VAT-EU registration – when is it necessary and how to obtain a European TIN?

What is a European VAT number?

In practice, a European VAT number is simply the VAT number assigned to a business upon registration, which, in the case of Polish taxpayers, is preceded by the prefix PL (i.e. the prefix specific to the Member State of registration). This European VAT number is used to identify taxpayers when trading with counterparties from other Member States of the European Union.

EU VAT registration – who should obtain it?

In accordance with the provisions of the Goods and Services Tax Act, taxpayers registered as active VAT taxpayers are obliged, prior to the date of the first:

• intra-Community supply of goods,
• intra-Community acquisition of services,
• intra-Community supply of services subject to the reverse charge mechanism (i.e. services for which VAT is accounted for by the recipient of the service);
• intra-Community acquisition of services settled under the reverse charge mechanism;
• notify the head of the tax office in the VAT-R registration form of their intention to commence these activities.

Mandatory registration for EU VAT will also apply to taxpayers subject to a threshold exemption (exemption up to PLN 200,000 in sales value in a tax year), whereby the obligation to register will arise for them:

• if the turnover from intra-Community acquisitions of goods within the country (i.e. activities that fall within the scope of this transaction but were previously exempt) in a given tax year exceeds PLN 50,000;
• if – regardless of the turnover in a given tax year – these taxpayers decide to recognise intra-Community acquisition transactions; in this case, the notification will be submitted simultaneously with the election to tax these activities (on a single VAT-R/EU form).

It should be emphasised, however, that the ‘registration’ of these entities as EU VAT taxpayers (i.e. notification of their intention to carry out intra-Community transactions) may take place without registration for VAT purposes (i.e. without waiving the VAT exemption).

How to register for EU VAT? EU VAT registration

EU VAT registration is carried out by submitting a VAT-R registration form to the head of the tax office competent for the taxpayer. Information regarding the performance of intra-Community transactions is provided in section C.3 of the form.

What are the consequences of failing to register for EU VAT?

The consequences of failing to register for EU VAT will be particularly significant in relation to intra-Community supplies of goods (i.e. for the seller). In this case, tax regulations make the application of the 0% VAT rate conditional upon the supply being made to a purchaser holding a valid and correct VAT identification number for intra-Community transactions, issued by the Member State competent for the purchaser. The buyer’s lack of EU VAT registration will therefore mean that the seller must charge VAT at the applicable rate and pay it to the tax office.

In the case of intra-Community acquisition of goods, the lack of EU VAT registration will not affect the tax settlement. Similarly, this applies to both the provision of services to and the purchase of services from EU contractors.

The lack of EU VAT registration may also cause practical problems in dealings with the tax office regarding the submission of the EU VAT summary report. This report includes, amongst other things, details of intra-Community supplies of goods, intra-Community acquisitions of goods and intra-Community provision of services. However, under the Act, such returns are to be submitted by taxpayers “registered as EU VAT taxpayers”. In this regard, submitting a VAT summary return despite a lack of EU VAT registration may raise questions from the tax office.

Criminal and fiscal liability arising from a lack of EU VAT registration is, in turn, a matter of debate. This is because there is no provision that explicitly provides for a penalty for failing to fulfil this obligation. However, in accordance with the general principle of criminal liability, there is no offence without a law. Such liability cannot, however, be ruled out, given the imprecise wording of the provisions of the Fiscal Penal Code, namely Article 56 § 4 of that Act, under which such a breach could be classified. After all, the provision refers to the late submission to the authority of a return or statement, which a VAT-R return is not, in principle. Under the Tax Ordinance, a return is understood to mean returns, lists, statements, reports and information, which – at least according to the literal wording – a VAT-R return is not. Nevertheless, it cannot be ruled out that the tax authorities might apply a broader interpretation of the aforementioned provisions and the definition of a declaration, and treat the VAT-R registration as information, which in turn could form the basis for imposing a fine on the taxpayer pursuant to Article 56(4) in conjunction with Article 3 of the Fiscal Penal Code.

If you are wondering how to obtain a European VAT number and are interested in issues such as VAT registration or EU VAT, please make use of the services of HWW Hewelt Wojnowski Lindner i Wspólnicy.

Author

Mateusz Kowalski

Radca prawny, Senior Associate

I specialize in Polish tax law, particularly income taxes, as well as international tax law. My experience includes, among others. providing ongoing tax advisory services, preparing legal and tax opinions, drafting requests for individual interpretations, conducting tax reviews. I gained professional experience in Warsaw law firms.

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