VAT checkout method when selling with Allegro - worth knowing
Making purchases in brick-and-mortar stores due to the time spent on reaching, choosing and possible return procedure causes that more and more often commercial platforms are used to sell owned goods or services, such as Allegro. To optimize VAT, entrepreneurs with specific incomes choose the cash method of VAT settlement. They should pay attention to the correctness of the VAT settlements made when the trading platform allows the use of the so-called quick payments. Check what the VAT checkout method looks like when selling with Allegro!
The cash method is a special form of VAT settlement. It was intended only for the so-called small taxpayers. A small taxpayer is understood as a taxpayer of value added tax whose sales value (including the tax amount) did not exceed in the previous tax year an amount expressed in zlotys corresponding to the equivalent of EUR 1,200,000, converted at the average EUR exchange rate announced by the National Bank of Poland on the first business day of October of the previous tax year, rounded up to PLN 1,000. In 2020, the value of revenues from the so-called small taxpayer amounts to PLN 5,248,000
Tax obligation - rules of establishing
According to the general rule expressed in Art. 19a paragraph. 1 of the Act on tax on goods and services, the tax obligation in respect of the supply of goods arises upon its completion. Thus, the date of the delivery of the goods, understood as the transfer of the right to dispose of the goods as the owner, is of fundamental importance for determining the moment when the tax obligation arises.
In principle, the VAT obligation for the provision of services arises upon their performance. In the case of partially accepted services, the service is deemed to have been performed in relation to the part for which the payment has been determined (Article 19a (1) and (2) of the VAT Act).
Pursuant to Art. 19a paragraph. 3 and 4 of the VAT Act, a service for which, in connection with its provision, consecutive payment or settlement dates are established, shall be deemed performed at the end of each period to which these payments or settlements relate, until the provision of this service is completed or respectively the delivery of goods.
As a rule, the receipt of all or part of the payment (prepayment, advance payment, advance payment or installment) before the delivery of goods or the performance of the service gives rise to a tax obligation upon its receipt in relation to the amount received. This rule is set out in Art. 19a paragraph. 8 of the VAT Act.
VAT cash method and tax obligation
In relation to certain activities, the tax obligation arises in a special way - upon receipt of payment.
Tax obligation for taxpayers using the cash method in accordance with art. 21 sec. 1 of the VAT Act, the following is created:
- on the date of receipt of all or part of the payment - in the case of delivery of goods or services to the taxpayer referred to in art. 15, registered as an active VAT taxpayer,
- on the date of receipt of all or part of the payment, no later than the 180th day from the date of delivery of the goods or performance of the service - in the case of delivery of goods or services to an entity other than specified in point 1
- after prior written notification to the head of the tax office by the end of the month preceding the period for which he will apply this method.
The taxpayer settling VAT using the cash method is responsible for monitoring payments made from contractors. The receipt of the payment determines the moment when the VAT obligation arises.
Fire and Water s.c. uses the cash method as part of VAT settlements. On September 1, 2019, it performed a renovation service in the amount of PLN 1000 net, VAT - PLN 230. On September 5, she received a payment of PLN 984 (PLN 800 net, VAT - PLN 184) from a contractor (natural person).
Due to the receipt of payment, Ogień i Woda s.c. will be required in September 2019 to show the tax due in the amount of PLN 184. In the event that she did not receive further payment, the remaining amount of VAT, i.e. PLN 46, will be obliged to show on the 180th day from the date of the service.
Receipt of payment
The VAT Act does not define the moment of receipt of payment. The Supreme Court in the resolution of January 4, 1995, file ref. no. III CZP 164/94, stated that the non-cash payment is performed on the day the creditor's bank account is credited, unless the parties to the obligation relationship have agreed otherwise.
As a rule - payment to the contractor is settled on the date on which the money reaches his account. The freedom to contract makes it possible to modify this rule - contractors may include in the contract a provision stating that the date of debiting the debtor's bank account will be considered the moment of payment.
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VAT checkout method when selling with Allegro
In the era of digitization, the need to complete quick purchase and payment transactions is the norm. Many on-line trading platforms (online stores), including Allegro, in accordance with the regulations contained in it, allow you to use the services of intermediation of payment institutions, for example PayU or Przelewy24. Transactions made via the above-mentioned payment options are in line with the provisions of the Act on Payment Services.
In economic practice, the use of PayU or Przelewy24 brokerage services comes down to:
- make cash withdrawals from the seller's payment account as well as all activities required for operating the payment account;
- execution of payment transactions, including the transfer of funds to the seller's payment account;
- enabling the acceptance of payment instruments and the execution of payment transactions initiated by the buyer's payment instrument by the seller.
As a consequence, it is assumed that the payment for the purchased item using the payment service specified in Annex 7A and Annex 7B to Allegro Regulations - in the event that the payment for the purchased goods will be made in the form of an electronic transfer from an account maintained in one of the banks providing the so-called quick payments - should be treated as a form of payment in the form of a bank transfer.
The correctness of the above thesis is confirmed in the individual interpretation of the tax law provisions issued by the Director of the National Tax Information on July 4, 2019, No. 0114-KDIP1-3.4012.236.2019.1.MT, which reads:
„With regard to payments via on-line payment systems (here PayU), the Authority notes that this form of payment, because it is made from the buyer's account of the goods in question, to the Applicant's bank account, meets the premise that it was made through a bank ”.
Payment in the Allegro store can be made via an instant payment system, e.g. PayU, PayPal, etc. In the scope of determining the moment of its taxation under the provisions of the Act on tax on goods and services, please indicate the individual interpretation of tax law provisions issued by the Director of the Tax Chamber in Warsaw of December 24, 2014, No.IPPP1 / 443-1254 / 14-2 / MP, which emphasizes that:
„[...] The amount due for the goods, made by customers using PayU payments, is related to a future specific transaction, which allows it to be treated as an advance payment [...].
In the model of settlement of payments presented by the Applicant, made by Customers purchasing the Applicant's goods in the online store, it should be considered that the funds accumulated on the PayU payment service account remain at the disposal of the seller, i.e. the Applicant, at all times. The applicant - as is clear from the description of the case - has the option of making a withdrawal from the PayU account to his bank account at any time. It does not appear from the description of the case that this right was limited in any way.
Consequently, it should be stated that the day of payment is the day when the money is credited to the financial intermediary's account (and not to the seller's account). The fact that the funds are deposited on the intermediary institution's bank account does not in any way affect the fact that the funds are constantly at the seller's disposal, and the moment of their transfer to the bank account indicated by the seller is irrelevant.
Fire and Water s.c. sells the goods it offers via Allegro. The contractor paid PLN 6,150 for purchases via PayU on October 5, 2019 (PLN 5,000 net, PLN 1,150 VAT). The funds were available to Ogień i Woda on the same day on the bank account of the intermediary institution.
In the VAT settlement for September, Ogień i Woda s.c. paying with the cash method will be required to report the tax due in the amount of PLN 1,150.
Taxpayer settling VAT using the cash method using the so-called quick payments made through payment institutions, for example PayU or Przelewy24, made available in accordance with the regulations of the Allegro online trading platform, means that when the funds are credited to the account of the above-mentioned institution, the taxpayer is obliged to show the tax due on the payment received. The technical transfer of funds to the taxpayer's bank account is irrelevant for the correct settlement of VAT.