POLAND FIGHTS AGAINST VAT FRAUD

On July 1st 2018 Poland implemented a set of new rules over SPLIT PAYMENT.

This concept called split payment is a mechanism consisting on splitting payments for goods or services into the net amount, which is paid by the purchaser to the seller’s bank account and the VAT amount which is paid to the seller’s other bank account – so called VAT account.

For now applying the split payment mechanism will be voluntary until December 31st 2018. The initiative of this matter should belong to the purchaser. It also can be applied selectively – it is the purchaser’s choice which invoice they want to pay that way.

The new rules oblige banks and credit unions to provide their entrepreneur-customers with the VAT accounts to every account they have in PLN. The money held in the VAT account will belong to the tax payer although they will have it at limited disposal. The tax payer will be able to spend the money on particular purposes specified in the legislation, e.g. to pay VAT to the tax office or to pay the contractor the equivalence of the VAT amount from an invoice received from this contractor.

Each single rule sets a different deadline for VAT refund depending on the type of the bank account, to which the refund is supposed to be transferred. These are two of the options:

• 25 days from the date of submission of the VAT return along with a request to return the money to the VAT account. That request can be presented by any tax payer regardless of whether the invoices are paid with the split payment mechanism.
• 60 days from the date of submission of the request to transfer the money held in the VAT account to a specified bank account. Transferring money from the VAT account to a regular account provides the tax payer with an easier disposal. The request must contain a specified amount that is supposed to be transferred.

In addition, they also provide split payment users with some incentives: limitation of joint and several liabilities, reduced default interests and faster VAT return.

Nevertheless, it could also represent a potential threat for the cash flow of small businesses working at a low operating margin, for which it might be a problem to have their money locked on a VAT account. Money transferring will take much longer and some difficulties might occur while exporting or importing such payments to any accounting or banking software.

As adminex Polska we provide the needed tools and counselling in order to avoid the possible difficulties generated by split payment and also take profit from the perks of this mechanism.

As for today, the split payment mechanism is only voluntary, but it is the government’s plan to make it obligatory in 2019 -starting from the construction industry-, so in the near future it will be necessary to have a plan of action with this issue when operating in Poland.