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New VAT rules for the e-commerce sector

Laura Strzemiecka Menedżer, PwC Poland

The last few months of the COVID-19 pandemic and the resulting heavy restrictions have had a significant impact on consumer behaviour. The digitization and automation processes which have been taking place in recent years have translated into a significant increase in e-commerce. This trend is very likely to continue in the future.

During the pandemic, the interest in online shopping has increased even more, which has resulted in the need to revise the existing sales models. The new rules of VAT taxation are intended to meet these new requirements, so it is worth becoming acquainted with them today. 

VAT e-commerce 2021

Effects for the retail sector

As of 1 July 2021, the reform will result in tightening loopholes in the VAT system for B2C supplies and services provided by non-EU entities. 

Ensuring a level playing field EU and non-EU enterprises will eliminate some dishonest suppliers and bring about the concentration of competition on the market. Therefore, as a result of the proposed simplifications and the reduction in the costs of cross-border VAT handling, B2C commerce between EU Member States should increase. Settlements through VAT-OSS will mean that the VAT rates applicable in the consumer’s country will be applied, so it may be necessary to refer to regulations on the applicable VAT rates; this often causes problems for entrepreneurs (especially, the identification of goods covered by reduced VAT rates).

The anticipated changes will also mean that intermediaries in online sales of imported goods within the EU territory will be involved in VAT settlements. Online platforms are therefore facing significant challenges, consisting of, among other things, developing internal procedures and rules for cooperating with sellers.

From the consumers’ perspective, a certain increase in prices of non-EU goods is to be expected. In this respect, suppliers from Asia generate the largest volumes. However, price adjustment will also translate into higher certainty of turnover and a reduced inflow of goods of dubious quality, where competitive advantage is based solely on low prices – which is often the result of not paying VAT. Therefore, non-EU sellers will be forced to look for solutions which will enable them to effectively compete with EU entities. This may mean, among other things, higher quality products at relatively lower prices, with benefits for customers.

Contact us

Laura Strzemiecka

Laura Strzemiecka

Menedżer, PwC Poland

Tel: +48 519 504 115

Mieczysław Gonta

Mieczysław Gonta

Partner, PwC Poland

Tel: +48 22 746 4907

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