The decision whether to make the payment by using split payment will be left to the purchaser. However, the parties are free to make any arrangements. For example they can choose that the payments should be made without usage of the split payment regime.
Split payment procedure
The split payment procedure would be as follows:
- Polish banks will automatically open special/additional bank account called ‘VAT account’ for every business Client that has an ‘ordinary’ bank account in PLN. Opening and holding of the VAT account will be free of charge. So all banks should allow its customers to use the split payment mechanism.
- The customer will have a possibility to either pay the supplier:
a. without usage of the split payment regime, i.e. the gross amount will be transferred to the ‘ ordinary’ bank account,
b. using split payment mechanism that means that net amount will be paid to the supplier’s ‘ ordinary’ bank account and the VAT amount to the supplier’s VAT account.
- The supplier will be able to use the amount of VAT held at the VAT account in two cases:
a. To pay VAT to its suppliers if this payment is also made using the split payment mechanism; it means that it will not be possible to use the VAT amount held at the VAT account to pay net amount of the invoice to ‘ ordinary’ bank account; the amount of VAT kept at VAT account may only be used for VAT payments to the VAT account of other entity,
b. pay the VAT due resulting from the VAT return; if the payment is effected before the deadline, the supplier will be authorized to pay a little less than resulting from the VAT return (at present it is 0.0041(6) % for every day before the deadline.
- The Company that would have any money at its VAT account and would like to transfer this amount to its ‘ordinary’ bank account has to ask the Polish tax authorities for permission. The tax authorities would have 60 days to decide upon this request.
- The main benefit for the purchaser to make the payment using the split payment mechanism would be lack of so called additional sanctions if it turns out that the VAT settlements were incorrect. This benefit is however limited up to the amount corresponding to the VAT amount resulting from the invoice received and paid using the split payment mechanism.
- On the other hand using split payment may create some negative cash flow implications for the suppliers, who must pay their vendors without usage of the split payment mechanism. In such a case supplier would get only net amount at its ‘ordinary’ bank account and VAT amount at its VAT account and would be liable to pay to its vendor the gross amount to the ‘ordinary’ bank account.
No special arrangements necessary
Based on the rule as published, companies do not have to make any special arrangements with the banks in terms of opening VAT account. This because it will be done automatically, in case of course they already have a bank account in PLN with the Polish bank. At this stage we advise to:
- make arrangements with your vendors and customers in order to determine whether and if yes in which cases the split payment mechanism would be used;
- adjust the accounting schemes used in a company and be prepared for additional bookings concerning amounts on the VAT account if applicable.
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