Do you know everything about split payment?

The latest changes in VAT settlements by Polish entrepreneurs are coming striding.

From 1st July, the regulations concerning the so-called split payment come into force, i.e. paying invoices in two parts – the net value is transferred to the main account and the VAT tax to a special account set dedicated to this purpose.

Although settlements through this system are voluntary, they may affect the companies’ financial liquidity.
Below you can find a list of questions and answers that address the unobvious issues related to these regulations:

Can the split payment be transferred to the personal account?

After the changes enter into force, the divided payment made into a personal account will be returned by the bank of the payee to the account of the person ordering. It will, therefore, be necessary to have a company account.

Can split payment be used for cash or card payments?

For the time being, there is no information about the possibility of using this procedure in forms of payment other than a bank transfer.

Who decides whether a payment will be made using the split payment procedure?

Whether or not the payment will be split will be decided by the purchaser, and this decision will make conditional their company’s financial impact. The seller of goods or services will have at their disposal an amount reduced by the amount of VAT, i.e. net salary.

Can each payment be split?

The split payment may only be used for transactions carried out on behalf of other VAT payers. It cannot be used in B2C sales.

What are the benefits of split payment?

It may seem that this procedure is only a hindrance for businesses, but there are also some positive aspects, such as:

• Showing the agency that company made a proper effort to show that it settles up properly,
• Common responsibility law doesn’t apply to the split payments,
• In case of the tax refund, the transfer to the VAT account is made much faster – within 25 working days.

How many VAT accounts will be opened for each taxable person?

In this case, the principle of one VAT account per bank applies – even in case of having several current accounts in one bank.

Does split payment increase operational costs?

As there is no possibility of collective transfers for several invoices, each of them has to be paid through a separate bank transfer. For example, in the case of 10 invoices, 10 transfers have to be made, which causes higher bank charges.

Will the VAT account bear interest?

Interest on the funds accumulated on the VAT account will be registered on the basic account of the entrepreneur. The interest rate depends on the bank and should correspond to the percentage of the base account.

Is it possible to reduce taxes in case of the early payment?

It is possible to pay VAT earlier than required. In this case, the entrepreneur may pay a smaller amount, calculated under the formula published by the Ministry of Finance.

Will these regulations also cover transactions in foreign currencies?

Currently, there is no possibility of doing it. The split payment method is available only to entities that have a bank account in PLN.