As always, we follow all news in law closely. We observe not only environmental regulations. Due to numerous inquiries we receive from our contractors, we feel obliged to raise a topic that is becoming louder with the help of the Internet and social media. The Ministry of Finance is planning major changes aimed at “sealing” VAT. They can turn out to be a real revolution, especially for small and medium-sized companies. In addition, it turns out that these changes are already scheduled for September this year. This is about changes in the VAT Act. The new rules will impose an obligation to use a split payment mechanism, the so-called Split payment, in some sectors of economy indicated by the act. This mechanism is to replace the current reverse charge mechanism as well as the tax liability of the buyer. Split payment method – what is it? In the split payment method, payments for liabilities that result from an invoice are made into two separate bank accounts. The net amount determined by the seller is paid to his bank account (or it pays in a different way), while the VAT value resulting from legal regulations is charged to a special VAT account of the seller or service provider. This account is assumed for every VAT taxpayer by banks or credit unions. According to the law (Article 108b paragraph 1), an entrepreneur may apply for transfer of funds from the VAT account to a bank account in order to be able to freely dispose of them for the needs of the business. However, it is necessary to submit an appropriate application in which you must specify the amount that we apply for. Such an application is considered by the Tax Office competent for its activity, and its director issues a decision with the decision within 60 days of receiving the above-mentioned application. The bill amending the VAT Act shows that the above mechanism will have to be obligatorily applied by entities that at the moment are obliged to apply the reverse charge mechanism. Thus, it will cover goods and services listed in Annex No. 15 to the VAT Act.
Who will specifically include the new rules?
The obligation to use split payment will apply to goods and services that have been indicated in Annex 15 added to the VAT Act. According to it, companies dealing in the trading of non-hazardous metal-containing wastes, which are listed as code 184.108.40.206, are also obliged to incorporate the new regulations into force on 1 September this year. From that day, the split payment will also cover transactions involving parts and accessories for motor vehicles, coal and coal products as well as electrical machines and devices (electrical parts and accessories). Entities that have not been listed in the above-mentioned Annex and will not include their amendments, which will come into force on September 1, 2019, will be able to use the distributed payment on a voluntary basis.
Payments exceeding PLN 15,000 The obligation to use split payment will apply to all payments for transactions exceeding PLN 15,000, regardless of the number of payments resulting from it. If the transaction does not exceed this amount, then it will be settled on general principles, and the split payment method can then be applied voluntarily. The amount of PLN 15,000 is also the limit value above which the payment via a bank account should be settled. The appropriate annotation on the invoice and possible sanctions When using the split payment method, it will also be necessary to include the appropriate sign in the form of the “split payment mechanism” information. In the absence of the above indication on the invoice, the legislator provides for a financial penalty in the amount of 100% of the VAT amount indicated on the invoice. This is important information for the buyer of goods or services on how to make a payment. According to the Ministry, this designation is of particular importance, because in the absence of it, irregularities may occur.
In order to circumvent dishonest practices of suppliers, it is planned to introduce an order to accept payments in the split payment mechanism, if it results from an invoice.
This applies, for example, to the use of savings and billing accounts for settlements, or the possible provisions of the seller with the buyer, which are to lead to the omission of the split payment method. Funds accumulated on the VAT account If the draft amendment of the current law does not change, then the funds that have influenced the separate VAT account may be used not only to pay tax to the state, but also to pay income tax, excise tax, ZUS contributions and even customs duties. Opinion of entrepreneurs Despite the possibility of paying the above fees from the VAT account, most entrepreneurs are skeptical about the changes. Many of them are afraid of financial liquidity disruptions, which result from limited access to resources that could be used on an ongoing basis for the needs of their business.
Experts are alarming in addition that it is not possible to prepare accounting software so quickly and efficiently. Software development companies for finance and payroll departments need at least a quarter to be able to implement changes and test modified programs. Entrepreneurs also postulate that the changes should be implemented only by January of the next year, in order to have time for proper preparation for the new payment system. The Sejm is already at today’s meeting to deal with the fine-tuning of the bill. New regulations also outside of Poland The obligation to use a split payment will also apply to entities that do not have their registered office in our country, but must settle VAT on goods or services that are subject to such a duty. In connection with the above, these companies will have to have two separate accounts, including a VAT account, which will be run on the basis of Polish banking law. However, it is planned to introduce a compensation system for this part of taxpayers who does not have a registered office in Poland. They would receive a refund for handling the invoice account and VAT account. The latest news on changes in the law can be found in the news section on our website. UPDATED ARTICLE dated 22.07.2019: The Sejm has passed the draft of the act described. It will come into force on November 1, 2019. From that day, the split payment will be mandatory for selected goods and services, if the transaction is higher than PLN 15,000. 420 members voted. Only 5 of them were opposed.