For transactions regarding goods and services listed in Annex No. 15 to the Polish VAT Act the split payment method is obligatory.

The split payment procedure consists in dividing the invoice payment into two parts: the VAT amount or its part subject to split payment is transferred to the seller’s special VAT account, while the remaining invoice amount is transferred to his settlement account. The amount of VAT must be paid in Polish zlotys, while the net amount can be paid in any currency.

Conditions for the obligation to use split payment 

Split payment is obligatory provided that the following conditions are met jointly:

• the invoice contains the amount of the Polish VAT,
• gross invoice value exceeds the amount of PLN 15,000,
• at least one invoice item relates to a good or service listed in Annex 15.

The above also applies to payments made prior to the delivery of goods or the performance of services (prepayments, advances, deposits, instalments).

The invoice subject to the split payment mechanism should bear the words: “mechanizm podzielonej płatności” (“split payment mechanism”).

The Annex No. 15 to the Polish VAT Act covers, among other, fuel, construction services, transfer of CO₂ allowances as well as transactions related to:

• parts and accessories for motor vehicles,
• coal and coal products,
• electrical machinery and equipment, their parts and accessories, and
• electrical devices and their parts and accessories.

Exceptions

Exceptions to the above rule apply to: 

1. set-off - the split payment procedure does not apply to the extent that the amounts due will be set off,
2. making the payment of the amount of receivables resulting from the invoice documenting transactions carried out in performance of the public-private partnership agreement, if the entity to whom the payment is made was as of the date of the performance of the delivery a private partner with whom the public entity concluded a public-private partnership agreement, or a sole proprietorship of a private partner or capital company, whose only shareholders are private partners with whom the public entity has entered into a public-private partnership agreement.

In other cases, the split payment method is voluntary. Its use is decided by the buyer, the consent of the seller is not necessary.

Sanctions

• Issuing an invoice without the indication “split payment mechanism” results in the determination of an additional tax liability amounting to 30% of the amount of tax subject to split payment. Still, there is no sanction if the buyer performs a payment using the split payment mechanism.
• A sanction amounting to 30% of the amount of VAT covered by split payment also applies to the buyer who, despite the obligation, does not perform a payment in the split payment procedure, unless the supplier or service provider settles the entire amount of tax resulting from such an invoice in the submitted tax declaration.
• A buyer who has not complied with the split payment obligation shall be jointly and severally liable with the seller for his tax arrears in the part proportionally corresponding to the delivery performed to him.
• A buyer, who despite the indication “split payment mechanism” made the payment without this mechanism, from 1.1.2020 cannot classify the amount paid as tax deductible costs.

Bank account

• For the purposes of split payment special VAT accounts are automatically opened by the banks in Poland. They can be associated only with settlement accounts within the meaning of Polish banking law, covered by the so-called STIR system.
• The obligation to apply the split payment procedure forces those selling or purchasing goods or services listed in Annex No. 15 to have a settlement account kept in the Polish currency at a bank with its seat in Poland. This also applies to foreign entities without a registered office or permanent place of business in Poland, participating in trade with such goods or services.

Payment

• Payments in the split payment mechanism may apply to a single invoice, all invoices from a period not shorter than one day and not longer than one month or an advance payment.