European NIP (tax identification number) - who is obliged to have one?
When running a business, entrepreneurs often make transactions with foreign contractors, i.e. from other European Union countries or from outside the European Union. For the correct tax settlement of such transactions, taxpayers use a special NIP (tax identification number). This is called European nip. How to get it and is every entrepreneur obliged to have it? Let's check it out!
What is the European Tax Identification Number (NIP)?
First of all, it should be emphasized that the European NIP applies only to transactions with countries from the European Union. It is a tax identification number given to taxpayers so that they can make intra-community transactions. The entrepreneur receives the so-called NIP-EU, which for Polish taxpayers looks like the NIP assigned when setting up a business, with the difference that it is preceded by the prefix PL. This additional marking identifies the country of origin of the entrepreneur using this number. In the case of Polish entrepreneurs, the European tax identification number (NIP) consists of the PL prefix and a sequence of 10 digits, so it has the format: PLXXXXXXXXXX.
Does every entrepreneur have to have a European tax identification number?
Intra-Community transactions may include both active VAT payers and entrepreneurs benefiting from VAT exemptions. In the case of active VAT payers, the absolute obligation to register for VAT-EU takes place before concluding the transaction:
- intra-Community acquisition of goods (WNT),
- intra-community delivery of goods (WDT),
- intra-Community supply of services, the VAT settlement of which is the responsibility of the purchaser of the service,
- intra-Community acquisition of services to which art. 28b of the VAT Act, i.e. when a Polish taxpayer is obliged to settle VAT on account of the concluded transaction.
Taxpayers benefiting from VAT exemption (objectively or objectively) also have to register to VAT-EU before making a transaction with an entrepreneur from another EU country, namely in a situation where:
- intra-community acquisition of goods (intra-community acquisition of goods)
For taxpayers who benefit from VAT exemption, who conclude intra-Community acquisition transactions, the legislator provided for an exemption from the obligation to have a European tax identification number (NIP), i.e. from VAT-EU registration. Pursuant to Art. 97 sec. 2 of the VAT Act, if the value of the intra-Community acquisition of goods does not exceed PLN 50,000 in a given year, the taxpayer benefiting from VAT exemption is not required to register for VAT-EU.
- intra-Community supplies of services, the VAT settlement of which is the responsibility of the purchaser of the service;
- intra-Community acquisition of services to which art. 28b of the VAT Act.
European NIP and JPK_V7
The European tax identification number used by the buyer or supplier is closely related to the country code of its origin - it is a prefix used before the tax identification number (NIP). In the JPK_V7 file, this code is included in the KodKrajuNadaniaTIN field and represents the code of the country of assigning the number by means of which the buyer, supplier or service provider is identified for the purposes of tax or value added tax. According to the explanations of the Ministry of Finance on the use of the country code, it is important to verify the type of transaction because in the case of transactions:
- domestic - the code "PL" should be entered in the KodKrajuNadaniaTIN field, if the code is included in the invoice. This means that if the invoice contains such data, enter the code "PL",
- EU - in cases where the provisions of the VAT Act and legal regulations on value added tax in the country of the contractor / supplier impose an obligation to use the tax identification number preceded by the letter code of the country of assigning this number, complete Kod KrajuNadaniaTIN if it is known e.g. "DE" for a contractor from Germany.
- outside the EU - the field KodKrajuNadaniaTIN should be filled in if the data collected by the taxpayer allow this field to be completed, eg "US" for the United States. In case of difficulties with determining the country code, the field may be left blank.
Registration for VAT-EU
In order to register for VAT-EU, i.e. in order to obtain a European tax identification number (NIP), the entrepreneur must submit the VAT-R form with part C.3 filled in. on intra-community implementation.
The VAT-R form (application or update form) should be submitted to your own tax office in person, sent by post or sent electronically using your own qualified signature. If a non-VAT payer obtains a European VAT number, he can still benefit from VAT exemption. Registration for VAT-EU does not affect the loss of this right and is not tantamount to registration for VAT.
For whom VAT-UE, and for whom VAT-EU?
When we purchase services or goods from contractors from another EU country, as a rule, the sales invoice should contain the seller's European VAT number, i.e. the VAT-EU number preceded by the prefix of the given country, e.g. in the case of a contractor from Italy it is IT, and when the seller is there is a company from Germany, it will be the DE prefix. When concluding foreign transactions, entrepreneurs may receive a purchase invoice with the NIP number preceded by the EU prefix. Does this mean that such a transaction should be treated as an intra-Community acquisition?
Pursuant to Art. 132 sec. 1 of the VAT Act, foreign entities providing telecommunications services, broadcasting services or electronic services to private persons (not conducting business activity) having their registered office, permanent residence or habitual residence in the territory of the European Union may submit a notification in the Member State of identification informing about their intention to use the the special VAT settlement procedure.
Art. 131 sec. 1 point 6 of the VAT Act:
special VAT settlement procedure - "it means the settlement of the VAT due for the provision of telecommunications services, broadcasting services or electronic services to the Member State of consumption via the Member State of identification". Thus, entrepreneurs from outside the European Union using the special VAT settlement procedure, after submitting the declaration, receive the European NIP preceded by the EU prefix. In a situation where an invoice with such a seller number is received by an entrepreneur running a business, he does not treat the transaction as an intra-Community acquisition but as an import of goods or services from a non-EU contractor.
What is a VAT-EU declaration?
Entrepreneurs with a European tax identification number (NIP), who make intra-community transactions, call-off stocks, intra-Community supplies or intra-Community services, are required to send monthly VAT-EU summary information. This document is not a form of tax declaration on the basis of which the VAT payable to the Tax Office is calculated. The VAT-EU summary information is for information purposes only and is a reporting document.
The VAT-EU summary information shows transactions such as:
- intra-Community acquisition of goods,
- intra-community delivery of goods,
- intra-Community supply of services to which art. 28b of the VAT Act.
- intra-Community transactions and movements of goods under the call-off stock procedure
Pursuant to Art. 100 sec. 3 of the VAT Act, the VAT-EU summary information is submitted by the 25th day of the month following the month in which at least one of the aforementioned transactions took place. This document is submitted by both an active VAT payer and an entrepreneur benefiting from VAT exemption. The VAT-EU summary information is submitted only in electronic form and only for monthly periods. In a situation where the entrepreneur did not conclude an intra-Community transaction in a given month, he does not submit VAT-EU summary information.
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Deregistration from VAT-EU
The European NIP (tax identification number) is assigned to entrepreneurs after submitting a registration application. However, it should be borne in mind that in certain situations the entrepreneur may be removed by the Tax Office from the register of VAT-EU taxpayers. The deletion will take place when:
- for 6 consecutive months or 2 consecutive quarters, the entrepreneur submits a JPK_V7M or JPK_V7K file, which will not show the sale or purchase of goods or services with tax amounts to be deducted,
- for the next 3 months, the entrepreneur did not submit the VAT-EU summary information, despite such an obligation.
- the entrepreneur was removed from the register of active VAT payers.
Art. 97 sec. 15 of the VAT Act:
"In the event that the entity referred to in paragraphs 1 to 3, for 3 consecutive months or a quarter, submits declarations referred to in Article 99 paragraph 1, 2 or 3, in which it did not show the sale, purchase of goods or services nor the import of goods with the amounts of tax to be deducted, the head of the tax office deletes this entity ex officio from the register as an EU VAT taxpayer and notifies it of its deletion. "
Ms Anna is an active VAT taxpayer with a European tax identification number. During the holiday period (from June to September), she ceased her activity and did not receive any income during that time. However, it did not decide to suspend its activities. Therefore, fulfilling her tax obligations, Ms Anna submitted zero VAT returns and JPK_VAT files for June, July and August. In October, Ms Anna received information from the Tax Office that she was removed from the VAT-EU register. Should Ms Anna submit zero VAT-EU summary information to avoid deletion from the register?
As a rule, unlike the VAT declaration and the JPK_VAT file (which have been replaced by one JPK_V7 structure since October 2020), you should not submit zero VAT-EU summary information. Due to the fact that Ms Anna did not show the sales and purchases of goods or services in the VAT declaration for 3 consecutive months, the office had the right to remove Ms Anna from the VAT-EU register. Therefore, before making a transaction with an entity from another EU country, Ms Anna should re-register for VAT-EU, submitting for this purpose an update of the VAT-R form.
Mr. Jan submitted the JPK_V7M file for three consecutive months, in which he did not show any sales revenue. However, he bore the costs that he showed in the file, and therefore a surplus of input tax over due tax was carried over to subsequent periods. Additionally, Mr. Jan did not make any intra-Community transactions for 3 months, therefore he did not submit VAT-EU summary information. Can the office in such a situation remove Mr. Jan from the register of VAT-EU taxpayers?
No, the office cannot remove Mr. Jan from the register of VAT-EU taxpayers, because despite the fact that Mr. Jan did not conclude intra-community transactions and did not show any sales in the JPK_V7M file, he showed in the file purchases from which VAT was deducted. Therefore, the head of the tax office has no grounds to remove Mr. Jan from the VAT-EU register.
How to generate VAT-UE in the wfirma.pl system?
To generate VAT-EU information in the wfirma.pl system, go to the tab: START »TAXES» VAT TAX »ADD DECLARATIONS» EU VAT INFORMATION. The document is completed automatically on the basis of data contained in the VAT purchase and sale register (in the case of active VAT payers) or in the VAT register of foreign transactions (in the case of taxpayers benefiting from VAT exemptions).