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What’s split-payment and why it is so important for future company owners (especially before 1 November)

split payment foreigners

Ladies and gentlemen,

More and more often you hear the term split payment. Some of you are also wondering – what is it?

Well, split-payment is nothing more than a split payment mechanism. Under Article 108a of the VAT Act, taxpayers who have received an invoice with the amount of tax shown may use the split payment mechanism to pay the amount due under that invoice. 

In short, it means that the amount shown on the VAT invoice is divided into two parts. The amount paid for goods or services is credited to a regular account (of the entrepreneur). The amount that constitutes VAT (23% from the entire amount) is transferred to a special VAT account.

As of today, a divided payment, the so-called Split payment, is completely voluntary. It should be borne in mind, however, that as of 1 November 2019, a divided payment will be obligatory in the case of making by an entrepreneur so-called sensitive purchases, the value of which will exceed 15 thousand zlotych (15 000 zł). Pursuant to the provision of Article 108a(1a) of the VAT Act, in force since 1 November:

When making payments for purchased goods or services listed in Annex 15 to the Act, documented by an invoice in which the total amount of receivables is the amount referred to in Article 19(2) of the Act of 6 March 2018. – The law of entrepreneurs (15 000 zł), taxpayers are obliged to apply the mechanism of divided payment.

What are sensitive purchases?

These will be examples:

– electronics (smartphones, tablets, laptops, etc.);

– Writing inks;

– investment gold;

– precious metals;

– construction works.

However, these are only a small part of the goods and services (out of 150) listed in Annex 15 to the VAT Act.

What effect will split payment have on foreign companies?

The introduction of split payment will have a particular effect on foreign companies that do not operate regularly in Poland. From 1 November 2019, they will be obliged to have a PLN account in Poland. This applies, of course, to those companies that are VAT payers. It will be all the more troublesome as the current regulations aimed at preventing money laundering introduce numerous regulations that may be troublesome for business owners. For example, this is a regulation that indicates that the bank account agreement has to be signed by members of the management board.

Another problem is that split payments can only be made in Polish zlotys, and not in dollars or euros, which are today a common currency in economic transactions.


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