EU’s new VAT rules to land Polish treasury another EUR 270 mln per year

Minor goods sent to the EU from Asia, which until now have not had VAT placed on them, will be subject to the tax from July 1 this year following the adoption of the EU’s VAT e-commerce package. The Polish state budget is expected to gain more than EUR 110 mln this year from the new regulation. That figure should grow to more than EUR 270 mln per year starting from 2022.

Pawel Selera, Director of the Goods and Services Tax Department at the Ministry of Finance, told the Polish Press Agency PAP that the VAT e-commerce package introduces significant changes for entrepreneurs, which will also result in changes for consumers. In his opinion, it is one of the most important implementations of EU VAT regulations after Poland's accession to the EU.

On the one hand, the system will be tightened, especially in the case of small consignments from East Asia (up to the value of EUR 150), on the other hand, the new rules will make it easier and less costly to pay VAT.

In the case of companies, the most important novelties concern deliveries of goods to consumers (so-called B2C), both within the EU and related to the shipment of goods from countries outside the EU. Generally, the idea is that VAT will be charged in the country of consumption and that it will not be possible to avoid it

Currently, when selling goods within the EU, the place of supply is usually registered as the country of dispatch. If this is for example Poland, the goods will also be taxed in that country. However, if the value of the goods sent exceeds a certain threshold specified by each country, the situation changes and VAT will instead have to be paid in the country to which the goods arrive. The thresholds vary from country to country, but usually range within the EUR 35,000 to EUR 100,000 bracket.

Starting on July 1, a uniform threshold of EUR 10,000 will be introduced in the EU. VAT will have to be paid in the country in which the goods arrive if their value crosses the EUR 10,000 threshold. However, it will not be necessary to register your VAT in that country as the so-called One Stop Shop Procedure will be introduced.

Consequently a Polish company will be able to pay VAT on goods, sent to another EU country, in Poland.

The second element of the package concerns the supply of goods from non-EU countries to EU consumers. The main aim of the changes is to tighten up VAT collection on small value shipments entering the EU from East Asia. As most of the member states exempt imports of consignments up to 22 euro from VAT, countries that do not, including Poland, lose out. This is because products sent to the EU without VAT are cheaper by about 20 percent. It is a practice which, according to Mr Salera, distorts competition.

He pointed out that there is a notorious practice of undervaluing parcels to avoid VAT, artificially dividing shipments into parts, the value of which as a whole exceeds the amount of EUR 22, or giving false information about the true value of goods that in reality cost much more than EUR 22.

The e-commerce VAT package removes the EUR 22 limit across the EU and provides new measures that will apply to shipments of goods valued up to EUR 150.

Most of the sales to the EU from East Asia are conducted through giant e-commerce platforms. The EU’s VAT e-commerce package puts specific emphasis on targeting those entinites.

The amendment to the bill, necessary to introduce the changes to Poland’s legal order, was passed by the Lower House of the Parliament in May. The Senate is scheduled to proceed with it between June 16 and June 18, while the new rules are to be implemented from July 1