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Poland Launches Consultation On VAT Split Payment Mechanism

Wednesday, June 5, 2019

On May 16, 2019, Poland's Ministry of Finance launched a public consultation on proposals to introduce a VAT split payment mechanism on a mandatory basis for certain suppliers.

Under the split payment mechanism, when a taxable person acquires goods or services from another taxable person, the portion of the payment to the supplier that is VAT will be deposited separately and automatically to a dedicated account of the seller (an r-VAT account), to satisfy the VAT required to be remitted to the tax agency. The net amount for the transaction will be received by the seller. The amount deposited in a r-VAT account will earn interest for the vendor and may be used to satisfy its VAT obligations.

Poland introduced a split payment mechanism on a voluntary basis on July 1, 2018. However, the Government considers that the introduction of a mandatory split payment mechanism is necessary to combat VAT fraud.

The VAT split mechanism will apply to B2B supplies only where transactions are PLN15,000 (USD3,890) or more. Supplies subject to the mandatory VAT split mechanism include certain metals, electronics, jewelry, waste, fuels, and construction works, among others. However, taxpayers may also continue to use the mechanism on an optional basis.

According to the draft law, it is intended that the measures will be effective from September 1, 2019.

Comments must be submitted by June 6, 2019.