The implementation of the VAT e-commerce package, which introduced EU VAT rules for e-commerce, has significantly changed how many taxpayers account for tax. This package aims to simplify transaction settlements across the European Union in B2C sales, leading to the introduction of the OSS and IOSS procedures.

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Instead of registering for VAT in multiple countries, sellers can declare and pay VAT in a single member state. This system not only reduces administrative burdens but also ensures that customers are not faced with unexpected tax charges upon delivery.

What is VAT OSS?

The One Stop Shop (VAT OSS) is a simplified VAT settlement procedure for businesses engaged in distance selling within the European Union. It allows businesses selling goods remotely to individual customers in other EU member states to submit VAT declarations and pay the due tax to the tax authority in their country of establishment. This local, well-known tax authority then transfers the appropriate VAT amounts to the respective EU countries.

VAT OSS is available to both VAT-registered taxpayers and businesses that are not registered as VAT payers. Registration for VAT OSS does not affect VAT-EU registration or any applicable VAT exemptions. Sales covered by VAT OSS are excluded when determining the VAT exemption threshold. The decision to use VAT OSS is voluntary and remains at the discretion of the seller. However, businesses engaged in mail-order sales or providing services to private individuals in other EU countries must monitor their sales thresholds.

VAT OSS simplifies VAT settlements by allowing businesses to continue accounting for VAT through the Polish tax office, even after exceeding the EU sales threshold. The seller still applies foreign VAT rates to invoices, but tax payments and declarations are handled in Poland.

VAT IOSS Procedure

VAT IOSS (Import One Stop Shop) is an electronic system that allows taxpayers selling goods shipped from third countries to consumers (B2C) in EU member states to declare and pay VAT in those countries. Thanks to the VAT IOSS procedure, taxpayers can settle their tax obligations in one place, i.e., in the country where they are registered, thereby avoiding the need to register and file tax reports in each member state to which they supply goods.

The IOSS procedure is available for taxpayers with a registered business in the EU, as well as for those who do not have a business registered in the EU but engage in distance selling of imported goods (SOTI) with a true value of up to €150.

It is worth noting that registration for the VAT IOSS procedure is voluntary and applies only to B2C sales, excluding transactions for other businesses. Furthermore, registering for the VAT IOSS procedure entails the obligation to account for all SOTI transactions within this procedure.

How to register for VAT OSS/IOSS?

VAT OSS registration is conducted through an online OSS portal assigned to each EU member state. Entrepreneurs based in Poland can register by completing the VIU-R form designated for OSS. The VIU-R registration form must be submitted electronically with a qualified electronic signature. If the entrepreneur does not have their own qualified electronic signature, they may appoint a proxy, which requires submitting a PPS-1 form.

According to the Polish VAT Act, businesses can register for VAT OSS by the 10th day of the month following the month in which they exceeded the sales threshold.

The VAT IOSS registration process follows a similar procedure but requires the submission of the VII-R form before commencing distance sales of imported goods.

How to account for VAT under the VAT OSS/IOSS procedure?

Under the VAT OSS procedure, businesses must apply the VAT rate of the purchaser's country. Foreign VAT is reported separately in the VIU-DO declaration, which is submitted electronically.

According to Polish VAT regulations, the VIU-DO declaration must be submitted by the end of the month following the end of each quarter. Transactions in this declaration are expressed in EUR. If payments are made in other currencies, the exchange rate published by the European Central Bank (ECB) on the last day of the settlement period applies.

For VAT IOSS, the VII-DO declaration must be submitted monthly, regardless of whether any transactions occurred in that period. Under Article 138g of the Polish VAT Act, taxpayers are also required to submit zero declarations (VII-DO) if no transactions took place. The deadline for filing the declaration is the last day of the month following the settlement period. Similarly, the VAT amount resulting from the VII-DO declaration must be paid by the same deadline.

Importantly, when selling goods under the VAT OSS procedure, the buyer is an entity that does not have a registered office or a fixed establishment in Poland. This means that invoices issued under the VAT OSS procedure are also not subject to the obligation of issuance through KSeF. However, since the implementation of KSeF has been postponed to February 1, 2026, the final version of the regulations is not yet available, which could impact the initial assumptions.