VAT split payments in Poland – latest changes

Last 27 October, the Polish Parliament approved the Finance Bill of 2018. 

1 December, 2017

As a result, some adjustments regarding the introduction of the VAT split payments mechanism on B2B domestic transactions as from 2018 will be introduced.

What are the changes?

The most notable change is that implementation deadline was postponed until 1 April 2018. The entry into force of the mechanism was planned in principle for January next year. However, due to changes and infrastructure required by banks to adapt their systems, the parliament finally delayed this date until April 2018.

The rest of the amendments are related to the mechanics and practical implementation of the VAT split payment.

According to the Finance Bill, amounts included in the VAT bank account not allocated for the payment of the tax may be withdrawn within a period of 60 days (initially the period was 90 days). Furthermore, it will also be allowed to use the split mechanism when only part of the total invoice amount is paid. This is something that was not allowed in the previous proposal.

The government also indicated that opening a VAT bank account cannot generate any additional bank charges to taxpayers.

In addition, as we announced earlier, those taxpayers who are opting for the split VAT payment mechanism will benefit from some advantages regarding their VAT compliance obligations. Among them, VAT refunds will be received as early as 25 days from the moment the VAT is transferred to the VAT bank account. The penalties are reduced where most input VAT is ´paid´ with this system; joint tax liability of the customer is cancelled when supplying certain goods such as IT equipment, fuel and others; and there is an extra repayment for payment VAT earlier than the statutory deadline.

What is the VAT split payments mechanism about?

Under the VAT split payment mechanism, VAT is not collected by the supplier and then paid to the tax authorities. Instead, the customer pays the VAT element directly to the tax authorities, hence avoiding the output and input VAT mechanism.

This mechanism significantly reduces VAT fraud in transactions, reason why countries like Italy or Romania have already implemented it.

VAT split payments in Poland


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