The amendment of the Polish VAT Act, in force since September 1 2019, introduced regulations on the electronic database of taxpayers registered for VAT purposes in Poland (the so-called 'white list', or 'e-register'). The rules constitute further actions aimed at eliminating VAT fraud.
The white list is an online register of VATpayers containing contractors' business information, for example: business name, address, VAT number (NIP), status as VAT registered or VAT exempted taxpayer, date of registration for VAT, and deregistration and re-activation for VAT purposes. The register makes it possible to verify VAT taxpayers' contractors' VAT status, which is crucial in defending an input VAT deduction effectively and carrying out due diligence (especially in the case of VAT fraud). The e-register will indicate up-to-date information on taxpayer status and will provide the ability to check a VATpayer's record for the preceding five years, which is helpful in the case of a tax audit.
Additionally, the white list contains the bank account numbers of all taxpayers. It will include all bank account numbers reported by taxpayers to the tax office (through the submission of NIP-8 or NIP-2 tax forms).
There is no explicit legal obligation for taxpayers to verify their contractors' bank accounts through the white list. However, the new rules indirectly impose an obligation to execute bank transfers using bank accounts published in the e-register, in respect of all business-to-business (B2B) transactions exceeding PLN 15,000 ($3,700) including VAT.
The sanctions for making payments to bank accounts other than those mentioned in the white list (at the date of bank transfer order) will come into force on January 1 2020 and will be as follows:
- For VAT: joint responsibility for output VAT not settled by the supplier (up to the VAT amount disclosed on the invoice);
- For income taxes (corporate and personal): the expenditure will not be treated as tax deductible costs.
The above sanctions are applied only when the payment: (i) is related to a transaction exceeding PLN 15,000 gross; (ii) is documented with an invoice (not any other document); and (iii) is related to the supply of goods/services made by an entity registered as an active VATpayer in Poland.
The sanctions can be avoided in two situations: when making a split payment transfer (only VAT joint responsibility will be cancelled); and in cases where a notification is submitted to a seller's tax office within three days after the bank transfer order is made (providing details of the bank account to which the payment was made).
The white list regulations may entail the following administrative burdens:
- Reviewing the vendors list in order to compare and confirm whether bank accounts entered in the system are the same as disclosed on the white list;
- Establishing dedicated procedures on the verification of bank account details; and
- Implementing additional internal controls at the stage of releasing the payments.
Based on experiences during the first few days after the white list was made available, we have noticed many 'gaps' and irregularities in the e-register. There are also many doubts regarding new regulations, such as in relation to: payments made to foreign bank accounts for invoices issued by foreign entities registered for VAT in Poland, payments made to 'virtual accounts' and escrow bank accounts, and payments made via special payment platforms (such as payU, BLIK and similar). The Ministry of Finance has announced that additional guidance on the new rules will be issued in the near future.