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Mandatory split payment – practical information for businesses


On 29 August the President of the Republic of Poland signed the Act on amending the act on the tax on goods and services and certain others acts. The introduction of subsequent crucial changes for businesses in VAT concerning the mandatory split payment (SP) is approaching inevitably. The new solutions are to come into force on November 1 of this year. The Act aims to make the application of voluntary and mandatory SP easier, but in practice the modifications that are soon to become effective pose many questions and doubts.

As a reminder, the split payment is a tool splitting the payment for purchased goods or services due the seller into two separate accounts – the net amount into any account indicated by the seller and the amount of tax, into a VAT account characterized by limited freedom to dispose of funds accumulated in it. Despite the fact that the account constitutes the sole ownership of the taxpayer, the funds held in it can only be used for such activities as settling the amount of VAT from contractor’s invoice or paying liabilities in value added tax (except for VAT on the import of goods) towards the Tax Office.

From November 1, 2019, it will also be possible to pay income tax, excise duty, customs, VAT import and Social Insurance Institution (Polish ZUS) contributions from the account. Furthermore, compensating mutual claims pursuant to art. 108a (1d) of the VAT Act, will not be treated as a violation of regulations imposing the obligation to regulate a given invoice in SP.

Unfortunately, despite the new regulations, using the split payment mechanism will still exclude payments in currencies other than PLN. Art. 108a (3) of the VAT Act clearly states that “a payment made using the split payment mechanism shall be made in Polish Zlotys using a transfer message made available by a given bank or savings and credit union, intended for making payments under the split payment mechanism (…)”. Thus, when the payment is made in a foreign currency one cannot use the split payment system. However, invoices in a foreign currency can be realised by two separate bank transfers: one traditional, in the net worth - in a foreign currency and  the other, under the SP in the VAT amount - in the Polish currency.

Pursuant to the Amendment, in addition to transactions concerning sectors particularly vulnerable to violations, the obligatory split payment apply to transactions involving parts and accessories for motor vehicles, coal and coal products, electrical machinery and equipment, their parts and accessories (documented by an invoice exceeding the gross amount of PLN 15,000, concluded between VAT payers). In the case of invoices fulfilling the above criteria, concerning the supply of goods or services referred to in Appendix 15 to the Act, it will be extremely important to include the "split payment" annotation on the document, because in the event of failure to comply with this obligation and the authorities determining a violation of regulations, the taxpayer will be subject to an additional liability of 30% of the amount of tax indicated on the invoice.

Implementing mandatory SP entails transitional arrangements set out in Art.10 of the Act  amending the act on the tax on goods and services and certain others acts of August 9, 2019 regarding transactions carried out before November 1, 2019, whose effects will occur after that date. Thus, in the case of goods supplied or services performed:

  1. before November 1, 2019, for which the tax obligation arose or the invoice was issued after October 31, 2019 (e.g. a service was conducted on October 28, 2019, and the invoice was issued on November 4, 2019),
  2. after October 31, 2019, for which the invoice was issued before November 1, 2019 (e.g. a service was performed on November 4, 2019, but the invoice was issued on October 29, 2019)

the provisions of the Act on tax on goods and services currently in force, i.e. the reverse charge mechanism, will apply.

As the Minister of Finance assures, amendments to the regulations coming into force at the beginning of November are to improve the conditions of conducting business and ensure security for businesses when carrying out transactions. However, it should be noted that the limited freedom to use the funds accumulated in a VAT account may constitute a severe impediment to some taxpayers’ financial liquidity. It is therefore worth preparing in advance for the upcoming changes in the law and planning the way of using the funds paid into the VAT account, so as not to be forced to use external financing, which significantly burdens one’s budget.


Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.

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