Mandatory split payment since September 1, 2019?

Update the effective date of split payment: 1 November 2019

 

On 16 May this year, a bill amending the VAT Act was submitted to public consultation. From 1 September 2019 split payment becomes obligatory for payment of invoices for particular groups of goods with a value of more than 15000 PLN.

The obligation applies to the purchase of fuels, computers, car parts, construction works, and other items listed in Appendix No. 15 to the bill. Thus, the necessity to adjust transfers will cover a much larger group of entrepreneurs.

However, the obligations do not only apply to the buyer. When issuing a sales invoice for goods and services covered by the mandatory split payment, the seller is obliged to inform the buyer of the need to use it with the note „split payment mechanism”. The new rules, therefore, entail a significant adaptation of the IT systems.

For not complying with the obligations, penalties will be imposed on both counterparties. The buyer, for not applying the split payment, is threatened with a high fine for a fiscal offense. For the lack of an annotation of the obligatory split payment, the penalty for the Seller may amount to 100% of the tax indicated on the invoice.

In addition, it won’t be possible to include payments without mandatory splits as tax-deductible expenses. All this is to prevent fraud in the trade in goods and services covered by the reverse charge mechanism and joint and several liabilities in Poland.

The new legislation on split payment does not only mean additional restrictions. There are also significant changes in the execution of the payment itself. So far, a split payment transfer message could only refer to one invoice. From 1 September this year, it’s planned to make a collective split payment for invoices received in a given period of time, however, this period cannot be longer than one month. By adjusting the payment method, taxpayers will be able to limit the number of transfers.

However, the greatest convenience for taxpayers is a possibility to use the funds accumulated on a bank VAT subaccount to pay, among others, income tax, excise tax, customs duties, or debt to Social Insurance Institution. It will certainly improve the liquidity of many companies.

An open question is the impact of planned changes in split payment on reporting and SAF-T structures. This subject is still covered by the Ministry of Finance. We’ll monitor all changes in the SAF-T structures on an ongoing basis.