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Split payment mechanism also in Poland


The Ministry of Finance published a proposal of the next law aimed at the effective improvement of VAT collectability. The so called split payment is to be available as of 1 January 2018 and is envisaged only for B2B transactions.

The essence of split payment is that the purchaser, who is a taxable person, pays the amount corresponding to the net sales value to the supplier’s bank account, while the amount of VAT is paid to a special separate account of the supplier – the so called VAT account. Such method of payment will not be, however, obligatory, the purchaser of goods or a service will be able to apply the split payment mechanism on a voluntary basis.

According to the proposal, the VAT account will be opened together with the entrepreneur’s settlement account, the funds held therein will be interest-bearing, and the bank will not be able to charge any fees or commissions for keeping the account. 

What is important, the supplier will be able to dispose of the funds held on the VAT account in principle only to settle VAT, and in particular to:

  • pay VAT to the VAT account of another entity (the supplier)

  • return VAT to the VAT account of the purchaser of goods or services in connection with issuing a corrective invoice,

  • pay VAT to the account of the tax office.

Any appropriation of funds other than indicated above will be possible at the taxable person’s written and justified request. Nevertheless, such procedure will be very time consuming – the head of the tax office will have as much as 90 days to issue a decision in this regard.

At the same time, the proposal of the amending law, to the extent of the amendments to the Banking Law, assumes that also VAT refunds made by the tax office may be credited to the VAT account. And the VAT Act will be expanded to include the new Article 87 paragraph 6a, according to which at the taxable person’s request, filed together with a tax declaration, the tax office shall be obligated to refund the tax to the VAT account within 25 days. In view of the above restrictions as regards disposal of the funds held on the VAT account, this change has to be assessed as not favourable for taxable persons – the deadline when a taxable person gets the actual access to the refunded VAT amount in order to use the same in the conducted business activity may be postponed even by another 90 days compared to the deadline available in the VAT Act currently (assuming that the authority will admit at all the taxable person’s request for another appropriation of funds). So there are not doubts that the implemented changes will adversely affect the entity’s financial liquidity.

The legislator is planning to introduce also an incentive for taxable persons to pay VAT from the VAT account before the deadline laid down for the tax payment. Such an inventive is to be reduction of the tax liability to pay by the amount which is calculated  based on the number of days and a relevant reference rate of the National Bank of Poland.

The proposal of the law envisages also certain facilitations for those entrepreneurs who decide to make use of the split payment mechanism. They will not be covered by the regulations on sanctions in the form of the additional tax liability to be determined in the case of any non-conformities in VAT settlements applicable as of 1 January 2017. Neither will the regulations on joint and several liability of the purchaser for the seller’s tax liabilities be applicable to such entrepreneurs.

If the legislation process goes on as planned, the Act amending the VAT Act and certain other laws will come into force as of 1 January 2018.