From the 1 of November 2019 were introduced changes to the operation of the split payment mechanism, which concerns VAT. For some groups of goods and services, use of this mechanism will be mandatory!
What is split payment?
Split payment is a mechanism allows you to deal with stretching VAT payments by entrepreneurs. SPM consists in the fact that the net amount goes to one company account, and the VAT amount - to another account, called the VAT account. This account can be used mainly for:
- VAT payments;
- payment of another taxes;
- payment of social security contributions.
The VAT account can only be kept in the Polish currency (PLN). This requirement significantly limits the ability to pay contractors in other currencies. In addition, innovation significantly limits foreign entrepreneurs who are VAT payers in Poland. Now Polish contractors will be able to pay (if the sales invoice includes Polish VAT) only to an account in PLN with a Polish bank and MANDATORY from the “White list of taxpayers”. Payments to bank accounts in other countries will not be possible, because white taxpayer accounts are only possible if the current account is opened only in a Polish bank.
How does SPM work?
The split payment mechanism, as a voluntary decision, began operating on July 1, 2018. From that day, the buyer decides whether to use this mechanism or not. If the buyer wants to use the split payment mechanism, the seller has no right to refuse him, and the buyer pays indicating net and gross amounts, invoice number and tax data of the recipient. In this payment format, the bank automatically divides the payment into net / gross and adds the amount of VAT to the entrepreneur's VAT account.
Money in the VAT account should be transferred only in PLN, and in the information about the transfer should be entered:
- VAT invoice amount;
- Gross sales amount;
- Invoice number;
- Service provider's / reseller's tax identification number.
Split payment mechanism - what changes have occurred?
According to the innovations of November 1, 2019, when selling certain goods and services worth over PLN 15,000 gross, the payment distribution mechanism is mandatory. From September 2019, the so-called "VAT White List" became effective. This LIST will contain information about registration, cancellation of registration and the status of the VAT payer, as well as bank account numbers of entrepreneurs.
Only billing accounts can be placed on the “White list of taxpayers”. This eliminates the process of split payment mechanism for savings accounts. If the contractor sends money to an account other than the one indicated on the White list, and the amount exceeds 15 000 PLN, he will not be able to indicate this amount in the expenditure line, which reduces the tax base to calculate income tax. Therefore, in order to avoid unpleasant consequences, it is necessary to check whether the account of the contractor is on the white list next to each SPM.
The division of payments is required for domestic sales services, construction services and goods, which until now were not jointly and severally liable. Among other things, spare parts and accessories for cars, coal products or televisions, as well as energy.
For split payments, the seller and recipient must be VAT payers. The seller and the buyer must have a company bank account, because you cannot open a VAT account for private savings accounts.
Penalties for not using SPM
You should remember! When invoicing, it is necessary that invoice to contains a "split payment mechanism" indication, as its absence may lead to a significant fine - 30 percent of the tax liability indicated on the invoice. Seller can avoid this penalty if the buyer pays the full amount, in accordance with VAT, in a split payment system.
Lack of wording does not release the buyer from the obligation of separate payment - for non-compliance with the split payment mechanism a fine of 30% of the VAT amount on the goods and services purchased will be imposed.
In the document explaining the draft amendment, the Ministry of Finance indicated that the buyer should know which product / service is the subject of the transaction, because the buyer initiates the payment and is responsible for choosing its form. The buyer cannot rely solely on the information of the seller who can try to avoid payments according to the split payment mechanism.
An invoice without the "split payment mechanism" mark may be corrected by the seller and a corrective invoice may be issued. The buyer, seeing the lack of marking on the issued invoice, may issue a corrective note and forward it to the seller.
The subject of the split payment mechanism is quite new and there are many unclear and unresolved issues. To avoid unpleasant business practices, we recommend you consult with accountants and approach to the matter with responsibility.
Ignorance of the law is no excuse!