It often happens that goods of a Polish or foreign entrepreneur are delivered to a warehouse located in Poland, and from there the further sales (including foreign sales) are planned. Sales to private individuals from Poland abroad (B2C) are so-called distant sale to a person who is not a VAT payer. In this situation some entrepreneurs wonder when VAT shall be paid in Poland and under what circumstances in the destination country. This question is important because possible omissions in this respect may lead to liability for non-payment of the tax due. Entrepreneurs should also think about the documents used to confirm payment of VAT due abroad in order to avoid additional taxation in Poland.
Distant sale from Poland to another EU country and VAT
Distant sale from Poland is sale of goods transported from this country to a natural person (private individual) from another EU country that is not a VAT payer. Such a situation occurs when goods are delivered from a warehouse in Poland to a private person, for example to Germany.
A trader providing the above-mentioned services should remember that distant sale from Poland is taxable in Poland if:
- the net threshold for distant sale to the EU country concerned has not been exceeded and in this case additionally;
- no notification has been submitted to the Head of the Tax Office in Poland of the voluntary taxation of these sales in the EU country of destination of the goods dispatched despite not exceeding the threshold.
Exceeding the threshold or submitting an appropriate notification results in taxation of this sale in the EU country of destination of the goods.
How to check whether the threshold value has been exceeded?
Each EU country sets its own threshold for distant sale between € 35,000 and € 100,000 (e.g. Germany € 100,000, Austria € 35,000). The threshold refers to the value of net sales by distant sale to the EU country concerned made in a given calendar year. The threshold expressed in a foreign currency is converted in Poland according to the exchange rate announced by the National Bank of Poland on 01.05.2004.
For example, the limit for distant sale from Poland to Germany according to the EUR/PLN exchange rate of 4.8122 PLN as of 30.04.2004 is 481,000 PLN (rounded up to 1,000 PLN).
When will distant sale be taxed in Poland?
The distant sale from Poland to an EU country will be taxed in Poland until the distant sale threshold set for that EU country is exceeded (unless an applicable notice is submitted). Once the threshold is exceeded, the distant sale will be taxed in the EU country of destination. This also applies to sales to that EU country in the year following the year in which the threshold was exceeded, even if the threshold was not exceeded in that following year.
For example, if in July 2018, distant sale from Poland to Germany exceeded the limit of PLN 481,000, so part of the distant sale from Poland to Germany in 2018 and all distant sale from Poland to Germany in 2019 is taxed in Germany. If this threshold is not exceeded in 2019, from 01.01.2020 the distant sale from Poland to Germany are again subject to taxation in Poland.
Do not forget about the documentation
It should be noted that despite exceeding the threshold of a given EU country, the taxpayer must have appropriate documentation to avoid additional taxation of these sales in Poland. In this case, it is the documentation that clearly confirms that the goods have been delivered to the buyer, who is in the EU country of destination of the dispatched goods. The above-mentioned documents can be very important for a possible control. It should also be remembered that after several years, when the entrepreneur does not remember the details of the sale, the authorities may ask for details of the transaction.
The changes in 2021
It should be noted that amendments to the law are planned for 2021, which will modify the existing regulations for the distant sale business. We will therefore keep you informed about the changes and new regulations. Knowledge of the legal environment enables effective management of the business conducted, which in the context of the uncertainty on the market is of considerable importance for the conduct of business.
If you already have questions regarding distant sales, please contact us. After we have familiarized ourselves with the individual situation, we will explain any doubts and try to find effective solutions tailored to the needs of the company.
dr Małgorzata Stępień, MBA, attorney at law (PL)/tax advisor (PL)
Paulina Kaźmierczak, tax advisor (PL)