The dropshipping model in Poland - advantages and disadvantages

Service-Tax

An online store seems much easier to set up and run than a stationary one. Well, it seems - online retailers know well that this is not a piece of cake at all. Entering the e-commerce industry is not only about standard outlays related to setting up a business - it is also about considerable expenses for building a website, server, online marketing and so on. To reduce costs (even the initial ones), it's worth finding out what dropshipping is.

What is the dropshipping model?

Dropshipping is an interesting logistics model where the distributor (wholesaler) is solely responsible for the transport of goods to the customer. The tasks of an online seller include acquiring customers as well as accepting orders and settling incoming payments. After accepting the order, he contacts the distributor, whose role is to ship the goods - the owner of the online store has no direct contact with the offered products, and profits from the difference between the wholesale price and the retail price.

Dropshipping - advantages

Dropshipping is usually the domain of small and start-up businesses. It is not surprising - no need to have and operate your own warehouse of goods is a big saving. In addition, dropshipping allows you to avoid the costs associated with insurance and the work of warehouse staff. The big advantage of dropshipping, which appeals to many, is the delegation of shipment responsibilities (packaging, securing, etc.) to an external distributor. Savings are expressed not only in specific amounts - it should also be taken into account that the seller does not waste time on all aspects related to logistics and stock replenishment. And if the distributor is up and running, the customers benefit too, getting the goods they order faster.

Dropshipping means low risk of doing business. An online retailer does not buy large batches of products in advance without knowing if they can be sold. You should also remember that dropshipping allows you to freely negotiate prices. The entrepreneur derives his profit from the difference between the wholesale price and the retail price, so it is actually up to him how much he will earn.

Dropshipping - disadvantages

A thorough analysis cannot ignore the shortcomings. The disadvantages of dropshipping include, first of all, little control over the process of distributing goods. Mistakes or unreliability of the external supplier can destroy the store's reputation. A dishonest wholesaler, having a full customer base of the company, may also try to take over them, creating a competitive business. Having only one cooperating supplier may mean no prospects for extending the offered assortment. Such addiction is sometimes also associated with the price dictate.

Dropshipping and taxation

There is no point in looking for provisions dedicated to dropshipping in income tax acts. For this reason, the seller's revenue should be taken as any amount owed - even if not received - less the value of the returned products or discounts. This is stated in Art. 14 sec. 1 of the PIT Act. The tax obligation arises when the receivable is credited to the entrepreneur's account.

Individual interpretation of the Director of the Tax Chamber in Poznań of September 15, 2011 (ILPB1 / 415-782 / 11-2 / TW):
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.

The invoices / bills received from the supplier constitute the basis for the settlement of tax deductible costs. On the other hand, the Act on tax on goods and services gives grounds to state that dropshipping is a chain transaction. In the case of delivery within the country, there are no problems, as the applied VAT rate is the same. The stairs start when goods are imported from abroad. When transporting products - for example from India - for a supplier from another country it will be a tax-exempt transaction, and for a contractor from Poland, an obligation to settle the import will appear. In addition, the domestic contractor is also obliged to tax the supply to the final recipient in Poland.

Attention!
When importing goods from outside the EU, it must be remembered that in addition to tax, the final consumer must also pay duties and excise duties.