VAT refund from abroad for e-commerce sellers

EU VAT refund for e-commerce sellers. Entities in the e-commerce industry, from the moment of tax registration, are obligated to submit periodic VAT declarations. The frequency and type of these declarations vary in different countries. However, every e-commerce entity based in Poland, as part of its e-commerce accounting, can also apply for a refund of EU VAT. Who exactly is eligible for an EU VAT refund in e-commerce accounting, and under what conditions? What expenses can be considered for a VAT refund from abroad? Let’s explore!

Every Polish entrepreneur who is an active VAT taxpayer in the country and whose business activities are located in Poland has the right to apply for a refund of VAT paid when purchasing goods or services in European Union countries. This applies to the e-commerce industry and e-commerce accounting as well. The VAT neutrality principle and the rule of avoiding double taxation guarantee entities subject to tax on the price of acquired goods and services a VAT refund from the EU, to the same extent as individuals from a given member state can reclaim this tax.

Updates on EU VAT refund – VAT-Refund and SLIM VAT 3

A change in the Regulation of the Minister of Finance, Funds, and Regional Policy regarding applications for the refund of VAT paid in another Member State of the European Union has resulted in the release of a new version of the VAT-REF form in the VAT e-Declarations section, effective July 1, 2021. This update reflects amendments to the Goods and Services Tax Act due to the implementation of the VAT e-commerce package.

On April 14, 2023, the Parliament passed a law colloquially known as “SLIM VAT 3.” The majority of changes outlined in this law came into effect on July 1, 2023. The most significant innovation is the relaxation of conditions for obtaining VAT refunds within a 15-day timeframe.

For entities facilitating payments through payment instruments such as terminals, the legislator has introduced a bonus. The tax office is obligated to process VAT refunds within 15 days, starting from the day following the deadline for submitting the JPK_V7 (Standard Audit File for Tax). This applies in cases of:

• Submission of a declaration where the taxpayer indicated a refund of tax difference.
• Submission of a correction to a declaration where the taxpayer indicated a refund of tax difference, provided the correction is made before the deadline for submitting the declaration.
• Submission of a correction to a declaration where the taxpayer indicated a refund of tax difference within 15 days from the day of submission, even if made after the declaration deadline.

VAT return in e-commerce accounting. Who can apply for VAT refund in the EU?

Any entity, including those operating in the e-commerce sector, can apply for a refund of foreign VAT if they meet the following criteria:

• The entity does not have a registered office, a permanent establishment, a permanent place of business, or habitual residence in the EU country where the acquisition was made, but does have such a presence in another EU member state.
• The entity is an active VAT taxpayer.
• The entity does not exclusively engage in VAT-exempt sales and does not benefit from entity-specific VAT exemptions.

However, e-commerce sellers exclusively engaged in VAT-exempt activities, regardless of the nature or turnover (not exceeding PLN 200,000 annually), are not eligible for EU VAT refunds. Any other taxpayer conducting any business activity, regardless of its purpose and outcomes, can avail themselves of the EU VAT return.

Conditions for EU VAT return and the procedure for submitting VAT-REF application in e-commerce accounting

Pursuant to Directive 2008/9/EC of 12 February 2008, which lays down the conditions to be met in order to apply for a refund of VAT from the European Union, the refund procedure is available to entrepreneurs who are registered as active VAT payers in Poland and whose registered office is located in Poland.

Under the terms of the directive, the entire refund procedure, the so-called Value-Added Tax Refund, is carried out online. The application for a VAT EU refund should be submitted on the VAT-REF form electronically, in the e-Deklaracje system. The VAT-REF application sent is confirmed by an Official Acknowledgement of Receipt (UPO). It is then transferred to the Polish VAT-REFUND system, where it is given the correct reference number within 72 hours.

The electronically submitted application for VAT refund from the EU in accounting for e-commerce is addressed, through the head of the national tax office in which the taxpayer settles, to the tax administration of the Member State in which the purchase of goods and services was made.

The application for the refund of VAT paid in European Union countries can be submitted until September 30 of the following year for which the application pertains. To ensure a positive consideration of the application, two conditions must be met:

• The minimum requested amount for the EU VAT refund must be at least 50 euros per year or 400 euros for a three-month period.
• The requested refund amount should be expressed in the currency of the respective country.

The initial verification of EU VAT refund applications takes place within Polish tax authorities. Subsequently, the application is electronically transmitted to the tax administration of the relevant EU country within 15 days. The decision is expected within 4 months, and if there is a need for additional information, the process may extend to 6-8 months from the date of receiving the application. The refund is processed no later than 10 business days after the expiration of these deadlines. Interest accrues for any delays. In the event of a negative decision, there is an option to appeal.

In the application for EU VAT refund in e-commerce accounting, it is necessary to specify the member state where the tax was levied. The type of business activity is indicated in the application through a code and sometimes a description. Additionally, the application must include information about the bank account to which the EU VAT refund will be credited.

In the EU VAT refund procedure within e-commerce accounting, the application must also specify the type of imported and acquired goods or services. These items are classified according to specific codes. Among such goods are:

• Acquisition of fuel
• Rental of means of transport and other expenses related to transportation
• Road tolls and other road usage-related costs
• Travel expenses (taxi fares, public transportation)
• Accommodation costs
• Costs for food, beverages, and restaurant services
• Entrance fees for fairs and exhibitions
• Expenditures on luxury, entertainment, and representational items
• Others (tools, parts, repairs, office supplies)

Sometimes, it is necessary to specify individual goods under sub-codes. Additionally, when goods or services were only partially used for the operation of the e-commerce entity, which forms the basis for obtaining a refund of EU VAT, e-commerce accounting must precisely define the proportion/percentage for which a VAT refund from abroad is possible.

VAT refund in EU e-commerce accounting – Member states’ preferences

Throughout the EU VAT refund procedure for online sellers in e-commerce accounting, it is crucial to note that European Union member states may establish their own preferences regarding specific rules for the refund of goods and services tax. These preferences may include aspects such as refund periods, business activity descriptions, required sub-codes, or document copies.

Detailed information about the preferences of EU member states can be found in the Tax Administration section on the Ministry of Finance website: www.mf.gov.pl.

VAT-REF and EU VAT refund in e-commerce accounting – Take advantage of our help!

The intricate process of EU VAT refund in e-commerce accounting can pose numerous complications. Hence, it is worthwhile to engage the services of a professional accounting firm specializing in the accounting and taxation of e-commerce entities.

By partnering with us, you will swiftly recover your EU VAT refund. Handling your e-commerce accounting, we will reconcile taxes, including VAT, and then prepare and submit the VAT-REF application, specifying the types of goods and services eligible for VAT refund from abroad. We will manage the entire process until you receive the rightfully due EU VAT refund in the e-commerce industry.

For any inquiries regarding EU VAT refund in the e-commerce market and our e-commerce accounting services, feel free to reach out to our experts: contact – amavat®.
amavat^® Team