Is the purchase of an electronic publication an import of services?

Service-Tax

Along with the opening of borders and the development of technology, foreign transactions and the purchase of electronic publications are gaining popularity. Is the purchase of an electronic publication from a foreign contractor treated as an import of services? Check!

Import of services - definition

Import of services is the provision of services for the performance of which the taxpayer is the buyer indicated in art. 17 sec. 1 point 4 of the VAT Act. As a rule, in the case of importing services, the obligation to settle VAT is the responsibility of the recipient, i.e. the entity that purchased the service. In order to qualify the purchased services as imported services, the following conditions must be met:

  • the place of disposal of services is the territory of Poland,

  • the service provider must have a seat or place of residence or stay outside of Poland,

  • the service recipient is a legal person, an organizational unit without legal personality and a natural person who has its seat, place of residence or stay in the territory of Poland and is obliged to settle accounts in the Polish Tax Office,

  • in Poland, the service provider did not settle the VAT due for the service provided to the service provider from Poland.

Services qualified as electronic services

Services provided electronically are services provided via the Internet or via an electronic network, the provision of which, as a rule, is automated and requires only minimal human interference, and their performance without the participation of technology would be impossible.

Article 7 of the EU Council Implementing Regulation No. 282/2011 contains a list of electronic services, in particular:

  • generally delivering products in digital form, including software, its modifications or newer versions,

  • services enabling or supporting the presence of enterprises or persons on the electronic network, such as a website or website,

  • services generated automatically by a computer and sent via the Internet or an electronic network in response to specific data entered by the recipient,

  • the transfer of the right to auction goods or services against payment via a website operating as an online marketplace, where potential buyers submit their bids using automated procedures and where the parties are informed about the sale via electronic mail generated automatically by a computer,

  • Internet service packages offering access to information where the telecommunications element is ancillary and secondary, i.e. packages that go beyond offering internet access only and include other elements such as pages that allow access to news, weather or tourist information, games , enable website hosting, access to discussion groups,

  • the services listed in Annex I.

Please note that the catalog listed in Annex I is not exhaustive, it only contains examples of electronic services.

Purchase of electronic publication - import of services

The purchase of an electronic publication is treated as an import of services. Accordingly, the obligation to settle the output tax rests with the buyer of the service, and not with the seller.

Pursuant to Art. 28b of the VAT Act, the place of providing services in the case of providing services to the taxpayer is the place where the taxpayer who is the recipient of the service has its registered office.

First of all, it should be determined whether the purchased publications, press articles or online studies from a foreign contractor can be classified as electronic services.

If they were downloaded from a foreign contractor, the method of their delivery indicates that we are dealing with an electronic service. Accordingly, the obligation to account for VAT rests with the buyer.

Example 1.

The Polish company X downloaded specialized software from the website of the foreign company Y for a fee.

This transaction may be considered an import of services, therefore the obligation to calculate and pay the tax lies with the Polish enterprise. The invoice amount should be taken as the basis for taxation with the domestic VAT rate for this type of transactions in domestic trade - as a rule, it will be 23%. An entrepreneur who is a VAT payer, who has purchased press articles or electronic studies from a foreign entrepreneur, intended to serve the entirety of his taxable activity, should report VAT on the import of services in the VAT declaration, both on the input and output tax side. An important issue when importing services is also the country from which the taxpayer purchases this type of service.

If the entrepreneur purchases the service from a country outside the European Union, it is not necessary to register for VAT-EU. If the purchase took place in an EU member state, it will be necessary to register the company for EU transactions on the VAT-R form. Registration results in the assignment of a European NIP number (before the NIP number, the PL prefix for Polish entrepreneurs and the appropriate prefix for other Member States will be added.

The obligation to provide the PL code in service transactions rests on Polish taxpayers in each case when they purchase services from foreign contractors for whom they are taxpayers due to the import of services, i.e. when they purchase services for which the place of performance has been specified in the buyer's country - Art. . 28b. The tax obligation for importing services arises when the service is rendered or the payment is made, whichever is the first.