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Poland: Fundamental change to Polish VAT due January 1 2018

11 July 2017

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Tomasz Michalik Maria Kotaniec

In May 2017 the Minister of Finances published a new project of quite fundamental change of the VAT Act. The project introduces a voluntary mechanism of a split payment scheme in B2B relations. The new regulations are supposed to enter into force on January 1 2018. With the split payment, the government aims to reduce VAT fraud and consequently increase tax revenues.

The naming of the mechanism as "voluntary" may be quite misleading as it is the purchaser who will decide, on their own, whether to use the mechanism or not. The supplier (invoice issuer) will have no influence on the application of the split payment.

The planned split payment mechanism will allow companies to transfer the net amount resulting from an invoice to the supplier's standard bank account and the equivalent amount of the output VAT to the specific VAT account. According to the draft, banks will be obliged to set up a new bank account, called VAT account, for every taxable person in order to allow the purchaser to choose the split payment mechanism or the traditional payment. The money collected on the VAT account of the taxable person will be owned by this taxable person but their right to use them will be limited – in principle the taxable person will be allowed to freely use this to transfer funds to another VAT account or to settle their VAT obligations. In order to use it for other purposes, the taxable person will have to apply for the permission of the head of the Tax Office. The head of the Tax Office will have 90 days to consider the request and make the decision – which is completely discretionary. This is one of the major weaknesses of the proposal.

The purchaser will be entitled to choose the split payment mechanism or to pay the total invoice amount directly to the supplier of the goods or services. In order to encourage customers to use a split payment, the draft provides for some important benefits – any taxable person opting for this type of payment would be exempted from other anti-fraud mechanisms, for instance being jointly and severally liable for the supplier's tax obligations or being punished with additional penalties – sanctions applicable since the beginning of 2017.

The consultations on the proposal are ongoing and there are opinions according to which introducing the split payment mechanism will result in restricting the taxpayer's ownership right and limiting the ability to dispose of the taxpayers' funds. The Minister of Finance believes that due to the "voluntary" character of the split payment introduction of this mechanism does not require any consultation with the European Commission.

Tomasz Michalik ( and Maria Kotaniec (
MDDP, Poland
Tel: +48 22 322 68 88

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