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E-commerce | July 2018

  1. VAT taxation on the sale of cryptocurrencies
  2. There is a tax on civil law transactions on foreign purchases via the Internet
  3. Payments via the BLIK application benefit from VAT exemption
  4. The remuneration for foreign companies under distribution agreements is not subject to the withholding tax in Poland
  5. The Ministry of Finance is planning to implement the EU Directive on electronic services
  1. VAT taxation on the sale of cryptocurrencies

This issue is subject of the individual tax ruling of the Director of the National Treasury Information of 6 July 2018, reference number 0111-KDIB3-3.4012.80.2018.2.MS.

The entity planning to expand its business to include the sale of cryptocurrencies obtained in an original manner (the process of so-called “mining”) applied for issuing the tax ruling. Units of cryptocurrencies will be sold in exchange for the traditional currency, mainly on virtual currency exchanges, on which any entity from any location can register anonymously, but it will be also possible to sell these units to individual buyers outside the virtual currency exchange.

The applicant intends to perform cryptocurrency sales activities in an organized and continuous manner with a focus on earning profit. He asked, therefore, for the VAT exemption for cryptocurrencies as well as for the moment when the tax point arise.

The Director of the National Treasury Information explained that the tax consequences depend on the status of the contractor. According to the tax authority:

  • the sale of cryptocurrencies to taxpayers based in Poland – is included in the scope of Polish VAT, but at the same time benefits from the VAT exemption;
  • the sale of cryptocurrencies to non-taxable persons having their place of residence or registered office on the territory of Poland or on the territory of the European Union – is included in the scope of Polish VAT, but at the same time benefits from the VAT exemption;
  • sale of cryptocurrencies to taxpayers who have their registered office in the European Union or outside the territory of the European Union (in a third country) – is not subject to Polish VAT at all;
  • the sale of cryptocurrencies to non-taxable persons residing or having their registered office outside the territory of the European Union (in a third country) – is not subject to Polish VAT at all;
  • when the transaction is taxed in Poland, the tax point arise at the time the service is performed, i.e. at the moment of the sale of units of the virtual currency acquired in the original manner in exchange for a traditional currency, virtual currency, good or service;
  • in case of exchanging the virtual currency for another virtual currency, it is possible to determine the VAT tax base.
  1. There is a tax on civil law transactions on foreign purchases via the Internet

This is how the Director of the National Treasury Information stated in an individual tax ruling of June 12, 2018, reference number 0111-KDIB4.4014.168.2018.1.MD

The man selling used clothing hoped for the lack of tax. He obtained goods from a person residing in Ireland. The seller, each time after receiving an order from Poland, prepared a parcel with clothing, put a signed sales contract into it and sent it to Poland via a courier.

The amount of such transactions exceeded PLN one thousand, so there was no question of an exemption under Art. 9 point 6 of the Polish TCLT Act. However, the buyer believed that transactions of this kind would not be subject to TCLT pursuant to art. 1 point 4 of the Polish TCLT Act. In the light of this provision, the sale of goods is subject to the Polish TCLT when:

  • goods are located in Poland,
  • goods are located abroad – but only if a buyer lives in Poland and here both parties conclude
    a contract.

In the tax ruling Director of the National Treasury Information recalled art. 70 § 2 of the Polish Civil Code, according to which if the offer is submitted in an electronic form, the contract shall be deemed concluded at the place of residence or at the seat of the offeror at the time of conclusion of the contract. So if the buyer lives in Poland and here orders clothing (by e-mail), the contract is concluded in Poland – said the Director of the National Treasury Information. This means that the buyer must pay a 2% tax on civil law transactions.

  1. Payments via the BLIK application benefit from VAT exemption

This is what the Voivodship Administrative Court in Warsaw ruled in the judgment of July 18, 2018, file reference III SA/Wa 2867/17. Earlier, the Director of the National Treasury Information refused the right of taxpayer to benefit from the exemption, arguing that the applicant who built the platform for conducting mobile transactions does not provide financial services, but only implements technical and administrative measures enabling the payment for goods or services offered for sale, or enabling to withdraw funds from an ATM. Consequently, the authority took the view that services provided by the taxpayer should be taxed at 23% VAT rate.

The Voivodship Administrative Court in Warsaw did not agree with this approach. The court ruled that the tax authority’s approach to the financial market is anachronistic. The court referred to the EU jurisprudence according to which the VAT exemption should apply to services which result in the execution of a money transfer. BLIK is such a service in the opinion of the court. Therefore, one should not deny the right to benefit from the exemption, simply because it is a more innovative solution than traditional methods of payment.

  1. The remuneration for foreign companies under distribution agreements is not subject to the withholding tax in Poland

This is confirmed by the individual tax ruling of the Director of the National Treasury Information from 18 June 2018, ref. 0114-KDIP2-1.4010.174.2018.2.JC.

The case concerned a company operating in the IT sector, which plans to provide services related to the distribution of software purchased from companies with headquarters abroad (including Austria, the Netherlands, USA), not having a permanent establishment in Poland within the meaning of double taxation treaties. The company will acquire the right to use computer software and in return will pay remuneration to the foreign companies. The company will not acquire the right to use a computer program for its own purposes – therefore it will not be a final user of this program. It will be only a software distributor for end users purchasing a usage license.

The Director of the National Treasury Information stated that in the case there will be no transfer of the copyrights or transfer of the license for the use of copyright to the computer software to the company. Consequently, the remuneration paid to foreign companies should be treated as profits of an enterprise not subject to taxation in Poland.

 5. The Ministry of Finance is planning to implement the EU Directive on electronic services

The Ministry of Finance has published the project of the bill amending the VAT Act. The purpose of the project is to reduce the costs and nuisances associated with the VAT settlement of electronic services provided to consumers from the EU Member States other than Poland.

The proposed amendments anticipate:

  • introduction of a threshold of EUR 10,000 (PLN 42,000), referring to the annual net value of electronic services provided to the EU consumers outside Poland, to which taxable persons will be able to settle VAT for such services according to the rules applicable to domestic transactions. This solution is optional, what means that taxpayers will be able to decide on settling VAT in the Member States of recipients of their services.
  • allowing taxpayers not having registered seat in the EU , but registered for VAT purposes in one or more Member States to settle electronic services at a Mini One-Stop Shop (MOSS).

This post is also available in: pl - E-commerce | July 2018PL

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