Changes to e-commerce - CESOP Regulation

Changes to e-commerce - CESOP Regulation

Szymon Lipiński, Tax Consultant
Changes to e-commerce - CESOP Regulation
On 14 April 2023, the Sejm adopted another package of changes to the tax legislation. This time, the legislator implements the changes for the e-commerce trade. The general terms and conditions of the proposed changes are set out in Council Directive (EU) 2020/284 of 18 February 2020 amending Directive 2006/112/EC with regard to the introduction of certain requirements for payment service providers and Council Regulation (EU) 2020/283 of 18 February 2020 amending Regulation (EU) No 904/2010 with regard to measures to strengthen administrative cooperation to combat VAT fraud, the so-called 'CESOP Regulation'.

E-commerce changes continue

It should be noted that over the past three years, the EU has continued to intensify its work on sealing the VAT system for e-commerce. One of the fundamental actions of the Commission in this area was the introduction of the so-called VAT e-commerce package. With the e-commerce package, tax settlements in e-commerce were changed and a number of new solutions were introduced, for example:

  • One Stop Shop - a solution to settle VAT in one Member State on electronic B2C sales to multiple countries within the EU;
  • Import One Stop Shop - a solution to settle VAT in one Member State on electronic B2C sales of imported goods to multiple countries within the EU;
  • Replacement of distance selling by intra-Community distance selling of goods (CTSO);
  • Introduction of simplification of distance selling of imported goods (SOTI).

The aim of the implemented solutions was to seal the VAT system in e-commerce.

What is CESOP?

CESOP is a long abbreviation for Central Electronic System of Payment information. The idea for such a solution was developed after the implementation of the VAT e-commerce package into the European legal system. At present, EU Member States do not have the possibility to verify the fulfilment of tax obligations by entities selling goods within the EU but established outside the Community. According to the European Court of Auditors, the solutions introduced in the area of e-commerce have so far been insufficient to tighten the VAT system. The answer to this problem is to be found in CESOP.

According to Regulation 904/2010 added by the CESOP Regulation, each Member State shall, no later than from 1 January 2024, collect information on payees and payments, from payment service providers:

a) no later than by the end of the month following the end of the calendar quarter to which the information relates;

b) by means of a standardised electronic form.

Changes to the VAT Act

The Polish legislator is implementing CESOP through amendments to the Value Added Tax Act. According to the provisions adopted by the Sejm, an obligation is set out for payment service providers to keep electronic records of payment recipients and cross-border payments in relation to the payment services provided, for each quarter, if they provide payment services which correspond to more than 25 cross-border payments to the same payment recipient during the quarter. A payment is considered to be a cross-border payment if the payer and the payee are located in the territory of different Member States or if the payee is located in the territory of a third country.

The obligation to send information to the Head of KAS on executed payment services was included in the amendment of the Banking Act.

The new regulations come into force on 1 January 2024.

The legislative process on the website of the Senate of the Republic of Poland: Senate of the Republic of Poland / Works / Legislative process in the Senate / Acts passed by the Sejm

Tax compliance and VAT - how can we help?

Meeting tax reporting obligations can be a significant challenge for companies, especially in view of the frequent changes in tax legislation. That is why the Crowe team of experts offers comprehensive reporting, tax accounting and tax compliance support including:

  • registration of the taxpayer for CIT and VAT,
  • calculation and verification of tax due,
  • conducting tax audits,
  • analysis of the correctness of fulfilment of tax obligations,
  • preparation and verification of tax documentation,
  • advisory on optimisation of tax settlements.

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