Until the end of 2020, in the cases of distance sales to consumers in the United Kingdom, the Polish seller shall apply the EU rules for taxation of such transactions. Given the high threshold determining the place of taxation (in the UK it is GBP 70 000), even in the event of a significant volume of sales, the seller is not obliged to register for VAT purposes in the UK while such sales are subject to taxation in Poland.
These rules will no longer apply starting from January 1st, 2021. From that moment on, selling goods to the UK shall be subject to the same rules as for other third countries which are not members of the European Union. We would like to underline that the rules described below are a general outline of the taxation in Poland and the UK - specific tax consequences should be analysed on a case by case basis (please do not hesitate to contact us in such instance).
What are the key consequences of Brexit for Polish taxpayers who sell goods to British consumers?
- From the Polish VAT perspective such sales will constitute an export of goods.
- The value of the consignment should be examined. If the value exceeds GBP 135, import of goods in the UK will have to be recognised (for non-UK based entities, a customs representative will have to be appointed). In other cases, the new UK VAT settlement rules will apply (as described below). What is crucial, the value described must be examined for the consignment as a whole and not for particular goods being part of such consignment.
- For consignments up to GBP 135, VAT will not be charged at the moment of importing the goods into the UK but rather at the point of selling to the consumer. This transaction will therefore be treated for VAT purposes as a local transaction in the UK starting from the very first pound earned (i.e. there is no threshold for the turnover volume).
- In order to fulfil these obligations, the Polish seller should: (i) register for VAT purposes in the UK - as a principle, a quarterly VAT reporting applies (ii) familiarize with the statistical classification of the goods sold in order to determine the VAT rate applicable in the UK (iii) issue a document including UK VAT to the consumer and keep the necessary data in its tax records for the period of 6 years.
- Special rules as described above do not apply to excise goods and non-commercial goods (e.g. gifts).
Should you have any questions or concerns, do not hesitate to contact us.
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