We described what the term opt-out is and why it is important here. As a short summary and reminder opt-out is an unofficial term used by us at hellotax to describe the switch from paying VAT in the departure country to paying VAT in the destination country.
After you have received all the VAT ID's you will be able to request to "opt-out", please schedule a meeting with your Account Manager so we can advise you where opting out would be appropriate. This means that we will help you to opt-out from a certain country before reaching the distance sales threshold limit and opt-in to pay VAT in the destination country/countries. Your account manager and our local accountants will create an opt-out matrix to reduce your VAT liability in every possible country and also to optimize your compliance.
During the opt-out process you will need to fill in some forms, where you will notify the country where the goods are sold from, that you will stop paying VAT there. After you fill in the form send it to your Account Manager.
Opting out from Poland does have some special requirements:
- fill in the VAT 22 form and send it to your Account Manager
- There is a 30 days block period where you will still pay VAT in Poland
- Plan ahead and set the date on the VAT 22 form 45 days in the future (30 days block period + 15 days shipping and processing time for Polish Tax Authorities)
- Send a document or e-mail proof to the Polish Tax Authorities that you informed your Local Tax Authorities about opting out in Poland*
*Polish Tax Authorities require a document or at least an e-mail proof that you informed your local Tax Authorities about opting out in Poland. Local Tax Authorities is the tax office where your business is headquartered.
If you are wondering why the registration and opting-out cannot be done in parallel, there are a few reasons we will explain below.
First reason and a very important one is that during the opt-out process the involved countries(tax offices) will talk and collaborate with each other, and seeing that the requester has no VAT ID in one of the countries will raise additional questions.
Second, it is a technical requirement to have all VAT IDs registered and entered in our software in order to be able to apply for opt-out. This is directly correlated with the first reason, because we want to make this process as smooth as possible in order to avoid additional questions and delay from the tax offices side.
Third is that, opt-ing out is more than an option where to pay VAT and what VAT rate to apply. We see opt-ing out as a tax optimization instrument. You can optimize and improve your capital, by choosing what VAT rate to apply. For example:
If you are selling goods from the UK with a standard VAT rate of 20% to Germany where the standard VAT rate is 19%. You can request to opt-out from paying VAT in the UK right after registering your VAT number in Germany in order to benefit from a lower VAT rate.
Contact your Account Manager at email@example.com to help you with the next steps.