State of identification and consumption - Mini One Stop Shop

Service-Tax

Further changes to the Value Added Tax Act are coming - in this case it will be an amendment resulting from EU legislation. It is about taxation in the country of consumption of electronically supplied services, telecommunications and broadcasting (TV and radio). The status of recipients will lose its significance - it will not matter whether the buyer of the service is a company or a private person. In order to mitigate the resulting from the amendment of legal provisions, the implementation of the Mini One Stop Shop procedure was planned, allowing for settlements in the country of identification, i.e. single window procedures.

Mini One Stop Shop in the VAT Act

A special procedure for entities established in the territory of the European Union, but not established in the Member State of consumption, providing telecommunications, broadcasting or electronic services to non-taxable persons referred to in art. 28a. - this is the title of chapter 6a, which will be added to it as a result of the amendment to the VAT Act. The first article of the newly inserted chapter will contain basic definitions, while the following will contain information on official formalities related to the specific procedure for settling tax on goods and services.

Member country of identification with the Mini One Stop Shop

The amendment to the act will include, among others the concept of the Member State of identification. It is the EU member state where the taxpayer provides telecommunications, broadcasting or electronic services to non-taxable persons with their registered office, permanent residence or usual residence in the member state of consumption. This taxpayer should submit a declaration stating their willingness to use the special VAT settlement procedure.

In order to understand the concept of the country of identification, it is necessary to specify in which country the taxpayer providing the above-mentioned services is entitled to submit a declaration of willingness to use the Mini One Stop Shop procedure.

Art.130b of the draft of April 15, 2014 amending the Act on tax on goods and services and the Act - Tax Ordinance

1. Taxpayers providing telecommunications, broadcasting or electronic services to non-taxable persons referred to in Art. 28a, having their registered office, permanent residence or habitual residence in the Member State of consumption, may submit a declaration informing about the intention to use the special VAT settlement procedure in the Member State where the taxpayer has:

1) headquarters of economic activity,

2) a permanent place of business in the event that it is not established in the territory of the European Union,

3) a permanent place of business, which he chooses to submit the application, if he does not have a registered office in the territory of the European Union, but has more than one permanent place of business in the territory of the European Union.

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It follows from the above that in the case of a Polish businessman with a registered office in Poland, the Member State of identification will be Poland. It is in our country that he will be obliged to settle and submit declarations regarding the use of the special VAT procedure.

The country of consumption in the Mini One Stop Shop

Now let us consider the concept of the state of consumption. It is the country in which the buyer of the services mentioned (non-taxable person) consumes them - in other words, it is the country where the services are taxed. In the Mini One Stop Shop procedure, the country of consumption will always be different from the country of identification - because only in this case it is applicable.

It is worth knowing that the amendment to the regulations on determining the place of supply of telecommunications, broadcasting and electronic services to private persons (non-taxpayers) from EU countries, which provides for taxation of the said service in the country of consumption, is obligatory. On the other hand, it is up to the entrepreneur to decide whether to use the new special VAT procedures or to register independently in each of the countries of consumption.