Tax Focus 2019 | Upcoming changes in the area of VAT settlements soon to come into force

Updated: 11-10-2019
Updated: 30-08-2019

Dear ladies and gentlemen,

We would like to draw your attention to a broad package of changes in the area of VAT settlements, which should come into force in the second half of 2019. Some of the changes (concerning the mandatory application of the split payment VAT) concern only selected industries/sectors, while others concern all VAT taxpayers.

The tax advisors of Accreo, in co-operation with getsix®, have prepared for you a brief summary of the upcoming changes, which can be found in the appendix. We recommend that you familiarise yourself with the changes and plan the process of introducing appropriate VAT procedures as soon as possible. We are ready to support you with this process, both in theory and in practice.

If you have any further questions, please do not hesitate to contact us.

White Paper

On 27th May, 2019, the President signed a draft amendment of the Act establishing the white list of VAT payers. The Act will come into force on 1st September, 2019.
The White List of taxpayers will include information concerning:

1. registration;
2. deregistration;
3. VAT payer’s status; and
4. numbers of bank accounts of the entrepreneurs registered for VAT purposes in Poland into which payments for their invoices should be made.

Counterparties can be found on the basis of their tax identification number (NIP) and a fragment of the entity’s business name or person’s surname.

You should remember that any sums in excess of 15,000.00 PLN transferred to bank account numbers other than those on the White List will not be deemed as tax deductible expenses. This sanction, however, will not be introduced until 1st January, 2020 (like the proposed sanctions for omission to apply the mandatory split payment mechanism – which is discussed below).

It also matters whether a bank account was on the list on the date of transfer. This is why the effective date of transfer will be the date on which the transfer was ordered rather than the date on which the buyer’s account was debited.

However, there are exceptions to the above rule. In a situation where taxpayer makes an error, they will be able to classify amounts in excess of 15,000.00 PLN that were paid into other bank account(s) as tax deductible expense, in the event that:

• the taxpayer notifies their tax office that they made payment to an account other than the one on the white list within 3 days;
• the payment is made using the Split Payment mechanism.

The White List will be published:

• in the public bulletin of the Ministry of Finance, and
• in the Central Business Activity Records and Information Office (CEIDG).

Compulsory Split Payment

The Split Payment mechanism will be introduced for specific industries starting from 1st November, 2019. Currently, the Split Payment mechanism has been functioning within Polish law on a voluntary basis.

The assumptions of the project:

• Taxpayers settling their accounts on the basis of invoices (B2B) where the transaction value equals at least 15,000.00 PLN (regardless of the number of payments arising from it) are obliged to use the compulsory Split Payment mechanism.
• The 15,000.00 PLN limit of transaction value will only apply to a single invoice, and the value of invoices will not sum up.
• It is possible to make collective transfers using the Split Payment mechanism in the event where the taxpayer has received more than one invoice from a single supplier or service provider within a period of at least one day and not longer than one month, whereby each such invoice should amount at least to 15,000.00 PLN.
• For amounts lower than 15,000.00 PLN, general rules of the settlement of accounts taxed with VAT will apply; to this end, a voluntary Split Payment may be applied.
• Taxpayers who are foreign entities who settle transactions taxed with VAT using bank transfers, will be obliged to have separate bank accounts.
• The level of joint and several liability borne together with the supplier of goods on account of failure to pay VAT will decrease.
• The institution of the guarantee deposit will be cancelled.

The obligation to apply the Split Payment mechanism will among other things apply to¹:

• Steel products, precious metals, non-ferrous metals,
• Waste, scrap, recyclable materials,
• Electronics – including in particular: processors, smartphones, telephones, tablets, notebooks, laptops, game consoles, inks, toners, hard disks,
• Fuels for motor vehicles, fuel oils and lubricants,
• Rights to greenhouse gas emissions,
• Construction works,
• Coal,
• Trading of car and motorcycle parts.

Therefore, the obligation to apply the reverse charge mechanism will be replaced with the Split Payment mechanism.

Sanctions:

• As a result of a failure to provide information about the application of the compulsory Split Payment mechanism by issuer of an invoice the issuer will be charged with an additional tax liability in the amount equal to 100% of the amount of tax specified on that invoice.
• A recipient of invoice who fails to make specific payment while applying the Split Payment mechanism will not be entitled to treat the costs on the invoice as tax deductible expense for the CIT/PIT purposes (the latter shall only apply as of January 2020).

Amendments that are favourable for taxpayers:

• Possibility to pay other tax liabilities, customs duties or social insurance contributions from the VAT account.

Possibility to make a transfer (using the Split Payment) for more than one invoice in a single bank operation.

We will be keeping track of the legislative work and keep you informed of any changes in this respect.

If you have any further questions, please do not hesitate to contact us.

The information contained above is of a general nature and does not concern the situation of a specific company. Due to the speed of changes occurring in Polish legislation, we kindly ask you to determine, on the date of this information, whether it is still up to date.

¹All goods will be listed in new Annex No 15 to draft Act, whereby the existing Annexes 11, 13, and 14 will be repealed.

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