VAT Mini One Stop Shop - what is the country of identification and what is the country of consumption?

Service-Tax

The government is planning further changes to the VAT Act. This time, however, they result from the top-down initiative of the European Union. From January 2015, all electronically supplied services, telecommunications services, and radio and television broadcasting services will be taxed in the country of consumption. It will not matter so far whether they are provided to companies or private persons. To alleviate the consequences of the changes, a one-stop procedure (the so-called MOSS - Mini One Stop Shop) is introduced, which will allow you to settle in the country of identification.

Mini One Stop Shop procedure - a new chapter in the VAT Act

According to the draft of the planned changes to the VAT Act, it is intended to introduce a new chapter 6a into the regulations, entitled:

"Special scheme 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. "

The first of the articles of this chapter (Article 130a) will define the terms used in it, and the next ones will refer to the issue of declarations and submitting information to the office related to the use of a special VAT settlement procedure.

Mini One Stop Shop Procedure - Member State of identification

The draft amendment to the act stipulates that the Member State of identification will be the Member State in which the taxpayer provides telecommunications, broadcasting or electronic services to non-taxable persons (Article 28a), having their registered office, permanent residence or habitual residence in Member State of consumption submits a declaration informing about its intention to use the special VAT settlement procedure.

In order to explain what the country of identification actually is, it is therefore necessary to specify in which country the taxpayer providing telecommunications, broadcasting or electronic services can legally submit a notification informing about the intention to use the Mini One Stop Shop (MOSS) procedure. This is provided for in Art. 130b of the draft amendments to the VAT Act.

 

Art. 130b of the draft of 15/04/2014 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.

According to the above-mentioned Member State of identification, Poland will be the Polish entrepreneur whose seat of business is located in our country. It is here that he will settle accounts and submit declarations related to the application of the special VAT procedure.

Mini One Stop Shop procedure - the country of consumption

So what will the country of consumption be? The state of consumption, although it is not explicitly specified in the draft act, will be the country in which the buyer - a non-taxable person - of the nature of the services in question will consume the purchased

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benefit. It will therefore be the same country where the service provided will be taxed. It is important that the country of consumption under the special MOSS procedure will always be a country other than the country of identification. Only then can the EU solutions of the Mini One Stop Shop system be applied.

Finally, it should be recalled that the amended regulations regarding the determination of the place of supply of telecommunications, broadcasting and electronic services to non-taxpayers from European Union countries, which require taxation of the provision in the country of consumption, are obligatory. However, it is up to the trader to decide whether the taxpayer providing the service will benefit from the new special VAT procedures or will register independently in each country of consumption - it is up to the trader himself.

MOSS invoicing - read more!