incur any expenses for the purchase of goods and thus does not include them in tax costs.

Example 1.

Mr. Janusz conducts the activity of brokerage in sales based on the sales model which is dropshipping. He is an intermediary between the wholesaler and the final buyer and does not have his own warehouse with goods.
On the part of the entrepreneur, the question arose whether in his case the value of the goods sold, including the commission, or the commission itself, is subject to taxation.

In the case of intermediation in sales where the entrepreneur does not have his own warehouses with goods, only the commission obtained by him is taxed. The invoice is issued to the entity that was the owner of the goods sold. The final buyer receives an invoice from the actual seller.

Mediation in the sale of goods (dropshipping) in the wFirma.pl system

With this sales model, the revenue is the commission itself (the difference between the amount received from the customer and the amount transferred to the supplier), for which a sales invoice should be issued via the tab REVENUE »EXHIBITION» ISSUE AN INVOICE.

Complete the required data in the generated window.

After saving, the invoice will be included in the KPiR (col. 7 - sale of goods and services) or in the revenue register (flat rate, according to the selected rate). In the case of VAT payers, the transaction will be automatically shown in the VAT sales register.

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Dropshipping - selling in your own name for your own account

Dropshipping is also used by sellers who purchase and sell goods on their own behalf and for their own account. Income tax settlements will look different than in the case of commercial brokerage. The revenue will be the amount obtained from the buyer of the goods - in the case of an active VAT payer, it will be the net amount (without tax), in the case of an entity exempt from VAT, the entire amount received. Expenses related to the purchase of goods for resale will constitute a tax deductible cost in accordance with Art. 22 sec. 1 of the PIT Act.

A similar case was explained in the tax interpretation issued on September 15, 2011 by the Director of the Tax Chamber in Poznań (ILPB1 / 415-782 / 11-2 / TW):The information provided in the application shows that the Applicant conducts business in the field of mail order sales of goods based on the dropshipping logistic model. The interested party collects orders from the buyer, sets the selling and transport price, and sends the orders to the supplier of the goods. Then the supplier sends the goods directly to the buyer by post or courier, who transfer the amounts collected from the buyer of the goods to the Applicant's account.

Considering the information presented in the application and the provisions referred to above, it should be considered that in the case in question, the revenues obtained in connection with the sale of goods via the Internet using the dropshipping logistic model constitute non-agricultural business activity, determined in the amount of the receivable paid by the buyer for the goods concerned. . As a rule, this income arises when the funds are credited to the Applicant's bank account, unless the Applicant has previously issued an invoice for the sale transaction.

Example 2.

Mr. Janusz runs his business on the basis of a tax book of revenues and expenses, he sells on his own behalf and for his own account as part of dropshipping.
On the part of the entrepreneur, there was a question of how to book the costs, if one of the invoices shows the purchase of goods and transport costs.

In the case of dropshipping, the cost of purchasing goods should be included in column 10 of the KPiR - purchase of goods and materials, and the cost of transport to column 11 of the KPiR - purchase side costs.

Example 3.

Mr. Janusz settles accounts on the basis of the KPiR, sells under dropshipping. On the part of the entrepreneur, the question arises whether the invoice should contain a separate item with transport costs, or should it be added to the price of the goods.

The regulations allow for the use of both methods of invoicing transport costs, both included in the price and as a separate item on the invoice. It should be remembered that in the case of active VAT payers, transport costs are taxed at the VAT rate applicable to the goods sold.

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Dropshipping - sale of commercial goods on your own behalf in the wFirma.pl system

With this sales model, the revenue is the entire value of the transaction (net for active VAT payers and gross for VAT-exempt taxpayers), to which the sales invoice should be issued via the tab REVENUE »EXHIBITION» ISSUE AN INVOICE.

Complete the required data in the generated window.

After saving, the invoice will be included in the KPiR (col. 7 - sale of goods and services) or in the revenue register (flat rate, according to the selected rate). In the case of VAT payers, the transaction will be automatically shown in the VAT sales register.

To sum up, dropshipping is not a simple solution in terms of income tax settlement. An important factor here is the content of the contract concluded between the seller-buyer entities, because on their basis it should be determined whether the transaction is a commercial agency or a sale on behalf of the seller and on his account.