Poland has delayed the launch of its mandatory split payment mechanism for selected goods and services from 1st September 2019 to 1st November 2019.

As of this date, the procedure will become mandatory in certain fraud-sensitive industries, like electronics, steel products, scrap, construction and coal. These rules will also apply to non-residents.

The split payment method will only apply to transactions made between taxpayers (B2B), which are subject to VAT in Poland and above a value of PLN 15,000 that are paid for by means of bank transfers.

The mechanism requires supplying businesses to open a separate “blocked VAT bank account”, into which their customers must pay the VAT amount applicable to the bought goods and services. The money in this VAT account could be used to pay VAT to the tax authorities, to suppliers and to settle other tax liabilities.

Invoices for transactions covered by the new regime will have to mention “mechanizm podzielonej płatności” (split payment); otherwise a 30% penalty of the VAT due will apply.

Initially Poland was authorised by the Commission to introduce this measure from 1st March 2019 .

The reason that the effective date has been pushed back is to give impacted businesses an extra two months to identify how their transactions may be affected and to make the necessary changes to their ERP /accounting systems. Importantly, they need to open their VAT accounts in time for the deadline.

Contact our VAT experts now and find out how this change could affect your business.

By |August 12th, 2019|