The e-commerce environment is incredibly dynamic and constantly evolving, and legal regulations must keep pace with it. The year 2023 brought a wealth of changes for e-commerce businesses, particularly with the implementation of the Omnibus Directive. What changes await entrepreneurs in 2024?
Both EU and Polish legislators are increasingly trying to adapt their laws to the specifics of online sales. In recent years, many factors have contributed to the rapid growth of e-commerce, which is difficult to keep up with. The coming year will bring further changes to legal regulations aimed at regulating new areas.
Many changes are primarily due to the European Union's influence on national law. The implementation of EU regulations in 2024 will particularly impact the e-commerce industry.
Changes to e-commerce law in 2024
Digital Services Act
On February 17, 2024, the Digital Services Act (DSA) will enter into force. Its primary goal is to set a new standard for platform liability for illegal and harmful content, as well as to provide enhanced protection for network users. The DSA will contribute to the unification of digital regulations across internal markets.
Who does the DSA apply to? Primarily, businesses (especially large corporations) that provide online services of an intermediary nature. These businesses include those that provide hosting and intermediary services, offering network infrastructure and online platforms: those that bring together sellers and consumers, as well as those that pose a particular risk of disseminating illegal content and causing social harm.
The DSA imposes numerous obligations on intermediaries, particularly those related to combating illegal content transmitted using the services offered by the company. Each intermediary must comply with the order to take specific measures against illegal content in a given country and to provide specific information about any recipient of the service. Furthermore, intermediaries must designate a contact point for the exchange of information between European Union Member States, the Commission, and the Digital Services Council, as well as a contact point for users of the services. Also crucial are the obligation to develop a service user policy, which requires the intermediary to define the procedures, policies, measures, and tools used for moderation, a system for handling user complaints, and a reporting obligation regarding content moderation.
Dark patterns in 2024
The DSA regulates so-called "dark patterns," practices that are intended to affect the ability of users of a given service (including online stores!) to make informed and independent choices or decisions. The new regulations prohibit such practices, but the Act itself... There is no legal definition of this concept.
So how can we make sure that we do not engage in such activities on our website?
It's worth using the guidelines adopted by the European Data Protection Board on so-called "deceptive design patterns." Although they pertain to social networking interfaces, they can provide a good basis for attempting to define "dark patterns."
The scale of this phenomenon is enormous - according to research conducted by the European Commission, as many as 97% of stores and websites use practices such as hiding or hindering the cancellation of subscriptions, automatically adding products to the basket, hiding additional order costs, making service cancellation procedures difficult, designing the interface in such a way that the user forgets about additional costs or the protection of personal data...
The catalogue of these practices is open and it should be assumed that after the DSA enters into force it will be continuously developed.
It should be mentioned that although the DSA has exempted websites run by micro and small businesses from certain obligations, avoiding the use of dark patterns is a good practice among online stores, and if the UOKiK notices such practices, it may result in severe penalties.
Are hosting providers and platforms having a harder time?
The DSA imposes additional obligations on hosting providers, including online platforms. They must provide electronic reporting of illegal content for any person or entity and report all crimes to the appropriate authorities if they pose a threat to life or public safety.
Platforms and search engines providing services to more than 45 million monthly users will face the greatest challenges. They will be required to conduct audits every six months, assess systemic risk, provide a crisis response mechanism, and report on their obligations under the Digital Services Act, among other things.
Why are such complex regulations necessary? Primarily, they aim to ensure online security. The DSA will contribute to increased transparency in digital content moderation rules and will even cover online advertising.
Digital Markets Act
The Digital Markets Act (DMA) is the result of an agreement between the European Parliament and the European Commission on rules aimed at limiting the market power of large online platforms. The DMA is intended to increase the safety of internet users within the European Union. Furthermore, the Act will allow the Commission to investigate and impose penalties on entities engaging in unfair practices. The DMA provisions primarily apply to businesses providing core platform services with a market capitalization of at least €75 billion or an annual turnover of €7.5 billion, as well as to operators of social networking sites and search engines with at least 45 million monthly end users in the European Union and 10,000 users annually.
Combating VAT fraud in e-commerce
An amendment to the Act of March 11, 2004, on Value Added Tax (VAT), aimed at tightening the VAT system for e-commerce, will come into force on January 1, 2024. This change implements a directive of the Council of the European Union.
With the amendment, the tax administration will gain an additional tool to effectively combat VAT fraud in international e-commerce.
What is the change? From the beginning of the year, payment service providers must maintain quarterly records of cross-border payments and their recipients, and also store and make these records available. This obligation applies to providers who make more than 25 cross-border payments to the same recipient within a quarter.
When does the record-keeping requirement not apply? The obligation does not apply to payment services related to cross-border payments where at least one of the payee's payment service providers is located in the territory of a Member State.
Minimum tax
At the beginning of the new year, a new form of taxation, more commonly known as the minimum tax, will come into effect. This is a corporate income tax (CIT), which applies to companies that generate no profit from operating activities or are low-profitable. It is calculated differently than the CIT, already familiar to Polish taxpayers, and independently of the traditional CIT.
A situation may arise where a company reporting a loss in its CIT-8 tax return will be required to pay minimum tax. This stems from the exclusion from the minimum tax calculation of some of the cost items that are typically deducted when calculating CIT.
The implementation provides for a group exempt from minimum tax, which includes start-up companies, small CIT taxpayers and entities with low profitability resulting from the specific nature of the industry in which they operate.
What does this mean for e-commerce entrepreneurs? We'll explore the new regulations and analyze whether the minimum tax applies to their businesses.
And speaking of taxes…
National e-Invoice System
In accordance with one of the stages of KSeF implementation, after preparing the draft amendment and public consultations, it is time to put the changes into practice.
What modifications have been made?
The deadline for implementing the KSeF by taxpayers who are exempt from VAT has been extended. Currently, the KSeF is voluntary, but it will become mandatory on January 1, 2025.
What happens if a KSeF user fails? Invoices can be issued offline, outside the system, and delivered to the system the day after issuance.
The changes also provide for the option of submitting a ZAW-FA notification (the form used to grant, change, or revoke authorizations) not only in paper form but also electronically and via the e-Tax Office. Previously, only a paper version was provided for.
It has also been introduced that invoices issued using self-billing must be marked with a verification code if the buyer issuing the invoice does not have a Tax Identification Number.
VAT – rate change
For entrepreneurs operating online food stores, the beginning of the year brings some good news. In the first half of December, the Minister of Finance decided that the VAT rate on basic food products will be 0% until March 31, 2024. However, entrepreneurs must prepare for the possibility of a return to the 5% rate, which could significantly impact the number of transactions with consumers. It's important to consider the impending changes in strategy for the second quarter of the year and adapt online operations accordingly.
Changes to limits on e-commerce sales and imports of goods
The VAT Act precisely defines limits for e-commerce sales and the import of goods. These limits are expressed in euros and, therefore, must be converted to Polish zloty using the euro exchange rate announced by the European Central Bank on the first business day of October of the year preceding the tax year.
The limits for 2024 should be converted at the exchange rate of PLN 4.6123 per EUR 1 announced on 2 October 2023.
What are the limits for Polish entrepreneurs?
Sale deemed to be a supply by a given taxpayer – entrepreneur (Article 7a, paragraph 1 of the VAT Act)
Where a trader facilitates, through the use of an electronic interface such as a platform, trading platform, portal or other similar ones, the distance sale of imported goods in consignments with an actual value that does not exceed PLN 692 (in 2024), it is deemed that the trader has independently received the goods and delivered them.
Exemption from import tax (Article 45, paragraph 1, point 11 of the VAT Act)
Imports of goods benefit from tax exemption for shipments with an actual value not exceeding PLN 692 (in 2024). The exception to this exemption are goods subject to excise tax.
The exemption covers:
- a declaration of value added tax due on distance sales of imported goods under the special scheme for distance sales of imported goods;
- providing the customs authority with a valid VAT identification number, in accordance with the provisions on the notification of the intention to use the import procedure in the Member State of identification (Article 138e paragraph 7 points 1 and 2 of the VAT Act) or on terms corresponding to those regulations.
Person responsible for tax collection (Article 138i, paragraph 1 of the VAT Act)
In the case of import of goods that are the subject of distance selling of imported goods in shipments with a value not exceeding PLN 692 (in 2024), terminated within the territory of the country, the " person responsible for tax collection " may declare the tax collected on the import of goods in monthly declarations.
Who is the " person responsible for collecting tax" ? This is the person who declares goods to customs authorities within the territory of the country on their own behalf and on behalf of the person for whom the goods are destined.
SUP Directive
The new year will bring changes resulting from the implementation of the Single-Use Plastics Directive, also known as the "Plastics" Directive. Its regulations oblige businesses to charge end users (consumers) for beverages and food in single-use plastic cups or containers. Furthermore, the directive obliges businesses to ensure the availability of alternative packaging not made from single-use plastic by July 1, 2024.
This has consequences, particularly for businesses operating in retail and the food service sector, while annual fees for businesses marketing single-use plastic products also apply to other industries. This entails not only new costs but also additional reporting and record-keeping obligations.
Summary
In just a few days, numerous new regulations will come into effect, requiring entrepreneurs to adapt their business and marketing strategies to the new reality. The new regulations and amendments to existing laws cover a wide range of issues affecting e-commerce businesses. Most of them require proper implementation and consideration in business strategies, which will bring numerous changes to the way businesses operate.
Changes are affecting almost all businesses, but it's safe to say that this year is on par with 2023 in terms of the number of new regulations for the e-commerce industry. The Digital Services Act, combating fraud and changing VAT rates, changes to e-commerce sales and import limits, the Single-Use Plastics Directive, and other changes can be dizzying not only because of their sheer number and breadth, but also their level of complexity.
If you need help implementing new regulations or want to ensure that the changes you have made meet legal requirements,please contact us.
We are a team of specialized lawyers who are particularly interested in the e-commerce industry. We will handle your case with full commitment and guarantee your satisfaction.
