ONLINE SALES AND BUSINESS ACTIVITY, UNREGISTERED BUSINESS, AND SALES ON INTERNET PORTALS

Does online sales require us to establish a business activity? The answer depends on the specific situation.

First and foremost, we need to clarify what constitutes a business in Poland. According to Article 3 of the Act of 6 March 2018 on entrepreneurs (hereinafter: ‘Entrepreneurs Act’) a ‘business’ refers to an organized economic activity conducted for profit and performed continuously on one’s behalf. Business activity, to be considered as one, should have four essential features: professional and permanent nature, repeatable actions, adherence to principles of rational management, and participation in economic operations. It is emphasized that to recognize business activity as one, the joint presence of three functional features is necessary: profit-making, organization, and continuity. Therefore, business activity is, by definition, an organized, continuous, and profit-oriented endeavor that entails assuming entrepreneurial risk. The form of conducting business is irrelevant; it can be a sole proprietorship or commercial partnership (e.g., civil law partnership or limited liability company). The only requirement is registration with the tax office. It is also possible, though more challenging, to conduct unregistered business, which may reduce business costs, including income tax.

Navigating the Boundary: Is Running an Online Store a Business Activity in Poland?

Does running an online store fall within the aforementioned definition of business activity?

Yes, selling in an online store meets the criteria for business activity. It involves profit-oriented conduct as it aims to generate revenue. It also constitutes organized activity, as specific actions need to be taken to establish and run an online store – such as creating a website or setting up an account on a particular sales portal, ordering and purchasing goods (or making them, as in the case of handicrafts, art, or e-books). Running an online store also qualifies as continuous sales. Online sales do not have an incidental or occasional character and are carried out repetitively. If we, as sellers, conduct the sales in our name and are not mere employees serving customers, then it qualifies as a sole proprietorship. In such a case, it becomes a form of business activity.

Furthermore, in accordance with Article 5 of the Entrepreneurs Act, a business activity performed by an individual whose income from this business does not exceed 50% of the monthly minimum wage stipulated in the Act on the minimum wage for work, October 10, 2002, (Journal of Laws of 2018, item 2177, and 2019, item 1564) in any month and who has not conducted business activity in the last 60 months cannot be considered a business activity.

According to the regulation mentioned above, to avoid being classified as a business activity in Poland, two cumulative criteria must be met. First, the income from our online store (amounts receivable, even if not actually received) must not exceed 50% of the statutory minimum wage for work in any given month. Second, in the 60 months preceding the commencement of our online store activity, we must not have conducted any business activity. This business activity must also be carried out independently.

However, it is essential to note that business activity is subject to taxation, but only if a specific criterion is met – if we also earn income from another source that increases our annual income above the tax-free amount. The reason is simple: assuming that in each month of the tax year, we achieve the maximum income allowed for unregistered business, the total annual income will amount to 20,940.00 PLN (calculated using the minimum wage provided for in 2023). This amount will not exceed the tax-free threshold of 30,000.00 PLN. If the tax-free threshold is exceeded, the individual conducting such business must file an income tax return at the end of the tax year. The tax in Poland is calculated based on the standard progressive tax scale of 17% and 32%. Individuals engaged in unregistered business are not required to make monthly tax advances. The tax will be paid after the end of the tax year upon submission of the appropriate tax return.

As a business, we can benefit from the exemption from VAT for individuals whose annual sales value does not exceed 200,000 PLN. An exception is the sale of goods subject to mandatory VAT, such as electronics or cosmetics.

What potential issues might arise when conducting unregistered business on Allegro?

Strict compliance with the portal’s terms and conditions is necessary. Complaints and returns must be handled independently, as the portal does not deal with them on our behalf. The portal also does not assist in fulfilling GDPR obligations. Sellers must present their own sales regulations to customers.

As an individual, we are unable to create a business account on Allegro and utilize its features, which may result in our offers being displayed lower than those of registered businesses.

Allegro aims to professionalize its services, making it more challenging for unregistered individuals to sell on the platform. Allegro has introduced the Allegro Smart program for sellers and buyers, “productization” (grouping offers with the same product from various sellers), and a commission on shipping costs. Allegro Lokalnie has become a place for individuals without registered business activity, and currently, offers placed on Allegro Lokalnie are also visible on the main Allegro portal. However, this convenience is expected to be removed in the future.

These factors can lead to constricting unregistered business. Therefore, when considering such an approach, it may be worth considering alternative sales methods through other platforms or establishing a custom online store, which can be quickly set up using available templates without requiring programming knowledge.