New VAT for e-commerce an opportunity for Polish online stores

On July 1, 2021, new VAT rules for online stores and marketplace services are set to take effect across the European Union. The legal changes will complicate the purchase of products from outside the EU, especially from China, but should make it easier for Polish stores to sell to neighboring countries.

A package of EU directives that will clean up e-commerce across member states should come into force on July 1, 2021. The key change is the EU-wide elimination of the VAT exemption on imports of so-called small shipments worth up to €22. The likely effect of the package coming into force will be an increase in the price of products bought online outside the European Union and more intensive online sales within the EU than before.

The regulations introduced are heralded by EU legislators as an attempt to regulate competition to make it fairer to cheap products from China. The flow of parcels of untaxed goods from third countries into the European Union is to be restricted.

- Like most EU economic regulations, the VAT package for e-commerce is designed to create a protective barrier for non-European companies, and stimulate the domestic market, which is intended to benefit Polish entrepreneurs. The fact is, however, that some of them import cheap products from China and then sell them on the Polish market, which is why they will be particularly hurt by this introduced VAT, notes Artur Halik, Head of Sales of the online stores platform Shoper.

- More and more products are being shipped to the end customer from various logistics centers from Europe, not just directly from China, so the tax will not necessarily be imposed on all purchases. However, there are many indications that we are facing an increase in the price of goods purchased outside the EU, and perhaps also in the cost of logistics services, if, for example, courier companies gain more obligations to fulfill due to the imposition of VAT. But this is definitely positive news for those sellers in Poland, who today compete with offers from online stores operating in the dropshipping model from China or offers on marketplace platforms, where no invoices are issued for purchases, adds the expert Shoper.

The new regulation also provides for an expansion of the scope of transactions that can be settled for VAT purposes using the simplified One Stop Shop procedure. It provides for a uniform turnover threshold for all member states, up to which it will be possible to settle VAT in the supplier's country and at the rate applicable there. It also introduces IOSS (Import One Stop Shop) one-stop shops for imported goods, so that companies will no longer have to register for VAT in every EU country where they have sales activities. They will only need to do so once at the IOSS.

- True, Polish online stores are selling abroad, but still not at the level we would all like. According to government reports, only 4 percent of Polish companies sell products and services online to other countries, with the EU average at 7 percent. Among online store owners, Shoper the desire to launch foreign sales is quite high. In our recent survey, 14 percent of sellers declared that they were thinking of going outside the country with their offerings. Products "made in Poland" sold online should become more and more attractive on European markets, not only due to competitive prices, but also due to high quality, which is often appreciated by foreign customers, such as Germans, Slovaks or Czechs - who already willingly buy in Polish stores," predicts Artur Halik.

At the same time, Polish sellers have to remember that in order to make an effective start on a new market, first of all they need know-how: proven solutions for payment and currency handling, courier systems or fulfillment companies and integration with auction portals popular in a given country. In e-commerce today, entering a new market does not require opening overseas branches, but it does require knowledge of foreign markets and adjusting logistics for the country.