Tax Alert: Act sealing VAT in e-commerce signed by the President into law

Pursuant to the Act, domestic banks, foreign bank branches, credit institutions, payment institutions, and credit unions must maintain, store, and send records on cross-border payments to the Head of National Revenue Administration, where the payment service provider makes more than 25 such payments to the same payee. A payment shall be considered a cross-border payment when the payer is located in a Member State and the payee is located in another Member State, in a third territory or in a third country.

The records must include:

1. the BIC or any other identifier code that unambiguously identifies the payment service provider;
2. the name or business name of the payee, as it appears in the records of the payment services provider;
3. the number by which the payee is identified for tax or VAT purposes or another number by which the payee is identified for tax purposes, if available;
4. the IBAN or, if the IBAN is not available, any other identifier which unambiguously identifies and gives the location of the payee;
5. the BIC or any other business identifier code that unambiguously identifies the payment service provider acting on behalf of the payee where the payee receives funds without having any payment account;
6. if available, the address of the payee as it appears in the records of the payment services provider;
7. the details of any cross-border payment and any payment refunds identified as relating to the cross-border payments, i.e.:

• the date and time of the payment or of the payment refund;
• the amount and the currency of the payment or of the payment refund;
• the Member State of origin of the payment received by or on behalf of the payee, the Member State of destination of the refund, as appropriate, and the information used to determine the origin or the destination of the payment or of the payment refund;
• any reference which unambiguously identifies the payment;
• where applicable, information that the payment is initiated at the physical premises of the merchant.

Under the Act, payment service providers must keep electronic records of cross-border payments for a period of three calendar years from the taxable year the payment was made.

The collected records will be stored by the Head of the National Revenue Administration and sent to the EU central electronic system of payment information (CESOP). The system will collect data from Member State administrations to create a comprehensive database of all cross-border transactions both within the Union and with third countries, which individual Member States will be able to use under strictly defined rules. CESOP is yet another analytical tool to detect irregularities in transactions, thus increasing the effectiveness of VAT sealing, especially in the e-commerce sector.

New provisions become effective on 01 January 2024

First reports CESOP reports should be filed by 30 April 2024 and cover Q1 2024.

Amendments mean for service providers that they will need to identify reportable transaction and establish appropriate procedures. Given the wide scope of reportable data and relatively short time before the new provisions enter into force, preparations to meet the new obligations should start as soon as possible.

The new Act (in Polish) can be accessed at:

https://orka.sejm.gov.pl/opinie9.nsf/nazwa/3030_u/$file/3030_u.pdf

KPMG can assist you with implementing CESOP reporting, covering both advisory service and a dedicated IT tool for generating and sending reports, as well as support in outsourcing reporting obligations.

To ensure that the obligations arising from the new regulations are fully implemented, we can help you in:

• assessing the impact of the new regulations and defining the scope of reporting obligations;
• analysing the collected data in terms of meeting the formal requirements relating to the structure of the report;
• managing the process of developing and implementing internal reporting procedures.

Should you have any questions on the new reporting obligations or the scope of support offered by KPMG, please do not hesitate to contact us.