Commission of a foreign care agency: import of services and VAT — in Poland

If a foreign agency charges a Polish JDG a commission for intermediation, organization of an order or other service, an import of services may arise and be settled in Poland. However, not every amount withheld by the agency is automatically imported, and the method of declaration depends on the VAT status of the Polish company.

First determine who provides the service

Check the contract and settlement:

• who is the seller of care services for the family or patient,
• whether the agency provides the Polish JDG service or vice versa,
• whether the commission is a separate remuneration of the agency,
• where the agency has its registered office or permanent place of business,
• whether the parties are taxpayers for the purposes of the place of supply rules.

The invoice itself without foreign VAT does not constitute a reverse charge.

When services are imported

For a typical B2B service covered by the general rule of Art. 28b, the place of performance is the country of residence of the buyer. If a Polish JDG is the buyer and the foreign service provider does not settle Polish VAT, the buyer may be obliged to report VAT due in Poland.

The rate is set as for the relevant national service. You should not automatically accept 23% without checking the nature of the benefit and possible exemption.

VAT-UE: registration, but not information on import

A Polish taxpayer purchasing from a taxpayer from another EU country a service to which Art. 28b, should, in principle, register for VAT-EU before the first such transaction.

VAT-EU registration does not automatically mean the loss of the personal exemption in domestic sales.

However, imports of services are not included in the VAT-EU summary information. VAT-EU information is used, among other things, to report specific deliveries of goods, purchases and services provided to EU contractors - not purchased agency commission.

Active taxpayer: JPK_V7

An active VAT payer reports the import of services in JPK_V7 for the appropriate period. The right to deduct input tax depends on the connection between the purchase and the activities giving rise to such a right and on the fulfillment of formal conditions.

If the commission is for partly taxable and partly exempt sales, an appropriate attribution or proportion may be needed.

Exempt taxpayer: usually VAT-9M, not JPK_V7

A taxpayer who does not submit JPK_V7 settles the tax due on the import of services, as a rule, on the VAT-9M form and pays it by the 25th day of the month following the month in which the tax obligation arose.

In certain situations, when the taxpayer files VAT-8 for other reasons, imports may be settled on VAT-8. An exempt taxpayer should not be ordered to submit monthly JPK_V7M just because of the import of services.

Right to deduct

If the purchase is solely for VAT-exempt sales, the tax due on import is generally not deductible and becomes an economic expense of the company.

However, it should not be assumed that every care service is exempt. The exemption depends on the conditions of Art. 43 of the VAT Act or from the personal exemption limit.

PIT and lump sum tax

On a scale or flat tax basis, commission and undeducted VAT may be an expense if they meet the general conditions of tax deductible costs and are properly documented.On a lump sum basis, the agency's commission and undeducted VAT do not reduce the income taxed on a lump sum basis.

Example

The German agency issues an invoice to the Polish JDG for EUR 500 for the intermediation service covered by the principle of Art. 28b. Entrepreneur:

1. converts the basis according to the appropriate exchange rate,
2. sets the Polish rate for this service,
3. shows VAT due in JPK_V7 or VAT-9M - depending on the status,
4. assesses the right to deduction,
5. does not enter the purchase into the VAT-EU information.

A specific VAT amount cannot be calculated correctly without the exchange rate, tax obligation date and set rate.

The most common errors

1. Submission of JPK_V7 by a taxpayer exempt only due to import.
2. Reporting the import of services in VAT-EU information.
3. Automatic acceptance of 23% for each commission.
4. VAT deduction despite the connection only with exempt sales.
5. Lack of VAT-EU registration before the EU service under Art. 28b.
6. Assumption that an invoice without VAT always means import of services.
7. Deduction of commission from income on a lump sum basis.

Sources

• VAT Act - ELI, Art. 28b, 97 and 99
• Podatki.gov.pl - VAT-9M
• EUREKA Ministry of Finance

Do you need to settle the agency's commission?

Oxyok provides accounting for JDGs providing services in Poland and abroad - from PLN 49 + VAT per month.

Write to Paweł or see Oxyok accounting.

The material is of a general nature. The contract and the VAT status of both parties determine the settlement.