From 1 July The rules on the split payment mechanism for goods and services will apply. This tool has been a source of excitement for several months. The Ministry takes steps to introduce the de facto obligation to use the split payment method. There have already been incentives to use the new solution, now there are veiled attempts to force mandatory use of split payment.
Weapons against abuse
Split payment assumes, dividing payment for purchased goods and services into two part – net amount and tax amount. To this end, for each business account associated with the business activity, banks separate a special sub-account under the name ‘VAT account’.
In deciding to apply the split payment mechanism, the buyer will implement one transfer using a dedicated transfer message, indicating the invoice number, supplier NIP number, net amount and VAT amount.
The rest will be done by the bank, transferring the net amount to the supplier's business account, while the amount of tax on the "VAT account".
In recent days, the Lotus pages reported that from 1 July 2018 any payments made by Lotos Capital Group companies on the basis of purchase invoices shall be made on a split basis. Perhaps it is the idea of the rulers to "infect" the market by split payment through the State Treasury companies.
In this way, the Ministry of Finance wants to seal the tax system, since the funds collected in the VAT account will not be available to entrepreneurs. This appropriation will only be intended to cover:
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- to pay the tax due to the tax office,
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- to pay for purchased goods and services using the split payment mechanism in the VAT part,
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- for another purpose (exemption to a bank account) after a statement in conformity by the Chief Executive of the Tax Office by way of a provision in response of the taxpayer's request.
Application of split payment will be a prerequisite for due diligence
The split payment mechanism is voluntary at the moment. It will be decided by the purchaser who decides whether to pay in a traditional way or whether to use split payment. The Ministry encourages taxpayers to apply the mechanism, promising protection against the negative consequences of the taxpayer's involvement in tax fraud. The use of the split payment will be a condition for the taxpayer to exercise due diligence in commercial contacts, which is of particular importance in the trade in goods exposed to abuse.
The Ministry of Finance intends to examine the optional functioning of the mechanism and to opt for the possible introduction of a compulsory version in certain sectors particularly vulnerable to VAT fraud. first steps have already been taken in this direction.
There was a message on the MF website announcing the Government's acceptance on 7 May 2018 Proposal to the European Commission (EC), which will allow Poland to apply a mandatory split payment mechanism. The basis for the application is Article 395 Directive 2006/112 on the common system of value added tax.
If the proposal is accepted by the European Commission and subsequently by the Council of the European Union, Poland could apply a mandatory split payment mechanism in VAT already in 2019 As indicated by the Ministry of Finance, the VAT settlement obligation would then only apply to transactions currently covered by the reverse charge mechanism and joint liability, i.e.
those sectors where significant VAT fraud has been identified, such as the steel industry, electronic equipment or the construction industry.
Domino effect
We recommend training in Split Payment
In recent days, the Lotus pages reported that from 1 July 2018 any payments made by Lotos Capital Group companies on the basis of purchase invoices shall be made on a split basis. Perhaps it is the idea of the rulers to "infect" the market by split payment through the State Treasury companies.
It should be noted that the main drawback of this mechanism, to which entrepreneurs pointed out from the beginning, is the loss of liquidity. It could quickly turn out that the entrepreneurs to whom the split payment was applied will start paying their suppliers with it. The taxpayer will have to choose either to apply to the U.S.
Warden to exempt funds from the VAT account or to pay VAT on its own, resulting from purchase invoices using split payment. Presumably entrepreneurs will choose this second option, due to smaller formalities and time savings. This can trigger a domino effect in the economy.
Thus the split payment mechanism, although voluntary for now, can spread fairly quickly. I wonder if other companies of the Treasury will follow the route set by Lotos.
Author:
Marcin Kołkowicz
Tax advisor, tax consultant at Russell Bedford Poland Sp. z o.o., graduate of the Administration, Management and Marketing of the Catholic University of Lublin named after John Paul II. The subject of tax law deals with from 2012. He gained experience in Lublin and in Warsaw tax advisory offices. Author and co-author of many tax publications, in particular for Tax and Tax Portal TaxFin.pl. In his career, he dealt with both direct and indirect taxation issues, with particular emphasis on VAT.