The development of an enterprise can go in very different directions. One of them is expanding the scope of activity or gaining new markets. New markets, on the other hand, may be located in the country in which the enterprise operates, but also may be located outside its borders. In the latter case, it is very important not only to understand the specificity of customers and the specificity of recipients, but also to know and understand the rules and methods of accounting for this type of sale. It is very important from the point of view of tax settlements.
One of the taxes that must be settled is VAT, i.e. value added tax. When selling abroad on a large scale, this tax must be settled in the country to which the goods are to be sold.
If, however, the sale is carried out in retail, it is on a small scale, then the VAT should be settled in the seller’s country, in the country of shipment. Details and indications regarding settlements are precisely described in the relevant documents regulating the principles of settlements related to foreign sales.
Foreign sales may take place both for other business entities and for consumers who do not run a business. If the sale of products is made to other entities that are also located in the Union, it is an intra-Community supply of goods. As such, it is exempt from the obligation to pay VAT, so it can be indicated on the invoices prepared that it is a sale with VAT at the level of 0%. Such a solution is aimed not only at promoting the international exchange of goods, but also at harmonizing VAT rates, and thus improving sales.
However, if the recipient of the purchased goods is a private person, not conducting business activity, the 0% VAT rate cannot be applied. This means that the entrepreneur selling to the destination country should register as a VAT taxpayer there. The principle of community settlements says that the tax must be settled at the place of consumption. Consequently, the account must be settled at the place to which the goods are transported.
The destination country sales and tax rule described above, however, is not always applied. There are exceptions to this rule described.
The first exception is sales scope. If the sale is small, retail or one-off, then the taxation obligation lies in the sender’s territory. This exception was introduced to make it easier for entrepreneurs to conduct this type of sale. If it is carried out on a small scale, the need to register in the target country and make settlements there is simply burdensome. That is why the regulations allow you to avoid these complicated formalities if the sale is not large. At the same time, it is not a major disruption to your billing.
However, the term “small-scale sales” is very imprecise. That is why the legislator introduced specific limits that determine when an entrepreneur deals with small-scale sales and when large-scale sales. And so, the quota limit was set at PLN 100,000. euro, while member states can reduce it even to 35 thousand. euro. It is a value specified per fiscal year.
Member States have the option of setting the limit on their own in the range of 35 – 100 thousand. euro. It may therefore happen that an entrepreneur from Poland selling his goods to several Member States and achieving the same results from this sale, in some of these countries will have to register as a VAT payer, while in others he will not have to. It will depend on the limits adopted by the given countries. In those in the countries where it does not exceed the limit, it will not have to register, in those where it exceeds the necessity.