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Mandatory split payments as of 2020


In an implementing decision 2019/310 of 18 February 2019, the Council of the European Union authorised Poland to impose an obligation to apply the split payment mechanism in industries that are particularly exposed to tax abuse. By way of reminder, split payment (a split-payment mechanism) came into force on 1 July 2018 as a voluntary, alternative to the traditional methods of payment, methods of settling liabilities towards contractors that are VAT payers.

The essence of the mechanism is the use of a transfer message which splits the amount due into a net receivable to be paid into a standard operating account and the VAT due, which is paid into a dedicated VAT account. The freedom to use the monies deposited in the VAT account is considerably restricted to payments of VAT due on invoices or the VAT due the tax authority.

Taxpayers that apply the split payment mechanism are not subject to joint and several liability on account of supply of sensitive goods.  They are also in a position to have their tax liability reduced provided that they make an early payment. However, an evident disadvantage of the mechanism is the restriction to payments made in PLN and it not being possible to make aggregate payments in so-called packages.

The Ministry of Finance announced already last year that it would impose the obligation to apply split payments in certain industries in order to eliminate VAT abuse since the actions taken so far, i.e. introduction of the reverse charge mechanism in domestic transactions, joint and several liability, mandatory JPK_VAT (single control file) structure, or stricter regulations on registration and deletion of taxpayers, have proved insufficient.

According to the decision of the Council of the European Union, Poland will be permitted to introduce mandatory split payments between 1 March 2019 and 28 February 2022 with respect to the supply of goods and provision of services that are currently subject to the reverse charge mechanism, as set out in Schedules 11 and 14 to the VAT Act and the supply of the so-called sensitive goods, as set out in Schedule 13 to the Act.

Moreover, the new regulations can apply to desktop computers, TV sets, car parts and accessories, coal, coke and briquette.

As a result of the introduction of the mandatory split payment mechanism, the reverse charge in domestic transactions as well as joint and several liability in sensitive sectors are to be lifted. The split payment mechanism is to be applied exclusively between VAT payers (in B2B transactions). A new requirement is that it will be necessary to provide information on invoices about mandatory split payment.

An advantage of the proposed changes, according to the Ministry of Finance, will be the possibility of aggregate payments and using the funds deposited on a VAT account to settle other public duties.

The proposed changes are supposed to come into force at the beginning of 2020. Therefore, it is advisable to analyse one’s goods and services with view to the upcoming amendment.


Ewa Pyrkosz, Tax Consultant, ATA Tax Sp. z o.o.

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