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FBA Sellers: Invalid Vat number | Olszewska
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FBA Sellers: Invalid Vat number

Magda Olszewska

Last updated: 30.04.2022
Magda Olszewska

FBA Sellers: Invalid Vat number

Have you received the message from Amazon, that your Polish VAT number has been rejected due to its invalidity? From this article you will learn, what are the typical reasons for the Polish authorities to deactivate the VAT number of the FBA sellers. We will also show you, how to reactivate the VAT number in Poland.

CONTENTS

  1. Introduction
  2. Deregistration from the VAT
  3. Check the status of your VAT registration
  4. Deactivation of the Polish intra-community VAT number
  5. Check the status of your intra-community VAT number
  6. Tax consequences of the invalid VAT number
  7. How to reactivate the invalid VAT number?

Introduction

The VAT registration of the FBA sellers in Poland usually consists of two steps:

  • Registration for VAT and
  • Application to obtain an intra-community VAT number.

The former is required to conduct any taxable activity in Poland, whereas the latter is additionally necessary, if the taxpayer intends to conduct intra-community transactions. The foreign FBA sellers need besides the standard VAT registration also the intra-community VAT number, the so-called “VAT-UE” number because they need to report transfers of their goods between Amazon logistic fulfilment centres located in different EU state members in their VAT returns.

The Polish tax authorities may under specific circumstances deactivate the VAT registration.

The deactivation of the VAT registration leads automatically to the deactivation of the intra-community VAT number (Article 97 (16) of the Polish VAT Act). The Polish tax authorities may also under specific circumstances deactivate only the intra-community VAT number, while the VAT registration remains valid.

The notification from Amazon about the invalid VAT number refers to the intra-community VAT number. To address this issue, in this article we will discuss both the deactivation of the VAT registrations (since it automatically leads to deactivation of the intra-community VAT number), as well as deactivation of the sole intra-community VAT number.

Deregistration from the VAT

The Polish legislation stipulates a number of situations, in which the tax authorities should deregister the taxpayer from VAT. The following grounds are most commonly used by the tax authorities in case of the foreign FBA sellers:

1) The taxpayer has not submitted three subsequent monthly VAT returns or one quarterly VAT return.

If the FBA sellers has missed to submit three subsequent monthly VAT returns of one quarterly VAT return, the tax office is obliged to deactivate the VAT registration of the FBA seller (Article 96 (9a) (2) of the Polish VAT Act). It is typically the case, if the FBA sellers has neglected to contract an external VAT provider to submit the VAT returns. It may also happen, if the VAT returns have been submitted but for some reason rejected by the tax office, e.g. the monthly VAT returns have been submitted while the taxpayer has the quarterly reporting period.

2) The taxpayer has submitted six subsequent monthly VAT returns or two subsequent quarterly VAT returners with neither sales nor purchases reported.

If the FBA sellers has submitted six subsequent monthly VAT returns or two subsequent quarterly VAT returners, in which s/he has reported neither sale nor purchases or import with the VAT to be deducted, tax office is obliged to deactivate the VAT registration of the FBA seller (Article 96 (9a) (3) of the Polish VAT Act.

The submission of the nil VAT returns usually means that no taxable transactions are being carried out in Poland anymore. The taxpayers are obliged to deregister themselves from the Polish VAT, if they stop carrying out taxable transactions in Poland. However, if they neglect to deregister themselves and continuously submit the nil VAT returns, the tax office is required to deactivate the VAT registration after six months.

Nevertheless, some FBA sellers may be surprised when they learn about the deactivation of their VAT registration on the grounds of the submission of the 6 consecutive VAT tax returns. It is usually the case, if the VAT registration was carried out with the intention to activate the PAN EU option in Amazon but the activation of this option has been for some reasons postponed. If the PAN EU option is not activated within 6 months from the VAT registration in Poland and the FBA sellers do no start reporting some taxable events in the Polish VAT returns (sales or purchases) within this period, the tax office will have to deregister him/her from the Polish VAT.

In another cases the nil VAT returns may be submitted due to faulty transmission of transaction data to the VAT services provider. It the VAT services provider does not get the transaction data, it submits the nil VAT returns for the FBA seller. After the submission of the nil VAT returns for the 6 consecutive months, the tax office will deregister the taxpayer from the VAT.

3) The taxpayer does not respond to the requests of the tax authorities.

If the FBA seller does not respond to the request of the tax authorities, tax office is obliged to deactivate the VAT registration of the FBA seller (Article 96 (9) (4) of the Polish VAT Act).

It is usually the case, where the tax office summons the FBA seller to submit the missing retrospective tax returns and the FBA sellers fails to do so. This ground is similar to the described in paragraph 1 (failure to submit three subsequent monthly or one quarterly tax return), but, in contrast to the paragraph 1 which covers the current VAT filings and should lead to immediate deregistration, the deregistration discussed in this paragraph may be related to the failure to submit the retrospective tax returns despite the additional request from the tax authorities.

The tax office is not obliged to inform the taxpayer about the deactivation of the VAT registration if is carried out on the grounds, that the taxpayer does not respond to the requests of the tax authorities. It means that the FBA sellers may even not get informed about the deactivation of their VAT registration.

The FBA sellers may even not get informed about the deactivation of their VAT registration

It is therefore important to check from time to time the status of one’s company VAT registration status.

Check the status of your VAT registration

You may check the status of your VAT registration on the official government website. If your VAT registration has been deactivated, you may also see, what was the ground for the deactivation of your VAT number.

The official index of the Polish taxpayers is available under this LINK.

The index is available only in Polish. In this blog article we describe, how to find your company on the official index of the Polish taxpayers as well how to read the extracts from the index.

Deactivation of the Polish intra-community VAT number.

As mentioned before, the deregistration from the Polish VAT leads automatically to the deactivation of the Polish intra-community VAT number.

However, there are two additional cases, in which the tax authorities may deactivate only the intra-community VAT number:

1) The taxpayer has submitted three subsequent monthly VAT returns or one quarterly VAT return with neither sales nor purchases reported.

If the FBA sellers has submitted three subsequent monthly VAT returns or one quarterly VAT return, in which s/he has reported neither sale nor purchases or import with the VAT to be deducted, tax office is obliged to deactivate the intra-community VAT number of the FBA seller (Article 97 (15) of the Polish VAT Act).

As you see, this case is similar to those discussed as the second case of the deregistration from Polish VAT (submission of six nil VAT monthly VAT returns or two quarterly VAT returns). The circumstances leading to deactivation of the intra-community VAT number are much stricter as those leading to the deregistration from Polish VAT. Whilst the taxpayers need to submit six nil monthly VAT returns (or two quarterly) to be deregistered by the tax office from VAT, the submission of only three monthly VAT returns (or one quarterly) will result in the deactivation of the intra-community VAT number.

2) The taxpayer has not submitted three subsequent monthly Recapitulative Statements, although such obligation existed.

If the FBA sellers has missed three subsequent Recapitulative Statements, although s/he was obliged to submit one, the tax office is obliged to deactivate the intra-community VAT number of the FBA seller (Article 97 (15a) of the Polish VAT Act).

This regulation has above all a punitive character. It sanctions negligent taxpayers who regularly neglect to submit the Recapitulative Statements, although the carry out intra-community transactions that should be reported in them.

Check the status of your intra-community VAT number.

You may check the status of your Polish intra-community VAT number on the official EU VIES database, available under this LINK.

Tax consequences of the invalid VAT number

The most serious consequence of the invalid VAT number for the FBA sellers is that they cannot apply the VAT exemption/ zero VAT rate to the cross-border goods transfer between two Amazon warehouses.

Whilst the transfer of own goods between the warehouses located in two different EU states is not a transaction, it is treated as taxable event for the FBA seller, whose goods are transferred, in both countries: the country of dispatch and country of arrival. The risk exists on the site of the country of dispatch. The transfer of own goods between two EU member states is treated as intra-community supply in the country of dispatch. The intra-community supply are generally VAT exempt or subject to zero VAT rate, provided that the number of conditions for the application of the VAT exemption/zero VAT rate are met. Since the implementation of the “VAT quick fixes” as of 1 January 2020 on the EU level, one of those conditions to apply the VAT exemption/ zero VAT rate in all EU countries is the valid intra-community VAT number of the FBA seller in the country of arrival. If the FBA seller does not have a valid intra-community VAT number in the country of arrival, the transfer of own goods between two EU member states is subject to taxation in the country of dispatch with the applicable VAT rate.

Since Amazon moves the goods of the FBA sellers freely between the warehouses in different EU states, the values of the intra-community transfers in case of FBA sellers may be considerable. All those transfers, which are generally VAT-neutral, may present a huge vulnerability for the FBA sellers, if they allow that their Polish VAT number gets deactivated by the Polish tax authorities. In that case, all goods transfers to Poland generally subject to taxation in the countries of dispatch with the applicable VAT rate.

How to reactivate the invalid VAT number?

If the deregistration from the VAT was the result of missing tax filings (first case of deregistration from VAT) or of not responding to the requests of the tax authorities (third case of deregistration from VAT), the VAT registration may be reactivated if:

  • The taxpayer submits an application to restore the VAT registration within 2 months from the deregistration date;
  • The taxpayer proves, that s/he conducts taxable activities; and
  • If the taxpayer has not submitted VAT return, s/he submits the missing VAT returns at the moment of the submission of the application to restore the VAT registration at the latest (Article 96 (9h) of the Polish VAT Act).

The reactivation of the VAT registration is in those cases results in reactivation of the intra-community VAT number (Article 97 (16) of the Polish VAT Act).

Missed deadline

If the FBA seller does not manage to submit the missing tax return (if it was the reason to deactivate the VAT registration) and the application to restore the VAT registration within the 2-months deadline, s/he will have to start a new VAT registration to activate the VAT registration.

Reactivation after deregistration due to repeated submission of nil tax returns

The regulations described above should apply in case the deregistration from the VAT was the result of repeated submission of nil tax returns (second case of deregistration from VAT) provided that in addition to the conditions mentioned above the taxpayer proves, that the submission of the nil tax returns results from the specifics of the economic activity of the taxpayer. However, in practice, the tax authorities do not accept explanations of the FBA sellers (e.g., that the submission of the nil tax returns resulted from the fact, that the FBA seller has not activated the PAN EU option yet). If the deregistration is the result of repeated submission of nil tax returns, the only way to reactivate the VAT registration is in practice only the renewed VAT registration.

Reactivation of the intra-community VAT number

The Polish regulations do not specify the way to reactivate the intra-community VAT number, if only the number was deactivated, and the VAT registration remained in force. Since there are no special regulations, in those cases a renewed application to obtain an intra-community VAT number shall be submitted in order to reactivate the intra-community VAT number.

How can we help?

We can help you to reactivate your Polish VAT registration and/or an intra-community VAT number. Contact us to get more information.




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Magda Olszewska

My name ist Magda Olszewska. I’m Polish Tax Advisor and leader of the Olszewska Tax Consulting. I write posts regularly for our blog on the tax issues which we deal with in our praxis.

If you have any questions or would like to inquire about our advisory services, please feel free to contact me.

Magda Olszewska