Intra-Community distance selling in JPK V7

Service-Tax

When running a business, entrepreneurs do not have to limit themselves only to selling on the domestic market. They can also sell their goods (the so-called ESPO) or services (the so-called TBE) to private persons from other EU and non-EU countries. From July 1, 2021, such sales may be settled under one EU VAT OSS procedure. Let's check how intra-Community distance sales should be marked in SAF-T and how such sales should be accounted for on the basis of VAT.

What is ESPO and TBE?

The ESPO, i.e. intra-community distance sales of goods, is nothing more than mail order sales of goods to private individuals from other EU countries. From July 1, 2021, this term has replaced the existing definitions of mail order sales from the territory and within the territory of the country. Pursuant to Art. 2 point 22a of the VAT Act, in order to be able to talk about the ESPO, 4 conditions must be met:

  1. the goods sold are dispatched or transported by the supplier or on his behalf by a third party (including where the supplier indirectly participates in their dispatch or transport);

  2. the shipment or transport starts from one EU country and ends in another EU country;

  3. the subject of sale are not:

    1. new means of transport

    2. or goods requiring installation or assembly with or without a trial run;

  4. the buyer is:

    1. VAT taxpayer or a legal person that is not a VAT taxpayer, which is not obliged to settle intra-Community acquisition of goods, i.e. intra-Community acquisition of goods (including non-transactional intra-Community acquisition of goods) - i.e. a company that is not required to settle intra-Community acquisition of goods

    2. or a non-taxable entity, e.g. a private individual not engaged in business.

The ESPO most often occurs as part of the sale of goods from Poland to the territory of another EU country to private persons who do not conduct business, where the seller participates directly or indirectly in the shipment.

TBE is nothing more than the sale of electronic, broadcasting or telecommunications services to private persons from another EU country. The method of settling this type of sale has not changed after the entry into force of the VAT OSS procedure. Until now, such sales were accounted for as VAT MOSS. In both cases, the seller, after exceeding the sales limit, was required to issue an invoice with input VAT applicable to the buyer's country. According to Art. 28k paragraph. 1 of the VAT Act, the place of provision of telecommunications services, broadcasting services and electronic services to non-taxable entities is the place where these entities have their registered office, permanent residence or habitual residence.

How to calculate the sales limit for VAT OSS?

From July 1, 2021, the legislator unified the sales limit under the OSS VAT procedure and currently it amounts to EUR 10,000, i.e. PLN 42,000. This limit should be considered in the context of the sales volume in the current and the previous year. If the entrepreneur does not exceed it, he has the right to voluntarily register for VAT OSS and issue invoices with a foreign VAT rate or use domestic, Polish VAT rates (or issue invoices without VAT in the case of non-VAT). Pursuant to Art. 28k paragraph. 3 of the VAT Act, when the sales limit is exceeded, the transaction that has been exceeded must be taxed in the buyer's country. In such a situation, the seller has a choice - he can register for VAT OSS or for VAT directly in the buyer's country. In both cases, it is obliged to issue an invoice with a foreign VAT rate appropriate for the country of the buyer. The VAT OSS procedure makes it easier for the entrepreneur, because the settlement of foreign VAT for the entire European Union is made on one tax declaration, which is submitted to the Polish tax office - the Second Tax Office Warszawa-Śródmieście.

Example 1.

Ms. Emilia has her seat in Poland and conducts mail order sales of goods and provides electronic services to individuals from other EU countries. The total value of sales in the third quarter of 2021 is PLN 15,000. How should Emilia tax mail order sales of goods?

Due to the fact that Emilia has a registered office in Poland, she sends goods to buyers in other EU countries and provides electronic services to them, and the value of this sale neither in 2020 nor in 2021 exceeded the limit of PLN 42,000, are subject to taxation in Poland, i.e. they are treated as domestic sales subject to Polish VAT. Ms Emilia may voluntarily register for the VAT OSS procedure and issue invoices with a foreign VAT rate.

Registration for the OSS VAT procedure, after exceeding the sales limit of PLN 42,000 in one EU country or as the sum of sales to other EU countries, covers all other EU countries, regardless of the individual sales volume directed there.

Example 2.

Mr. Piotr is based in Poland and in 2020 he sold goods from Poland to Germany by mail order for the amount of PLN 45,000 (in 2020, the limit of mail order sales to Germany was EUR 100,000), and from Poland to Italy for the amount of PLN 12,000. He did not exceed the limits of mail order sales of goods in any of these countries, so he taxed transactions with the Polish VAT rate. Can Mr. Piotr continue to settle the ESPO in accordance with the current rules in 2021?

No, due to the fact that in 2020 the ESPO limit of PLN 42,000 was exceeded in Germany, Mr. Piotr has two options:

  • can register for VAT in Germany and Italy and from July 1, 2021, tax goods sold to the EU at the local VAT rate

  • or can use the VAT OSS procedure, i.e. issue invoices with the German and Italian VAT rate without the need to register for VAT in Germany and Italy, and pay VAT on such a transaction at the Polish tax office.

Intra-Community distance selling in JPK, i.e. how to mark ESC and TBE?

Until June 30, 2021, if the limit of mail order sales from Poland to another EU country was not exceeded, the transaction was marked in the record part of the JPK_V7 file with the code "SW". On the other hand, sales of electronic, telecommunications and broadcasting services had to be marked with the code "EE".

Currently, when taxing the ESPO or TBE transaction with Polish VAT, i.e. before the sales limit is exceeded, in the record part of the JPK_V7 file, the designation "EE" should be used. This obligation arises when the date of sale on the invoice falls after June 30, 2021. After exceeding the sales limit and registration for VAT OSS, the designation "EE" is not used, because such sales are shown in the OSS VAT sales register (i.e. the register of foreign transactions), and not in the sales VAT register (i.e. the register of domestic transactions, which is the basis for creating the JPK_V7 file) ).

Start a free 30-day trial period with no strings attached!

From January 1, 2022, sales carried out under ESPO and TBE will have to be marked as "WSTO_EE" in the record part of the JPK_V7 file before the limit is exceeded. This means that from January 1, 2022, the designation "SW" and "EE" will no longer be used in a situation where the sale date falls after December 31, 2021.

After exceeding the sales limit of ESPO and TBE in the amount of PLN 42,000 or voluntary registration to VAT OSS, intra-Community distance sales in JPK should not be shown by taxpayers, which means that invoices with a foreign VAT rate are not shown in the JPK_V7 file.

Example 3.

Mr. Łukasz provides electronic services and conducts mail order sales to private persons from Poland and Germany. It has not exceeded the sales limit, so it issues invoices with the Polish VAT rate. How should it show the invoiced transactions in the registration part of JPK_V7?

  1. For mail order sales prior to June 30, 2021, "SW" should be used.

  2. For the sale of electronic services that took place by June 30, 2021, the designation "EE" should be used.

  3. For mail order sales (ESPO) and sales of electronic services (TBE), which have taken place from July 1, 2021, the designation "EE" should be used.

  4. In the case of mail order sales (ESPO) and sales of electronic services (TBE), which took place from January 1, 2022, the designation "ESPO_EE" should be used.

From July 1, 2021, an additional designation "IED" was introduced in the record part of the JPK_V7 file. They are used by taxpayers facilitating sales via an electronic interface (e.g. an online store platform), i.e. operators of electronic interfaces that are not registered for VAT IOSS or VAT OSS procedures.

How to mark ESPO and TBE sales for JPK_V7 purposes in the wFirma.pl system?

In the system for conducting independent accounting wFirma.pl, intra-Community distance sales in JPK is already marked at the time of issuing the sales invoice. To do this, go to the tab: REVENUE »SALE» EXHIBITION »INVOICE, select the buyer, ie a private person from another EU country, where in the field where the NIP is set by default, the option NONE is indicated and then the Polish VAT rate is applied. In the ACCOUNTING sub-tab, as the Sales type JPK_V7, select the EE option.

The invoice issued in this way will be entered in column 7 of the KPiR or Revenue Register (in the case of lump sums) and in the sales VAT register. Additionally, in the registration part of the JPK_V7 file, the invoice will be marked with "EE" automatically.