The Polish Ministry of Finance has recently published a bill amending the VAT Act and some other acts, providing for the introduction of a mandatory split payment model for certain transactions from September 1 2019.
The introduction of a mandatory split payment mechanism in Poland results from the derogation decision of the Council of the European Union Poland No. 2019/310. The decision provided that Poland should introduce an obligatory split payment by February 28 2022. Nevertheless, the above required the adoption of Polish legislation.
The bill provides that the mandatory split payment mechanism will apply in particular to supplies of goods and services that are subject to the reverse charge mechanism in Poland, as well as some others, as follows:
- Steel products and scrap;
- Construction services;
- Consumer electronics (computers, telephones, TV sets, etc.);
- Motor fuels;
- Coal products; and
- Automotive parts and accessories.
Payments using the split payment mechanism will apply to invoices documenting transactions made between taxpayers (B2B) with a one-off value exceeding PLN 15,000 ($4,000).
Failure to meet new obligations will result in serious sanctions such as:
i) VAT sanction of 100% of the amount of the tax disclosed on the invoice may be imposed on the invoice issuer just for failure to include, on the invoice, the notice 'split payment mechanism' as well as on the purchaser of goods/services who will not make the payment of VAT from the invoice in the split payment mechanism despite such an obligation;
ii) exclusion of the expense from tax deductible costs in corporate or personal income tax settlements; and/or
iii) a fine from the penal fiscal code of up to PLN 21 million.
Although the bill has set out an effective date of September 1 2019, one cannot exclude the possibility that amendments will be postponed. Legislative works on Polish mandatory split payment regulations have still not been completed and the bill may not be adopted before summer break.
Surely, though, the so-called white list of VAT taxpayers will come into force in Poland by September 1 2019. The white list will have an electronic form and include, among others, bank account numbers of VATpayers.
According to the amendments, payments exceeding value of PLN 15,000 made to bank accounts not included in the list cannot be treated as tax deductible from a personal or corporate income tax perspective and will result in joint liability for VAT obligations of the supplier.