VAT OSS - what are the rules of VAT settlement?

Service-Tax

On July 1, the VAT OSS came into force, i.e. a procedure that significantly changes taxation in relation to VAT and some procedures related to foreign e-commerce. One of the modified and significantly extended VAT settlement procedures for some transactions is the OSS VAT procedure. What are the rules governing the settlement of VAT according to it? This and many other questions are answered in this publication.

EU OSS VAT settlement procedure

The new EU OSS VAT procedure enables VAT to be settled in the seller's EU country for the following types of transactions made by the taxpayer.

The VAT due on the completed transactions covered by the OSS VAT paid in the country of registration for the OSS VAT procedure is divided and transferred to the EU countries of consumption. As a result, the seller does not have to register for VAT purposes in each EU country of consumption to which the following types of transactions are made.

The EU OSS procedure covers:

  1. providing telecommunications, broadcasting and electronic services to non-taxable persons in the EU, in EU countries where the seller is not established;

  2. providing other cross-border services to non-taxable persons in the EU, in EU countries where the seller is not established;

  3. ESPO - intra-Community distance delivery of goods (mail order sale);

  4. ESPO and certain domestic deliveries supported / facilitated by electronic interface operators (electronic marketplaces), who in this case are considered to be vendors.

Who can settle VAT via the EU OSS VAT procedure?

The new OSS VAT settlement procedure can be used by 3 basic groups of entities. They are presented in the table below.

Taxpayers entitled to use the EU VAT OSS procedure

1.

A taxpayer established in one of the EU countries, not classified as a supplier, performing ESPO transactions or providing services to non-taxpayers of EU Member States, where he has no registered office of economic activity.

2.

A taxpayer without a company seat in one of the EU countries implementing the ESPO.

3.

An electronic interface operator with or without a place of business in the EU that brokers / assists the delivery of goods and is classified as a supplier that carries out:

  • ESTO,

  • some domestic deliveries of goods.

Register to use the EU OSS VAT procedure

Registration to use the VAT OSS procedure is voluntary. A taxpayer who wants to register for the EU procedure must complete the electronic VIU-R form available at https://www.podatki.gov.pl/vat/e-deklaracje-vat/formularze-vat/.

The completed form will only be sent electronically to the Head of the Second Tax Office Warszawa-Śródmieście (handling data exchange with EU countries regarding VAT settlement via the OSS VAT procedure) via the e-Deklaracje system (available on the website https://www.podatki.gov.pl / e-declarations /).

It should be noted that the taxpayer, both for registration and subsequent VAT settlement using the VAT OSS procedure, uses his NIP number issued in the country of the company's seat or permanent place of business.

After sending the registration document, the taxpayer will receive from the Head of the Second Tax Office Warszawa-Śródmieście also electronically to the e-mail address provided in the form:

  1. confirmation of the application that he has qualified (met the requirements) to use the VAT OSS procedure, or

  2. decision to refuse to accept the notification if the taxpayer has not complied with the mandatory requirements of the VAT OSS procedure.

However, the taxpayer may lodge a complaint against the refusal within 7 days from the date of e-mail delivery of the said decision.

The particular importance of registration data provided by the taxpayer in the VIU-R declaration should be emphasized - i.e. all addresses of the registered office, permanent place of business or e-mail address. In the event of providing incorrect or outdated data, the taxpayer will not have a chance to react to letters addressed to him from the Head of the Second Tax Office Warszawa-Śródmieście.

Since when is it possible to use the VAT OSS procedure?

Registration for the VAT OSS procedure was possible earlier with effect from July 1, 2021. From July 1, 2021, taxpayers who have used the MOSS VAT procedure will use its extended version, i.e. the VAT OSS. From the above date, the VAT MOSS procedure will not function in its previous form or separately from the VAT OSS procedure (which will completely replace it).

A taxpayer who submitted a registration application for the VAT OSS procedure in June 2021 with effect from July 1, 2021, will be able to use it from July 1, 2021.

In turn, a taxpayer who submits, for example, in July 2021 a VAT OSS application, will be able to use it from the first day of the next calendar quarter after the quarter in which he submitted the above application (from October 1, 2021).

However, when the taxpayer initiated the first provision of services or ESPO before October 1, 2021, then the settlement of this sale against VAT will already be binding on the basis of the VAT OSS procedure (EU procedure). However, then the taxpayer is obliged to report this fact to the Head of the Second Tax Office Warszawa-Śródmieście by the 10th day of the month following the month in which it provided services to non-EU taxpayers for the first time or carried out the ESPO.

Moreover, in this case, the taxpayer is required to submit the first VAT declaration, separate from JPK_V7, covering the VAT settlement in the EU OSS VAT procedure for the discussed third quarter of 2021.

Example 1.

The Polish taxpayer started selling services to EU consumers on July 1, 2021.

He would like to start VAT settlement according to the VAT OSS procedure. So far, however, he has not sent the VIU-R registration application to the Head of the Second Tax Office Warszawa-Śródmieście.

In the event of the first commencement of the provision of services on July 1, 2021, the taxpayer is required to submit the notification no later than August 10, 2021 (by the 10th day of the month following the month of the first provision of the service to an EU consumer), then he will be registered for the VAT OSS procedure with effective from July 1, 2021.

Example 2.

The Polish taxpayer began selling services to EU consumers on July 1, 2021. However, he forgot to send the registration application to the OSS VAT procedure by August 10, 2021.

In this case, the taxpayer will be registered for the EU VAT OSS procedure by the Head of the Second Tax Office Warszawa-Śródmieście on October 1, 2021.

If in the third quarter of 2021 he provided services to EU consumers, unfortunately he will be obliged to settle VAT in each EU country in which he provided services to these consumers during this period.

Updating the taxpayer's data in the VAT OSS procedure

If the taxpayer notices that he has provided incorrect data in the VAT OSS registration procedure or that an event obliging him to update the existing data has occurred, he is obliged to send the VIU-R form by marking a cross when updating the data.

As during registration, the VIU-R form updating the data, the taxpayer will send e-declarations via the system to the Head of the Second Tax Office Warszawa-Śródmieście.

The situations in which the taxpayer will be obliged to submit data updates are presented in the table below.

Reasons obliging the taxpayer to send data updates - VAT OSS

1.

Change of contact details provided during registration (e-mail address, telephone number, permanent place of business in other EU countries than the country of identification).

2.

Failure to provide ESPO or services covered by the EU VAT OSS procedure.

3.

Changes resulting in failure to meet the conditions necessary to use the VAT OSS procedure.

It should be noted that the addressee in matters of VAT settlement, records, corrections and other issues related only to the OSS procedure will be the Head of the Second Tax Office Warszawa-Śródmieście, while the other, current VAT settlements, the current Head of the Tax Office competent for the taxpayer's address or registered office .

The taxpayer obliged to send the update electronically must do so no later than the 10th day of the month following the month of the change.

The obligation to send data updates does not apply to:

  1. data updated using the VAT-R form,

  2. data updated using the CEIDG form.

Special VAT records of transactions settled under the OSS VAT procedure

A taxpayer supplying ESPO or providing services to non-taxpayers from the EU is obliged to keep special records containing transactions covered by the EU VAT OSS procedure. The records should contain the data presented in the table below.

Elements of records documenting transactions covered by the EU VAT OSS procedure

1.

Member State of consumption, i.e. the country of recipients of the services or the ESPO

2.

The date on which the goods were sold or the service was rendered

3.

Object of sale - name of goods or services, description and quantity

4.

Tax base showing the currency used

5.

Amounts that increase or decrease the tax base

6.

Used (correct) VAT rate of the country of consumption

7.

VAT due, showing the currency used

8.

Date and amount of advances received prior to the sale of goods or the rendering of services

9.

Date and amount of receivables received

10.

Invoice data (if issued)

11.

Documents confirming the return of goods, tax base and VAT

12.

Specifying the address data of the recipient of services (information used to identify the company's registered office, permanent residence or habitual residence)

13.

Specification of the address details of the recipient of the goods (information used to identify the place where the shipment or transport of the goods to the buyer begins and ends).

Taxpayers who keep a record of transactions for VAT settlement according to the EU OSS VAT procedure must remember about the obligatory 10-year period of keeping these records.

It should be counted from the end of the year in which the transactions under the OSS VAT procedure were made.

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VIU-DO declaration in the EU VAT OSS procedure

A taxpayer using VAT settlement using the EU OSS VAT procedure is obliged to submit a special quarterly VAT declaration - VIU-DO (currently it is not available yet).

The three main types of transactions covered by the VIU-DO quarterly declaration are:

  1. ESTO,

  2. providing cross-border services to non-EU taxpayers,

  3. some domestic deliveries of goods by electronic interface operators.

It should be emphasized that when the service provided by the taxpayer is exempt from VAT in the EU country of consumption, the taxpayer does not include such a service in the quarterly VIU-DO declaration.

When completing this declaration, the taxpayer should also remember to take into account the following two types of VAT rates (if the EU country of consumption applies them for sales made by the taxpayer):

  1. basic VAT rate,

  2. reduced VAT rate.

This declaration may be submitted by the taxpayer via the e-declaration system (however, only in electronic form, similar to the VIU-R declaration).

VIU-DO quarterly returns must be submitted even if they are zero, so the taxpayer has not provided any services or made any supplies of goods covered by the EU OSS VAT procedure.

Importantly, the quarterly declaration for VAT settlements according to the EU VAT OSS procedure cannot be submitted before the end of the billing quarter (i.e. during the current billing quarter). The taxpayer may send it electronically at the earliest on the first day of the month following the end of the accounting quarter.

The addressee of the VIU-DO declaration is again the Head of the Second Tax Office Warszawa-Śródmieście.

The deadline for submitting quarterly VAT declarations for the EU VAT OSS procedure is the last day of the month following the billing quarter. Unfortunately, the day off principle does not apply in this case. If the last day is on Saturday or Sunday, the taxpayer is obliged to submit a VAT declaration for the previous accounting quarter for the EU OSS VAT procedure on that day off.

Example 3.

The Polish taxpayer registered in June 2021 to settle VAT according to the EU OSS VAT procedure with effect from July 1, 2021.

In this situation, the taxpayer will be obliged to submit the first quarterly VIU-DO declaration no later than October 31, 2021 (the last day of the next month after the accounting quarter, even if it is a holiday or a day off from work). It is worth noting that October 31 is Sunday.

The taxpayer may approach the payment of the OSS VAT for the third quarter of 2021 completely differently, which may be made no later than November 2, 2021.

Draft VIU-DO declaration in the EU VAT OSS procedure

An interesting, unprecedented solution for VAT settlement is the possibility of sending a draft VIU-DO (this applies, however, to VAT settlement according to the OSS VAT procedure).

Before submitting the VIU-DO declaration, the taxpayer may send a draft version of this declaration - by marking the purpose of submitting the declaration as a draft. This version is not a final declaration, which means that it will not be forwarded electronically to EU countries of consumption.

The VIU-DO declaration in the draft makes it possible to verify it in terms of some formal errors.

If it turns out that the tax office has identified errors in the declaration, the taxpayer still has the option to correct them and submit the first target VIU-DO declaration without any errors. The tax office will electronically send the taxpayer a message about the detected errors.

Of course, it may also happen that the taxpayer receives a message that the declaration is completed correctly, and therefore it can be submitted already in the final version.

Payment of VAT in the EU VAT OSS procedure

Each electronically sent quarterly VIU-DO declaration will receive (returned electronically) a unique UNR number assigned exclusively to it.

It is very important because the taxpayer is required to provide the UNR number when paying the OSS VAT. If he does not do this, the payment will not be classified as a payment of VAT under the EU OSS VAT procedure, and the Head of the Second Tax Office Warszawa-Śródmieście (electronic system) will not divide this VAT due between the individual EU countries to which it was made sale.

As a result of the above, but also late payment of the VAT OSS, there may be arrears in this tax and the obligation to pay it directly to the accounts of the relevant tax offices of EU countries of consumption (where there was a sale covered by the EU OSS VAT procedure for a given accounting quarter) .

Characteristics of the received UNR number related to the sent quarterly VIU-DO declaration for VAT settlement according to the EU OSS VAT procedure

PL / PLZZZZZZZZZZ / Q3.2021

Sample UNR number

PL

Seller's Member State code

PLZZZZZZZZZZ

VAT identification number of the seller's Member State

Q3

Billing quarter

2021

Billing year

The principle of VAT payment, as opposed to submitting VIU-DO declarations, remains unchanged, so if the last day of the month following the settlement quarter falls e.g. on Sunday, then the VAT tax may be paid on Monday (on the first business day after the holiday).

The taxpayer should remember that the individual amounts of VAT indicated in the VIU-DO declaration are expressed only in euro and are not rounded up or down. Therefore, it regulates exactly the VAT that will result from the completed declaration.

The payment of the OSS VAT resulting from the submitted VIU-DO declaration is made by the taxpayer to the account of the Second Tax Office Warszawa-Śródmieście:

  1. 84 1010 1010 0165 9315 1697 8000 - when the taxpayer makes a payment from a Polish bank account,

  2. PL84 1010 1010 0165 9315 1697 8000, BIC: NBPLPLPW - when the taxpayer makes payments from a foreign bank account.

The head of the Second Tax Office Warszawa-Śródmieście further divides the VAT between the EU countries of consumption.

It should be clearly emphasized that if the Polish taxpayer is reported to, for example, two procedures - EU VAT OSS and the import procedure - then he is obliged to pay:

  1. separately settled VAT for transactions covered by the EU VAT OSS procedure,

  2. separately settled VAT for transactions covered by the import procedure.

VAT overpayment in the EU VAT OSS procedure

In the event of overpayment by the taxpayer of VAT when settling the transaction according to the VAT OSS procedure (overpayment of the amount from the submitted declaration), the Head of the Second Tax Office Warszawa-Śródmieście will refund the overpayment amount.

If the overpayment results from the correction of the VIU-DO declaration submitted by the taxpayer, the refund will be handled by the EU country of consumption in accordance with the overpayment regulations in that country.