As announced this year, the split payment mechanism (hereinafter ‘mpp’ or ‘split payment’) will apply, but to a limited extent, to selected goods and services. This is the result of a derogation decision issued by the EU Council a few months ago, which allowed the Polish government to introduce a compulsory split payment.
Let us remind you: split payment consists in making payments for liabilities from invoice on two bank accounts: net value for the supplier's bank account (or otherwise); VAT amount for the supplier's special VAT account. The VAT bill will be established by the banks or the SKOK for each VAT payer.
For whom split payment
The obligation to apply the split payment mechanism will apply to transactions relating to certain categories of goods and services, recorded by the vat invoice (hereinafter: ‘fV’) for the amount above 15,000 PLN gross. However, the obligation to use mpp will not cover transactions carried out under the public-private partnership agreement system (in short, ‘PPP’).
The requirement to make payments using mpp will apply to selected categories of services and goods ranked in the Polish Classification of Products and Services (in short: ‘PKWiU’) from 2008, as follows:
- • trade in automotive parts,
- • execution of construction works
- • greenhouse gas emissions and goods in the form of coal, heating oils, propellant fuels, all electronics, secondary raw materials or precious and coloured metals.
The complete inventory of goods and services covered by mpp is included in the newly added Annex 15 to the VAT Act 1 .
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More options for using funds from thevatowski account and collective payment
As a result of the amendment, entrepreneurs will have more opportunities to use the funds collected in the VAT account. In addition to payment of VAT from invoices received from counterparties, payment of VAT to the tax office and interest on VAT due and additional tax liability, the VAT account will be able to pay contributions to the Social Insurance Institution and income tax, excise duties and duties. Moreover, you will be able to settle several invoices by one transfer in the aggregate payment system.
An invoice note and an account in the Polish bank for foreign counterparties
On the other hand, it may seem a nuisance two aspects of the use of split payment. After first the requirement to include on fv annotations on clearing through mandatory split payment. After second, foreign entrepreneurs will be forced to establish an account in the Polish bank in case of bank transfer of fees for transactions charged in Poland with a tax on goods and services.
Penalties for non-compliance with split payment rights
This amendment also addresses the issue of sanctions. It is provided that a purchaser who does not make the correct payment through a split payment will be unable to take account of the amount spent in the revenue collection directory and a penalty of equivalent value will be imposed on him 30% the amount of VAT due on transactions. However, it may be avoided by subsequent payment of the amount of tax payable on fV using the split payment mechanism.
The lack of information on the application of the split payment mechanism on fv will result in a penalty corresponding to the value of 30% tax due from the transaction – but here the same case will be applied as with the buyer, i.e. the possibility of subsequently regulating the amount of the tax using the split payment mechanism.
Time limits for entry into force of the amendments
The Act was signed by the President at the end of August this year. On 9 August 2019 VAT Act was published in the Official Journal 13 September (item 1751); Part of the new rules, i.e. those introducing the split payment mechanism, will apply from 1 November This year, i.e. the transactions in categories of goods and services indicated above will be covered by this regulation. Annex 15, which will be made after the day 31 October (the tax obligation, the supply of goods or the provision of services and the date of issue of the invoice shall be by 31 October 2019). In accordance with the transitional provisions indicated in Article 10 in the abovementioned Amending Act, if:
- •
- before 1 November 2019 the taxable person has supplied the goods or services listed in Annex 11 or Annex 14 to the law for which the tax obligation arose or the invoice was issued after 31 October 2019,
- •
- rod 31 October 2019 the taxable person has supplied the goods or services listed in Annex 11 or Annex 14 to the law for which the invoice was issued after 1 November 2019 the reverse load (in the current version of the provisions, i.e. before 1 November).
On the other hand, the remaining scope of the amendment – relating to the change in the classification of goods and services for VAT purposes – will enter into force with New Year.
How can this form of clearing transactions be done in practice?
Let's say one the company makes the purchase 20 Forklift trucks directly from the manufacturer or authorized distributor for the purpose of conducting their business (e.g. the buyer is a courier company and must carry out unloading and loading of various goods transported). The transaction shall amount to a VAT invoice issued 600,000 PLN gross.
- After receiving an fV with the correct endorsement of the ‘shared payment mechanism’, the purchaser shall make the one the transfer, indicating the invoice number, the issuer's NIP, the net amount and the VAT amount.
- If the seller (the tax payer issuing fV) has not included an endorsement in the document, e.g. ‘payment effected by the split payment scheme’, the tax authority will be obliged to impose a penalty of 33,658.54 PLN.
- In the case of payment of an invoice in the usual way for the purchaser, a fine of a/in the amount of the amount will be charged and it will not be able to classify the expenditure incurred in the revenue collection directory.
1 Source: http://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20190001751/O/D20191751.pdf