The split payment mechanism in Poland is a core tool in the country’s strategy to combat VAT fraud and improve tax collection. Introduced in 2018 and made mandatory in 2019 for specific high-risk transactions, this payment method splits the value-added tax (VAT) portion of a payment from the net value and deposits it into a separate, restricted VAT account. Now, with the EU Council’s approval, Poland has extended the mandatory split payment system through 28 February 2028.
This article explores the scope, functioning, legal framework, and practical implications of the split payment mechanism in Poland, and offers guidance for taxpayers, buyers, and vendors seeking to comply with the extended rules.
What Is the Split Payment Mechanism?
The split payment mechanism (SPM) modifies the traditional payment method for goods and services by separating the VAT amount from the net amount when the buyer makes a payment to the vendor. In practice, this is how the payment is split:
- The net amount (netto) of the invoice is transferred to the seller’s regular bank account.
- The VAT amount is automatically transferred to a special VAT bank account held by the seller at the same bank.
The mechanism aims to prevent VAT fraud, particularly carousel fraud, by ensuring that VAT is isolated and can only be used to settle VAT obligations or other public levies.
Scope of Application in Poland
The split payment mechanism applies to transactions that meet all of the following conditions:
- The buyer and seller are both VAT-registered taxable persons in Poland (B2B transactions).
- The gross value of the invoice exceeds PLN 15,000.
- The invoice covers at least one good or service listed in Annex 15 of the Polish VAT Act.
Annex 15 includes goods and services considered to be at high risk of tax evasion or VAT carousel schemes. Examples include:
- Electronics: laptops, smartphones, hard drives
- Fuel and energy: diesel, coal, natural gas
- Precious metals and scrap materials
- Steel and other construction materials
- Selected construction and renovation services
- Parts and accessories for vehicles
If these conditions are met, using the split payment system is mandatory.
Legal Basis and EU Approval
The Polish VAT Act, particularly Article 108a and Annex 15, forms the legal foundation of the mechanism. Initially adopted as an optional system in 2018, the mandatory split payment regime has since become a permanent fixture in high-risk sectors.
To introduce or continue a split payment system that diverges from the standard EU VAT Directive, a country must seek derogation from the European Union. In early 2025, the EU Council, upon request from the Polish Ministry of Finance, approved the continued application of the split payment mechanism through 28 February 2028.
The EU Council noted that the SPM had a proven effect in reducing VAT fraud, improving compliance, and stabilizing VAT revenues. Poland’s request was supported by evidence of decreased tax evasion and increased predictability in VAT settlements.
How the Split Payment System Works in Practice
Under the Polish split payment mechanism, the buyer initiates a bank transfer using a dedicated split payment format. The transfer includes:
- The invoice number
- The gross amount
- The VAT amount
- The seller’s VAT identification number
Polish banks automatically split the payment:
- The net value is sent to the seller’s regular account.
- The VAT amount is diverted into the special VAT account, which can only be used to pay VAT and certain other public liabilities.
This only applies to transactions in Polish zloty (PLN). For payments made in foreign currencies, the split payment is voluntary, not mandatory.
Use of Funds in the VAT Account
The VAT account is a restricted account maintained by the bank on behalf of the seller. The funds in this account cannot be used freely. They are designated for:
- Paying VAT to the Polish tax authorities
- Settling import VAT or customs duties
- Transferring VAT to another taxpayer’s VAT account
- Paying excise duties and other tax-related liabilities
Funds in the VAT account may be released for general use, but only upon formal request and approval by the tax office.
Benefits and Challenges for Taxpayers
Benefits:
- Reduces exposure to VAT fraud and carousel schemes
- Ensures compliance with Polish tax law
- Improves transparency in B2B transactions
- May result in faster VAT refunds
- Offers protection for buyers, as they can prove due diligence
Challenges:
- Liquidity constraints, as VAT funds are locked
- Increased administrative burden and training needs
- Need for ERP system updates to support correct invoicing and transfer formats
Despite the added compliance complexity, many businesses in Poland have successfully integrated the split payment method into their daily operations since 2019.
Penalties for Non-Compliance
Failure to apply the mandatory split payment when required can lead to severe penalties:
- 30% VAT sanction on the amount that was not paid via SPM
- Denial of input VAT deductions
- Potential fines and tax audits by Polish tax authorities
Both buyers and sellers can be held liable, so ensuring proper invoicing and payment processes is critical.
Voluntary Use of Split Payment
While certain transactions must use the split payment system, companies can also choose to use it voluntarily. Many businesses opt for SPM on a broader scale to:
- Secure their position during tax audits
- Avoid potential compliance risks
- Strengthen relations with public sector clients or large enterprises
Practical Tips for Using the Split Payment Mechanism
- Verify applicability: Check if the transaction meets the criteria for mandatory SPM.
- Ensure correct bank setup: Use Polish banks that offer SPM-compatible accounts.
- Provide clear invoice details: Include invoice number, buyer/seller VAT ID, and line-item breakdown.
- Use correct transfer message: Follow banking standards for split payment instructions.
- Track your VAT balance: Monitor locked funds in the VAT account and plan liquidity accordingly.
Looking Ahead: SPM Valid Until 2028
With the mechanism now extended until 28 February 2028, Polish businesses must continue to prioritize split payment compliance. It is highly likely that Poland will request a further extension beyond 2028, or even seek to make the regime permanent within EU legislation.
Summary Table: Split Payment Mechanism in Poland
| Element | Description |
| Name | Split Payment Mechanism (SPM) |
| Mandatory Since | November 2019 |
| Extended Until | 28 February 2028 |
| Applies To | B2B invoices > PLN 15,000 + goods/services from Annex 15 |
| Payment Currency | Polish zloty (PLN) |
| Involves | Net amount → regular account; VAT → VAT account |
| Legal Basis | Polish VAT Act, Article 108a; EU Council Derogation |
| Bank Requirements | Special VAT account for sellers |
| Buyer Obligations | Use of proper bank transfer messages and formats |
| Penalties for Non-Compliance | 30% VAT penalty, denied input VAT, fines |
Need Expert Support?
Split payment compliance in Poland requires precise coordination between accounting, legal, and banking systems. If you need help implementing or auditing your split payment processes, our VAT specialists are here to help. Contact us at office@intertax.pl to ensure full compliance