Accounting and tax compliance challenges in e-commerce sector

1/7/2020 Present crisis due to Covid-19 pandemic and restrictions of economic life induce entrepreneurs to look for new business opportunities. For this reason, companies running traditional retail activity are moving to virtual sales channels and thus become e-commerce traders.

Online sales solutions enable companies to develop domestic sales and also to dispatch their goods to EU countries. Analogical solutions are applied by foreign companies, which are dispatching their products from EU countries to Polish B2C customers within so called distant selling regime.

Invoicing and VAT reporting obligations in online sales

New sales channels trigger new tax and legal obligations – foreign companies running distant selling to Poland need to register for VAT purposes in Poland after exceeding a threshold of PLN 160 000net within one tax year and comply with all VAT reporting related duties. Likewise, Polish entrepreneurs need to adapt their sales and invoicing software to new online sales channel and new tax obligation point proper to new kind of transactions. First of all, online sales to natural persons are mostly documented with separate invoices issued for each customer being a natural person (or with receipts in particular cases).

Therefore, the Polish companies formerly running traditional retail activity (where sales were registered with collective daily sales reports from cash register) now may face the problem of huge quantity of documents to be registered and reported for tax purposes, because online sales often represent thousands of monthly transactions to natural persons.

Smart software provides solution?

Further to implementation of new online sales channel, companies need to examine some important points at the stage of parametrization of online sales and invoicing software, so that invoices to the customers are raised in the right moment depending on way of dispatch and timing of perceiving the payment. We will guide you also in regard of elements which should be included in return of goods procedure so that the returns are properly documented. Then, once online sales software linked to online payments is working properly, in the next step entrepreneurs need to face heavy monthly obligations in respect of VAT (for companies running distant selling and registered in Poland for VAT purposes only) and accounting (if e-commerce entrepreneur is acting as legal entity or sole trader). Except for time dedicated to fulfil all these obligations, there is also significant risk of accounting mistakes, that is why it is worth to use accounting software compatible with the sales tool.

Online sales to EU countries customers

Moreover, if the Polish entrepreneurs want to develop online B2C sales to EU countries, they need to monitor if thresholds established for distant selling in respective VAT regulations in these countries are exceeded. In case of exceeding such threshold in other EU country, the Polish companies need to register for VAT purposes in this country and comply with respective local VAT obligations.

Independently from the above, we draw your attention to the fact that on EU level it is planned to insert distant selling into MOSS procedure, which exempts companies from VAT registration in other EU countries and allows to submit VAT return covering distant selling to other EU countries in one EU country only.

Anna Możaryn

How can we support  entrepreneurs in switching to e-commerce activity using our knowledge of tax and accounting requirements and experience in working with companies from this sector?

  • we can provide accounting / VAT compliance services on our software which, via xls files, is compatible with many external tools of our clients, and will easily upload detailed monthly sales data (inserted into relevant templates) and then based on them will produce relevant SAFT_VAT, including new SAFT_ V7M/SAFT_V7K structures becoming mandatory starting from 1 October 2020. Thanks to flexibility of our software in respect of import of data from the client, thousands of transactions can be posted in an efficient way using our experience in such process and in the meantime companies may dedicate their time and efforts to their core business development,
  • via integrated network of Mazars EU offices, we can provide support to Polish companies planning their development into EU B2C markets in the area of registration for VAT purposes, parametrization of sales according to local VAT requirements as well as monthly accounting and VAT compliance services in other EU countries.