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ESL (ECSL) – what is it?

Each entrepreneur who sells products or provides services must submit tax declarations presenting their revenue on a monthly or quarterly basis. This obligation concerns not only those who sell products or provide services in the country but also those who conduct trade internationally. In this case, however, tax settlement looks differently. Additional declarations, such as an EC Sales List (ESL) or its digital format ECSL (so much easier to fill in in the Internet era) are required.

What is the purpose of ESL?

The EC Sales List serves the purpose of reporting VAT on the sale of goods or provision of services across EU borders. Each intra-Community trade should be registered on the list for the convenience of tax authorities. Submitting this declaration is essential in the process of verification whether both parties confirm their tax rates in accordance with EU regulations. In other words, it is possible to check whether tax rates are declared correctly, and taxes are paid in full by both parties of the transaction.

What should ESL include?

The EC Sales List should include information required for verification of a transaction between sellers and customers inside the EU. In addition to such basic information as customer’s details, the list must also include customer’s VAT number, their country code, and the value of sales. More importantly, the VAT numbers must appear in VIES – VAT information exchange system. Only then can the ECSL declaration be submitted.

When should you submit ESL (ECSL)?

The declarations (ESL filed on paper or ECSL filed electronically) should be submitted by anyone who runs their own business and sales products abroad, provides goods or services to an entity which pays VAT in another country, or specializes in the transport of passengers or goods in the EU. For this reason, the declaration must be submitted both by eCommerce traders selling products to customers in another country, and entrepreneurs who provide construction services across EU borders.

ESL or ECSL should be submitted on a monthly, quarterly, or yearly basis in accordance with the schedule set by the government. Before you undertake any business activity or expand to new markets it is good to study tax regulations applicable in a given country, so as to avoid any delays or mistakes, and learn more about the EC Sales List by visiting websites of tax authorities.

ECSL vs. Intrastat – what is the difference between the two?

People often ask about the differences between the EC Sales List and another declaration of a similar scope, that is the Intrastat declaration. In short, Intrastat helps gather statistical data regarding trade conducted between company’s home country and the country of delivery inside the EU. ESL and ECSL, on the other hand, are tax declarations which must be submitted to appropriate tax authorities. The information presented in ESL is not as detailed as in Intrastat.

Distance selling from Poland and the selling thresholds

Distance selling, to put it simply, is the sale of goods from their country of origin by a VAT payer to a consumer located in another intra-Community country.

However, not all goods are regulated by the rules of distance selling. In accordance with the VAT Act, such goods include:

• new means of transport
• goods which must be installed or assembled, with or without a test run, by the vendor or an entity acting on their behalf
• second-hand goods, art, collector’s items and antiques

The country of taxation for goods not mentioned above is determined on the basis of distance selling thresholds specified by each country of the EU individually. You can read about distance selling thresholds here.

If the annual distance selling thresholds for goods shipped from Poland to other countries of the EU have not been exceeded, the country of taxation is Poland, i.e. the country of shipment. The seller may choose the place of destination as the country of taxation, regardless of the turnover obtained from the delivery of goods to that country. However, the decision must be made before the distance selling thresholds are exceeded.

Note that the new place of taxation must be the country where the goods are being delivered – it cannot be any country of the EU.

The VAT-21 form and other formalities

Note that the head of tax office in Poland must be informed about choosing another country of taxation for distance selling. This can be done in two ways: in person or online. The head of tax office is notified via a VAT-21 form, free of charge. The choice of a new country of taxation is valid for two years from the finalisation of the first delivery of goods made after the change.

If you provide the notice online, you will receive an official confirmation of receipt (UPO) which must be appended to the VAT-21 form, and then sent to the tax office in the country of registration. On the other hand, if you provide the notice in person, you will receive an official stamp on the VAT-21 form. The certified document must then be submitted to the appropriate tax authorities in the selected country of taxation.

The notice must be submitted no later than 30 days before the finalisation of the first delivery which is to be settled in the new place of taxation. .

The formalities do not end there. The tax payer has to submit to the Polish tax office a document confirming they notified the appropriate tax authorities in the new country of taxation about the changes made. This document must be submitted no later than 30 days from the first delivery completed after the change had been made.

The deliveries must also be properly documented – such documentation is the basis for an exemption from the Polish VAT. If the appropriate documentation of goods exported from Poland is not provided, the seller may be subject to VAT in both countries.

Our support

If you are already one of our clients, all you need to do is provide us with the confirmation of receipt (UPO) or a paper document certified with an official stamp, and we will take care of all other formalities connected with VAT registration of your company. If you are not working with us and are looking for support, do not hesitate to contact one of our VAT experts. We provide support with VAT registration abroad, as well as with any other tax processes.

Are you a VAT payer?

In line with the Polish regulations, all entrepreneurs selling goods and services, exporting and importing goods in Poland and inside the EU are subject to VAT. They can be divided into active and exempt taxpayers. An active taxpayer must register as a VAT payer, submit declarations, keep records of goods and services, issue VAT invoices, and pay taxes.

An exempt taxpayer is an entrepreneur who can be exempt from VAT either on the account of sales volumes or on the account of specific products and services. However, there are certain requirements which they must meet, such as keeping simplified sales records and issuing invoices upon request.

VAT exemptions

A taxpayer is exempt from VAT when their annual sales do not exceed PLN 200,000. The exemption is then based on sales volumes. Entrepreneurs can benefit from it as soon as their business is set up. As long as they do not exceed their annual turnover threshold, they do not have to register as a VAT payer. The exemption can also be based on the specific products and services sold. Entrepreneurs can benefit from the latter if the economic activity they conduct is stipulated by Article 43 (1) of the Polish Tax on Goods and Services Act. More importantly, entrepreneurs entitled to this exemption cannot waive it. However, they are obliged to issue VAT invoices with an information on tax exemption.

When is it necessary to register as a VAT payer?

As stipulated by the VAT Act, there are instances when the entrepreneur is subject to VAT registration as soon as the business is set up. These instances include entrepreneurs who sell goods listed in Annex 12 to the VAT Act, excise goods (with exceptions), building land, parts of motor vehicles and motorcycles, new means of transport, as well as certain goods sold online – regardless of the annual sales value. Registration as a VAT payer is also obligatory when providing legal, advisory, jewellery and debt recovery services.

The e-Commerce package for online traders

According to the EU directive, entrepreneurs conducting trade online should expect some changes in VAT settlement methods in the second half of 2021. The alterations include the standardisation of VAT declarations in the form of VAT-OSS. The e-commerce package aims at facilitating international trade and providing entrepreneurs with equal opportunities on the European market. The most significant objective of the proposed modifications is creating a single digital market for all member countries. The cause of these modernisations is the rapid growth of the e-commerce sector. The existing tax regulations require adjustment to the new economic conditions. The e-commerce package, on the other hand, completes the series of changes in the VAT regulations introduced by the EU in recent years.

The eCommerce package – proposed changes

The main objectives of the EU directive include the standardisation of the VAT settlement processes, including the turnover threshold (EUR 10,000). Having exceeded this limit, preparing a VAT declaration for online trade conducted on the territory of the delivery country will be required.

The EU e-commerce package will enable entrepreneurs to settle VAT with only one declaration in the form of VAT-OSS (One Stop Shop). This way, entrepreneurs selling goods or providing services within EU will not have to register their business in each country individually. They can do it by submitting a single document in the country of identification, i.e. the address of the registered office or the place where the business is registered. VAT will be calculated in accordance with VAT rates applicable in the recipient country.

When should we expect these changes?

The changes in the Polish tax law introduced through the package for e-commerce sellers are to take effect in July 2021. It is worth acquainting oneself with the new procedures beforehand, so as to prepare for the alterations to come.

What is EORI and what is it used for?

The Economic Operator’s Registration and Identification number is a number assigned to economic entities enabling their identification for customs regulatory purposes in terms of trade between the countries of the EU and third countries. EORI number is mandatory for all entities registered in the EU which export goods to third countries, as well as entities registered outside the EU which plan on importing goods to the EU.

The EORI number is an integral part of the e-Customs programme implemented in 2009 which aims at improving and digitalizing intracommunity trade-related activities, as well as speeding up customs duty processes. The number is assigned to economic entities which take part in any customs-related activities inside the EU, e.g. when they import goods from outside the EU, or export goods to the countries of the EU as entities registered outside the EU. In such cases, having the EORI number is obligatory. It is crucial to apply for the EORI number before conducting any import/export transactions between the EU and third countries, as it must be confirmed at the very first customs control operation.

EORI number is unique and assigned only once. Each number is valid on the entire territory of the EU. It facilitates all formalities and excludes the need for any paper documentation. All EORI numbers can be verified online at https://ec.europa.eu/taxation_customs/dds2/eos/eori_validation.jsp?Lang=en.

The format of the number differs from one country to another. In Poland, it includes a prefix with the ISO PL country code, NIP (tax identification) number, and 00000 suffix (or, if applicable, the last five digits of the REGON number). In case of foreign entities, the number includes PL prefix and a sequence of 14 unique digits and the letter Z at the end.

Note, that in light of Brexit, trade between the UK and the EU requires having an EORI number as well. In this case, there are two EORI numbers required: the European number (so that goods could leave the EU) and the British number (so that goods could enter UK). Other post-Brexit changes in trade are described in this article.

How to obtain the EORI number?

The EORI number can be obtained in several ways. For instance, a filled registration request can be send via post, a courier or personally delivered to the appropriate customs office or customs authority. Another method is to register on PUESC online platform, submit the appropriate forms and fill in tax payer’s information. Registration online requires an electronic signature in order to verify the identity of the requester. In case of lack of signature –or in the case of send the registration request via post – the requester will have to appear in person at the appropriate office and verify their identity.

Filing registration request is not complicated, yet it can be time-consuming and demanding. For this reason, we decided to include the request for EORI number registration in our offer. If you want to learn more about our services you are welcome to contact one of our experts.

We also encourage you to read other articles on international trade available under the News section on our website.

What does the launch of Amazon.pl mean for sellers and customers?

Sellers and customers who are used to the Polish brand and conducting trade in Poland won’t have to change their habits. However, they still might want to look for better solutions. In addition to goods from abroad, Amazon also offers goods from Polish sellers. With the development of new technologies, international trade proves to be a promising business model. The current pandemic situation also shows how easy and convenient online shopping can be. Easy access to online selling platforms enabled many people to shop safely in a time when stationary shops were closed and people were staying home due to the lockdown restrictions.

The diversification of the Polish e-commerce market can be beneficial both for customers who will now have easier access to large quantities of goods, especially goods imported from abroad, and for sellers who can expand their businesses. The Polish version of the Amazon website exposes Polish sellers to the international market, and vice versa.

Expanding to the European market is facilitated by various tools which enable the offers posted on the Polish Amazon website to be found also on Amazon sites in 8 other European countries. This, in turn, allows for a wider range of offers and upscaling of sales.

Introducing new competition for Allegro may also influence the commission fees on sales and listings. For now, this margin does not exceed 15% of the price of goods sold. Amazon offers two more selling plans – the Individual plan, which costs 4 PLN ($0.99) per unit sold, and the Professional plan, which costs 165,91 PLN ($39.99) per month no matter how many units are sold. This distinction seems to determine the target selling group, that is small and medium sized businesses.

Amazon supports small and medium sized businesses also in other ways – from product placement (depending on the selling plan) to logistics solutions and a network of warehouses under the Fulfilment by Amazon (FBA) programme. Nine of such warehouses are located in Poland, providing employment for 18,000 people. Selling on Amazon can also be done directly, depending on the seller’s preferences. In such cases, the sellers are responsible for the shipping the goods, which influences the delivery costs. If you want to learn more about the sales models offered by Amazon, check this article.

What to keep in mind

Finding new customers and opening to international markets may seem overwhelming at first. Amazon, however, makes this process much easier thanks to different sales models, and new technological and logistical solutions. Yet the selling process matters is not all that there is to it – you should also remember about
the tax regulations, which vary from country to country. With the help of our tax experts it should not be troublesome. We offer support with all formalities regarding international taxation and expansion to new markets – even with the post-Brexit changes in trade. If you’d like to learn more, please head to this article.

The Anti-Crisis Shield programme – the support for Polish entrepreneurs

Assistance programmes are meant to help Polish entrepreneurs meet their businesses’ essential needs. The governmental assistance is directed both at sole traders and big companies looking for a way to endure this difficult situation. Depending on the type of business and their individual needs, the methods of assistance will differ. Entrepreneurs may choose to benefit from the tax relief, gain additional funds for their employees, reduce operating costs, receive a specific amount of funding to keep their business afloat, extend the date of payment or benefit from a variety of other aids available within the Anti-Crisis Shield programme. But which methods of assistance are used most often?

A 3-month exemption from social insurance contributions

The assistance programmes include a partial or full exemption from paying social insurance contributions to the Social Insurance Institution (ZUS). An entrepreneur is entitled to a three month period (indicated by the entrepreneur) of exemption from paying contributions to ZUS. However, there are certain conditions stipulated in Article 31zo-31zx of the Covid-19 Act, which must be met in order to be eligible for the exemption.

The idle time pay for entrepreneurs conducting business activity

Entrepreneurs can also apply for an idle time pay, which includes financial support as means of compensation for the lost income. If the financial situation of a company remains unchanged, an entrepreneur can apply for another type of a benefit. This kind of assistance is available only for certain types of businesses, therefore, before applying for the benefit, remember to check whether you company meets the eligibility criteria.

Loans for microbusinesses

An interesting solution is a low interest rate loan for microbusinesses. The 5,000 PLN loan is provided from the Labour Fund means, and it can be used to keep the business afloat, settle debts or pay remuneration to employees. Entrepreneurs have 12 months to repay the loan, but this payment term can be extended in justified cases.

COVID-19 tax relief

Due to the pandemic, there are additional tax reliefs for entrepreneurs which can be applied when paying tax for the previous fiscal year. These tax reliefs include deducting documented donations for combating COVID-19. Similar solution was adopted for businesses operating at a loss due to the pandemic. The only requirement is to show proof that economic activity conducted in 2020 provided a far lower income than in 2019. Such type of a loss in the time of pandemic can be the basis for the said tax exemption.

Additionally, income from research and development intended for combating COVID-19 can also be deducted from the tax base for the year 2020. In such a case, the tax base is decreased to 5%.

Supporting businesses during the pandemic

The scope of the financial assistance needed varies from business to business and depends on various factors. When searching for the most adequate assistance programme for your business consider the government’s suggestions. All information required to apply for additional funding or tax relief programmes can be found via a search engine available on the gov.pl website.

Accounting in Germany

When issuing German invoices, you must remember that there are two types of VAT numbers in Germany:

• Steuernummer (St.-Nr.), intended for domestic transactions – requires a German tax rate
• Umsatzsteuer-Identifikationsnummer (USt.-IdNr.), intended for German taxpayers conducting intra-Community transactions

The former number must be included on the invoice as soon as it is assigned. The moment the latter number is assigned, both of them must appear on the invoice. This refers to the sales of goods/services to the private German consumers (not companies).

Another important aspect is the fact that a German invoice requires a German tax rate which at the moment is 19% and 7% (reduced to 16% and 5% until the end of 2020 due to the pandemic).

You should also pay attention to the delivery date. If it differs from the sell date it should be indicated on the invoice.

Below you will find a template of a correctly issued invoice with comments. We hope that these guidelines will help you remember what to include on a German invoice.

In case of any questions or queries, we encourage you to contact one of our experts.

Interview with Krister Gullström

The idea originated during Krister’s hospital stay. It turned out that the worldwide isolation caused by the pandemic has affected the day-to-day operations of hospitals, staff, and patients considerably. Krister agreed to talk to me immediately. I encourage you to read the interview below.

Anna Jankowska: In a way, COVID-19 was one of the reasons for this interview… That’s why I wanted to ask you about your view on the post-Covid reality…

Krister Gullström: We need a flexible work model. Up to a certain point the current office size is right just as it is. However, if we want to expand and need to adhere to regulations concerning social distancing, there might be a problem with sufficient office space. I think that the hybrid work model is a good solution. Working from home is a great facilitation for those who don’t live in Poznań.

I’m not sure if I’d like to work solely from home. Staying at home all the time might become boring. Moments of spontaneous conversation when you can come up with different ideas are very important. Remote work model limits the opportunity for interaction. Even team leaders’ meetings held on Teams. Formely, the discussions were much longer. Now, the meetings are much shorter. Online meetings are not conducive to long conversations. For new employees remote work model is not perfect either – it is difficult to get to know your co-workers and the culture of the company from home.

I have a feeling that without any meetings with partners or clients at their headquarters for so long you start losing your grip on what is going on there. Of course, you can always communicate via emails or videoconferences, but it’s not the same.

A: Do you think that professional competencies will change in the future? Will some competencies become more important than others?

K: From the practical perspective, the process of remote work is running smoothly. We have prepared for it. Employees are independent. In the case of working from home, work has to be organized differently. It’s not the same thing as working in the office – if you’re sitting at your desk for 8 hours it means you’re working. For me, the most important thing is what you do. Remote work should not be difficult for an experienced employee. However, proper mentoring and onboarding of new employees is crucial. If you work in the office next to someone with years of experience, you can learn a lot. If you work from home, you don’t have that chance. Day-to-day operations can be easily done from home. However, managerial tasks, coming up with new ideas or mentoring require more mobilization, which makes it more difficult. These are the competencies that need to be developed.

A: Do you think changes are necessary?

K: Of course. Some changes are easy, and some, like company restructuring, are very difficult processes. It’s important to be able to predict and prepare for future changes. When you work for a big corporation and then decide to start your own business, you need a lot of courage, time and work to make it happen. When you want to do something creative – to paint or compose music, then you need to put in a lot of time and be talented.

A: Yet, COVID was not something we were prepared for. Do you think that lockdown was necessary?

K: There might’ve been more possibilities if the society had been better prepared. First, the problem was ignored, and then, hasty and hectic decision were made. If you can’t see something with your own eyes then it doesn’t exist. Until you actually see it, you don’t want to spend money on prevention methods. When no one is ill, you think you don’t need lockdown. But maybe no one got ill because lockdown was introduced. The reality showed that despite isolation people were still getting ill.

A: You had graduated from university long before COVID-19 struck. Have you always planned on following this career path or was it all coincidence?

K: I had never planned to work in management control or accounting. When I was at university I wanted to be a Portfolio Manager in Investment Banking or Corporate Finance. My career path was quite coincidental. My first job? I lwas looking for anything. My friend started a company where I worked for 4 years. We provided information services, a type of consulting. We had different data bases at our disposal, e.g. data bases connected to scholarships or other means of funding. We published books. When my friend decided to work in a different field, we went our separate ways. I didn’t want to run that company alone. I got a job in accounting by accident. I was responsible for general ledger consolidation. They quickly needed a temporary replacement. I was supposed to work there for a couple of months, but I stayed for a few years. I learnt a lot, I travelled a lot too, but the job was repetitive. I wanted to gain new competencies and learn about IT systems. I found what I was looking for in a pharmaceutical company. I was the IT systems expert. I worked there for three years. At that time some other company was looking for someone for a Financial Manager position. I thought it would be worth to try, and that’s how I got this job. I never had any long term plans, and yet, I’ve been working at Duni for 10 years.

A: Do you still want to face new challenges at work, or maybe try somewhere else?

K: Working at EFF is very interesting. A lot happens here. There are new challenges to face almost every year. VAT Compliance services are not something I would have thought of three years ago. It would be nice to try something new but I don’t have anything specific in mind yet. I’d like to visit a more exotic place, for example to live in Africa for a few years. My uncle used to be a contract engineer, so he worked in different parts of the world. Maybe I could do some contract projects for an international organization, too.

A: Did you consider living and working in another country?

K: As a child I lived for three years in the USA, so I’d already experienced living abroad. In the final year of my studies I spent a few months in Indonesia as an intern. I wrote a dissertation on sewage systems. When I googled my name, I found it on ISPN (Mentoring Initiative Navigator Program) where my dissertation was submitted. One summer I worked in France. Then I moved to Poland. An opportunity arose, so I took it.

A: Was working and living in Poland a big change for you and your family? Did you compromise or decide on your own to move here?

K: The whole family wanted to move to Poland. My wife especially. We thought it would be only for three years. There aren’t that many differences between living in Poland and in Sweden, as there are between living in the USA and in Sweden. The people and general mentality are quite similar. In the USA people behave differently. They have different values. My daughters were small when we moved, so they can’t compare it. Now, my older daughter is 19 and she lives in Sweden. My younger daughter lives here with me and she’s in high school now. She doesn’t have any fixed plans for the future yet. She keeps coming up with new perspectives and ideas.

A: Fatherhood – what kind of dad are you? Do you instil your own values in your children or do you give them space to discover the world on their own?

K: I am truly lucky to have such decent children. In general, I’m the kind of person who steers clear of conflicts. I try my best to solve problems peacefully. The most important thing is that my children are healthy and happy. What they do and how they live is their choice, they know what is best for them. If the way they live is not detrimental to their health and doesn’t put their lives in danger, then they have my blessing to do as they please.

A: “Because we have limited time” – these words, spoken in a conversation between Bill Gates and Steve Jobs could not describe our current situation more accurately. What about you? Have you rethought your values or started looking at life from a new perspective?

K: I don’t think so. I’ve learnt that life is short long ago. The last 20 years have passed very quickly. I always thought that you have to do as much as you can before it’s too late. You have to use the opportunity you’ve been given and not waste time. If you are dissatisfied with something, and you are ambitious, then change something in your life. Don’t wait for 10 years for it to happen on its own. A few months ago I had a kidney transplant. If you’re lucky, you quickly go back to your normal life after the surgery. If you’re not so lucky – you can end up being disabled. I considered various scenarios. What you can do when you can’t move freely, when you’re ill or disabled. I am very happy that I got so lucky in my life. It’s a waste of time to feel sorry for yourself and be dissatisfied with your life when you’re healthy.

A: Is this your definition of happiness? Do you think we need material things?

K: The most important thing is freedom. It’s enough that you are free to move on your own, that you are not stranded in a hospital or at home. We quickly forget about what is really important. Do material things matter? I think so. But you can’t take them (or yourself) too seriously, so as not to be perceived through the lens of your possessions. Material things do matter, but they are not the most important thing in the world.

A: What do you dislike in other people?

K: I don’t like people who are judgemental and blame others for their own failures, who think that everything is someone else’s fault. When you hold a managerial position, it is one of the worst traits you could have. The second worst trait is not taking responsibility for your own decisions. I hope I do not exhibit such traits.

A: How do you like to spend your free time?

K: Some people have only one passion throughout their entire life. For me there were several in different stages of my life. I played tennis for several years. I don’t play anymore at all. I used to play the guitar, now I rarely do so. There are moments, when I can’t stop reading for a year, and then I have a long break and stop reading altogether. When I was 20 years old, I used to work in a wine shop. My interest in wines is one of the passions that have stayed with me until this day. Nowadays, my favourite way to spend free time is to go on a boat on a sunny day, while drinking coffee and eating some tasty pie.

A: What are the places you’d like to visit, the places you miss?

K: I’d like to visit south Africa, particularly Namibia and Botswana, pristine regions with few inhabitants. Out of all the cities I’ve seen, New York has made the biggest impression on me. The people there are very open. Whenever you go to a restaurant people start conversations with you. I could see myself working there.

A: There is a Mazda MX-5 NC sports car, which you have had for some time now, parked in the underground parking lot. Do you use it only for summer road trips or maybe something else?

K: I’m in the process of modifying that car. I’m preparing to drive on a track. I’ve changed the tires and the suspension. My brother has some engine parts for me. I wanted to participate in Poznań Track Day but COVID made it impossible. Last year I drove on a track in Łódź. I don’t race. The driver drives alone on a track and is being timed. All I need is a racing helmet and a car. I like vintage cars, classics, particularly Ferrari 308 GTB – the one Magnum used to drive in the ‘80s.

A: What should I wish you?

K: For my kidney to work as long as possible and for the wellbeing of my family.

A: Thank you for the interview and for your time.

K: Thank you.