Deregistration and exclusion from VAT OSS – What you need to know?

When is deregistration from the OSS procedure necessary?

Deregistration from the VAT OSS procedure is initiated by the taxpayer and is required in the following cases:

• Ceasing the supply of goods or provision of services.
• No longer meeting the conditions required to use the VAT OSS procedure.
• Voluntarily opting out of the VAT OSS scheme.
• Changing the Member State of identification.

How can you deregister from VAT OSS in Poland?

To deregister from VAT OSS in Poland, taxpayers must submit the VIU-R form (the same form used for VAT OSS registration) to the Head of the Second Tax Office in Warsaw-Śródmieście via the e-Declarations system. When completing this form, the taxpayer must indicate that the purpose is deregistration.

If the business uses the services of a representative, an original PPS-1 power of attorney must also be submitted.

For more details about VAT OSS, check out our article: What is VAT OSS? Changes to VAT settlements in the EU.

Deadlines for deregistering from VAT OSS in Poland

If any of the aforementioned reasons occur, the taxpayer must submit a deregistration request for the VAT OSS procedure at least 15 days before the end of the quarter in which they intend to stop using the procedure.

Upon submission of a correctly completed document on time, deregistration from VAT OSS becomes effective from the first day of the quarter following the submission of the application.

Example – When to Deregister from VAT OSS in Poland?

On June 1, Company A ceases distance selling of goods for which VAT was accounted for under OSS. Consequently, the company must deregister from the procedure. To do this, they must submit a properly completed VIU-R form by no later than June 16.

If the document is correctly filled out and submitted on time, deregistration will take effect from the first day of the next quarter, i.e., July 1.

Exclusion from the VAT OSS procedure

Unlike voluntary deregistration, exclusion from VAT OSS is imposed by the tax authority. This happens when a VAT taxpayer repeatedly fails to comply with the requirements for using the OSS procedure.

Reasons for exclusion from OSS

The main and most common reasons for exclusion from the OSS procedure include:

• Failure to pay VAT due.
• Regular delays in VAT payments or ignoring payment reminders.
• Failure to comply with specific obligations, such as:
  • Deregistration from VAT or being unreachable despite documented attempts at contact.
  • No supply of goods or services in any EU country for two years.
  • Failure to file VAT-OSS returns for three consecutive quarters and no response within 10 days of a notice from the Head of the Second Tax Office in Warsaw-Śródmieście.
  • Not paying the full amount of VAT due for each of the three previous calendar quarters and no response within 10 days of a notice to settle the outstanding amounts.
  • Failure to provide records requested by the tax office within a month of being asked.

Penalty for exclusion from OSS – Two-year suspension

If a tax authority decides to exclude a business from OSS, the company faces a penalty: an eight-quarter suspension during which the taxpayer is prohibited from re-entering the OSS procedure. Only after this suspension can they re-register and use VAT OSS again.

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Consequences of exclusion from OSS

Exclusion from VAT OSS can have significant financial and administrative consequences. Businesses previously using VAT OSS will need to register for VAT locally in each country where they send goods or provide services.

This involves:

• Costs of obtaining foreign VAT numbers.
• Understanding local invoice requirements, procedures, reporting periods, and deadlines for VAT returns.

Since the OSS procedure significantly simplifies and speeds up VAT settlements, especially for e-commerce businesses, it’s crucial to adhere to its deadlines and requirements.

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Updating information in the VAT OSS procedure

Finally, it’s worth noting that taxpayers must notify the tax office in the following cases:

1. Ceasing activities covered by VAT OSS, e.g., providing services or WSTO (distance selling of goods).
2. Changing information provided during registration (except those updated through VAT-R or based on the Record-Keeping Act).
3. Modifying activities covered by VAT OSS in a way that disqualifies eligibility for the procedure, e.g., relocating the business to another EU country.

In such cases, businesses must inform the tax office by the 10th day of the month following the event.

For situation 3, if the taxpayer intends to continue using VAT OSS, they must notify both the tax office in the current Member State and the new Member State where they wish to use the EU VAT OSS procedure.

Deregistration and exclusion from OSS – Summary

The VAT OSS procedure is a significant convenience for businesses operating in international markets within the EU, especially in e-commerce. It allows for simplified VAT settlements, saving time and reducing bureaucracy. However, failure to comply with specific rules or payment delays can result in deregistration or forced exclusion, with severe consequences, including a two-year suspension.

To avoid issues and ensure smooth operations, businesses should focus on meeting VAT OSS obligations on time and consider seeking expert advice when needed. Attention to detail and compliance can maximize the benefits of this procedure while minimizing risks of exclusion and additional costs.

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