Mandatory Split Payment Mechanism in Poland Extended Until 2028

Executive Summary

The mandatory split payment mechanism in Poland applies mainly to domestic B2B invoices above PLN 15,000 gross that include goods or services listed in Annex 15 to the VAT Act. Where it applies, the buyer must use a dedicated bank transfer so that the VAT amount is paid into the supplier’s VAT account. Because the rules affect invoicing, payments, liquidity, and SAF-T reporting, companies should review both finance and ERP processes, not only tax settings.

What Is the Split Payment Mechanism?

The split payment mechanism changes the way a buyer pays an invoice. Instead of sending the full invoice amount to the seller’s ordinary bank account, the payment is split into two parts:

• the net value goes to the seller’s standard business account;
• the VAT amount goes to a separate, restricted VAT account maintained by the bank.

In Poland, the mechanism was first introduced as a voluntary solution and later became mandatory for selected high-risk transactions. Its main purpose is to reduce VAT fraud, including missing-trader and carousel fraud, by restricting how VAT amounts can be used after receipt.

In practice, MPP is not just a payment method. It also affects:

• invoice wording,
• banking operations,
• accounting workflows,
• cash-flow planning,
• VAT reporting.

Scope of Application in Poland

Mandatory split payment generally applies where all of the following conditions are met:

1. the transaction is a domestic B2B transaction;
2. the seller issues an invoice to a taxpayer;
3. the total amount due on the invoice exceeds PLN 15,000 gross or its equivalent;
4. even a single item on the invoice, whose total gross value exceeds PLN 15,000, concerns sensitive goods or services. In such a case, mandatory split payment applies only to the amount due for the purchase of the sensitive goods or services. The remaining amount payable under that invoice may be settled with or without using the split payment mechanism.

Annex 15 covers categories regarded as particularly sensitive from a VAT fraud perspective, including for example:

• steel and selected metal products,
• scrap and secondary raw materials,
• fuels and selected energy products,
• electronics such as smartphones, laptops, and storage devices,
• construction services,
• selected parts and accessories,
• coal and certain industrial materials.

Legal Basis and EU Approval

The mandatory split payment mechanism in Poland is based primarily on the Act of 11 March 2004 on Goods and Services Tax (the Polish VAT Act), in particular:

• Article 108a(1a) of the VAT Act — setting out the cases in which split payment is mandatory for payments relating to invoices covering goods or services listed in Annex 15 and exceeding the statutory threshold;
• Article 108a et seq. of the VAT Act — regulating the operation of the split payment mechanism more broadly;
• Article 106e(1)(18a) of the VAT Act — requiring the invoice to contain the wording “mechanizm podzielonej płatności” where mandatory split payment applies;
• Annex 15 to the VAT Act — listing the goods and services covered by the mandatory split payment regime.

From a Polish-law perspective, the mechanism also operates in conjunction with banking rules on the VAT account, which is maintained by the bank and used for restricted statutory purposes.

Because mandatory split payment departs from the standard VAT framework under EU law, Poland has needed a derogation approved by the Council of the European Union under the VAT Directive framework which was granted via a Council Implementing Decision (EU) 2025/373 of 18 February 2025. According to the extension referred to in this article, Poland has been authorised to continue applying the mandatory split payment mechanism until 28 February 2028.

How the Split Payment System Works in Practice

When mandatory split payment applies, the buyer makes payment using a special transfer message made available by Polish banks. The payment instruction typically includes:

• the invoice number,
• the seller’s VAT number,
• the gross amount or payment amount,
• the VAT amount.

The bank then routes the funds automatically:

• the net amount is transferred to the seller’s regular account;
• the VAT amount is transferred to the seller’s VAT account.

This mechanism is available in the Polish banking system and is closely linked to bank accounts maintained for business use in Poland. In operational terms, the buyer’s accounts payable team and the seller’s treasury and tax teams should both understand when the special transfer must be used.

The mechanism is straightforward in theory, but practical issues often arise in more complex commercial situations.

Split Payment in Common Payment Scenarios

Partial Payments and Installments

Mandatory split payment is not limited to cases where the invoice is paid in one transfer. If an invoice falls within mandatory MPP, then each payment made toward that invoice should be assessed accordingly.

This means that if the parties agree on:

• partial settlement,
• staged payments,
• instalments,

the payment relating to the invoice should still be made using split payment, to the extent that the invoice itself is subject to mandatory MPP.

In other words, a company cannot usually argue that MPP no longer applies just because the invoice is being settled in several smaller tranches.

Advance Payments and Pro Forma Invoices

Advance payments raise one of the most common practical questions. As a rule, what matters is whether the payment concerns a future supply that would fall under the mandatory split payment rules and whether the payment is documented in a way that triggers the requirement.

A pro forma invoice is not a VAT invoice, so by itself it does not normally create standard VAT invoicing consequences. However, once an advance payment invoice is issued for a transaction covered by mandatory MPP, the payment should be analyzed under the split payment rules.

In practice, businesses should pay particular attention where:

• the future supply includes Annex 15 goods or services,
• the transaction is domestic and B2B,
• the documented amount exceeds the statutory threshold.

Invoicing systems should distinguish between purely commercial pro forma documents and actual VAT invoices documenting advances.

Bulk Payments for Multiple Invoices

Businesses often pay several invoices in one batch. Polish split payment rules allow for operational handling of multiple invoices, but the technical method and scope depend on the banking functionality and the structure of the liabilities being settled.

From a tax-risk perspective, the safest approach is to ensure that:

• invoices subject to mandatory MPP are clearly identified,
• the payment message correctly allocates VAT,
• internal documentation allows the payment to be traced to the relevant invoices.

Where multiple invoices are settled together, controls should ensure that mandatory MPP invoices are not accidentally included in an ordinary transfer run.

Invoices in Foreign Currencies

Foreign-currency invoices are a frequent source of confusion. The practical issue is that the split payment mechanism operates through the Polish banking infrastructure and is functionally tied to VAT settlement in PLN.

Where a domestic invoice is issued in a foreign currency but falls within mandatory MPP, the business should verify:

• how VAT is presented on the invoice,
• how the bank transfer message should be completed,
• whether the net amount and VAT amount need to be operationally separated,
• whether the bank supports the relevant settlement format.

In many cases, the market practice has been to ensure that the VAT element can be settled through the Polish MPP mechanism, while the commercial settlement of the net amount may require additional attention. Because technical banking practice can differ, this is an area where finance teams should align tax, AP, treasury, and bank instructions.

Mixed Invoices (Annex 15 and Non-Annex Items)

A mixed invoice includes both goods or services listed in Annex 15 to the Polish VAT Act and items that are not covered by Annex 15. In such cases, businesses should not assume that mandatory MPP automatically applies to the full invoice amount.

According to the official guidance, you must apply MPP if at least one item on the invoice whose total gross value exceeds PLN 15,000 concerns sensitive goods or services. In that case, the mandatory split payment applies only to the amount due for the Annex 15 goods or services. The remaining part of the invoice may be settled either with MPP or without it.

This distinction is important in practice because mixed invoices create a higher risk of errors in:

• invoice annotation,
• payment processing,
• ERP logic,
• JPK_V7 reporting.

To reduce risk, companies should implement clear rules for identifying mixed invoices and separating the part that is obligatorily subject to MPP from the part that is not.

Settlement by Offsetting (Kompensata)

Offsetting, or kompensata, is another recurring topic. Where liabilities are settled by way of civil-law set-off rather than by bank transfer, the split payment mechanism may not operate in the same way because there is no payment flow through the banking system for the offset portion.

In practice, this creates an important distinction:

• the portion settled through offset is treated differently from the portion settled through an actual bank payment;
• if only part of the debt is offset and the remainder is paid, the paid part may still need to follow mandatory MPP rules.

This area should be documented carefully. Companies using set-off arrangements should keep a clear audit trail showing:

• the legal basis for the offset,
• the amounts covered by offset,
• the residual amounts paid by transfer,
• whether and how MPP was applied to the transfer part.

Because tax authorities typically focus on substance over form, offsetting should not be used as an artificial tool to neutralize mandatory split payment.

Can Invoices Be Split to Avoid Mandatory SPM?

A common question is whether a supplier can divide one transaction into two or more invoices so that each invoice remains below the PLN 15,000 threshold.

From a compliance standpoint, artificially splitting invoices to avoid mandatory MPP is high risk.

If the economic reality is that:

• there is one transaction,
• one commercial arrangement,
• one delivery or one closely connected supply,

then dividing invoicing purely to bypass the threshold may be challenged by the tax authorities.

Businesses should distinguish between:

• genuine commercial separation of supplies, with independent documentation and business justification;
• artificial fragmentation designed only to avoid MPP.

The second case may expose both parties to disputes over non-compliance, sanctions, and broader due-diligence concerns. Internal policies should therefore state clearly that invoice structuring must follow the real transaction and not tax-avoidance motives.

Expanded Use of the VAT Account Since 2020

One of the early concerns around split payment was liquidity. Initially, funds accumulated in the VAT account could be used only for a narrow set of purposes. Over time, the permitted uses were broadened.

As the regime developed, VAT account funds could be used not only for settling VAT, but also for selected other public liabilities. Depending on the applicable period and the exact legal wording, this broader use has covered liabilities such as:

• VAT due to the tax office,
• VAT to suppliers under MPP,
• certain corporate income tax liabilities,
• personal income tax advances,
• social security contributions,
• excise duty,
• customs-related charges.

The practical significance is considerable. Although VAT account funds remain restricted, the broader catalogue of permitted uses has made MPP less burdensome than in its earliest version.

Still, businesses should avoid treating the VAT account like a normal operating account. Treasury teams need clear rules on:

• what can be paid from it,
• who approves such payments,
• how balances are monitored,
• when release of excess funds should be requested from the tax office.

SPM Invoicing Requirements and JPK_V7 Reporting

Mandatory Invoice Annotation

Where mandatory split payment applies, the invoice should contain the annotation: “mechanizm podzielonej płatności”.

This marking is not optional. It is a formal invoicing requirement and acts as a compliance signal for the buyer. In practice, sellers should ensure that invoicing systems automatically add this wording whenever the transaction meets the MPP conditions.

Failure to include the annotation may trigger risk both for the issuer and for the buyer if operational teams then process the payment incorrectly.

MPP Marker in JPK_V7

Split payment also has reporting implications under JPK_V7, Poland’s combined VAT return and SAF-T style reporting file.

Transactions subject to mandatory split payment should be reflected correctly in the JPK_V7 structure. This includes the use of the relevant MPP marker, where required by the reporting logic applicable to the transaction.

For finance teams, this means MPP compliance is not limited to bank payments or invoice text. It also needs to be consistent across:

• the sales ledger,
• the purchase ledger,
• the VAT return logic,
• the JPK_V7 export.

A mismatch between invoice wording, actual payment method, and JPK_V7 reporting can create unnecessary audit flags.

GTU Codes and SPM

The MPP marker and GTU codes are not the same thing, even though the same transaction may involve both.

• MPP indicates that the transaction is subject to mandatory split payment.
• GTU codes classify certain types of goods or services for JPK_V7 reporting purposes.

Some Annex 15 goods or services may also fall within GTU categories, but one does not replace the other. Businesses should therefore configure their ERP systems carefully to avoid:

• adding MPP without GTU where GTU is required,
• adding GTU without MPP where MPP is required,
• assuming that one flag automatically proves the other.

A proper tax matrix is essential here.

Split Payment Obligations for Foreign Companies

Foreign companies often assume that split payment is relevant only for Polish entities. That is not always correct.

A foreign business may still fall within Polish MPP rules where, for example:

• it is registered for VAT in Poland,
• it makes or receives domestic taxable supplies in Poland,
• the transaction is documented by an invoice that meets the statutory conditions for mandatory MPP.

The key issue is not the nationality of the company but the VAT treatment of the transaction in Poland and the payment infrastructure used for settlement.

Foreign businesses should review the following areas:

• whether they have a Polish VAT registration,
• whether they use a bank account capable of supporting MPP-related flows,
• how domestic invoices in PLN or foreign currency are settled,
• whether local finance teams or shared service centers understand the Polish-specific rules,
• how MPP obligations are reflected in contracts and invoice templates.

This is especially important for international groups that centralize AP and treasury outside Poland. A non-Polish shared service center may process domestic Polish invoices incorrectly if it is not trained on MPP logic.

Benefits and Challenges for Taxpayers

Benefits

The split payment mechanism has several advantages from a tax control perspective:

• it reduces exposure to VAT fraud;
• it improves transaction traceability;
• it can support due-diligence arguments for buyers;
• it may reduce the risk of involvement in fraudulent supply chains;
• it contributes to more predictable VAT collection.

For compliant businesses, MPP can also support internal governance because it imposes discipline on invoicing and payment processes.

Challenges

At the same time, MPP creates real operational burdens:

• reduced cash flexibility because VAT funds are ring-fenced;
• more complex AP and AR workflows;
• higher ERP and banking integration requirements;
• greater risk of clerical errors in payment messages and invoice flags;
• training needs for accounting, purchasing, treasury, and sales teams.

For many companies, the main difficulty is no longer understanding the law in theory. It is ensuring that the law is reflected accurately in day-to-day process design.

Penalties for Non-Compliance

Failure to apply mandatory split payment can lead to serious consequences. Depending on the facts and the role of the party, risks may include:

• an additional VAT liability or sanction,
• disputes over input VAT recovery,
• invoice-related penalties,
• increased audit exposure,
• fiscal penal risk in more serious cases.

A commonly cited consequence is an additional sanction equal to 30% of the VAT amount concerned in the non-compliant payment, subject to the specific statutory framework and circumstances.

In practice, tax authorities will often look at the whole compliance picture:

• Did the invoice contain the mandatory annotation?
• Did the buyer use the correct transfer method?
• Was the transaction reported consistently in JPK_V7?
• Was the non-compliance isolated and corrected, or systemic?

Voluntary Use of Split Payment

Even where MPP is not mandatory, split payment may still be used voluntarily in certain situations.

Some businesses choose wider use of split payment because it can:

• strengthen tax-control evidence,
• reduce counterparty risk,
• support internal compliance policies,
• align with customer or public-sector expectations.

However, voluntary use should still be governed by clear rules. Overuse without treasury planning may unnecessarily increase the amount of cash trapped in VAT accounts.

Practical Tips for Using the Split Payment Mechanism

1. Build a transaction matrix.
   Map Annex 15 items, invoice thresholds, domestic transaction types, and invoicing rules.
2. Automate invoice annotation.
   The phrase “mechanizm podzielonej płatności” should be generated automatically where required.
3. Train AP, AR, and procurement teams.
   Most MPP failures happen in operations, not in tax policy documents.
4. Align tax and banking processes.
   Payment method, invoice data, and ERP coding must match.
5. Review mixed and foreign-currency invoices separately.
   These are among the most error-prone scenarios.
6. Document offsets and partial settlements.
   Keep a clear audit trail showing which part was offset and which part was paid.
7. Reconcile JPK_V7 markers.
   Check that MPP and GTU logic are consistent with the source invoice and payment.
8. Monitor VAT account balances.
   Use treasury reporting to avoid avoidable liquidity pressure.

Frequently Asked Questions

Is split payment mandatory for all invoices in Poland?

No. Mandatory split payment generally applies only to selected domestic B2B invoices where the total exceeds PLN 15,000 gross and the invoice includes at least one good or service listed in Annex 15 to the Polish VAT Act.

Can I pay part of an invoice via split payment and the rest by regular transfer?

If the invoice is subject to mandatory MPP, the payment should be handled in line with that obligation. Where an invoice is paid in parts, each paid portion should be assessed accordingly. A regular transfer should not be used as a workaround for a payment that should have been made under MPP.

How do I handle split payment for invoices in foreign currencies?

A foreign currency invoice subject to split payment (MPP) must be settled by making two separate transfers: the net amount in the foreign currency to the settlement account, and the VAT amount in PLN (after conversion) to the seller’s VAT account. The VAT account is maintained only in PLN, therefore a direct split payment transfer in a foreign currency is not possible.

Can I split an invoice into two to avoid the PLN 15,000 threshold?

Artificially splitting invoices to avoid mandatory MPP is risky. If the underlying transaction is commercially one supply or one arrangement, tax authorities may challenge such division and treat MPP as still applicable.

What can I use the funds in my VAT account for?

VAT account funds may be used for selected statutory purposes, including VAT payments and, under the expanded rules introduced over time, certain other public liabilities. The exact permitted catalogue should be checked against the current wording of the law and banking practice.

Does split payment apply to advance payments?

It can. If the advance concerns a transaction that falls within mandatory MPP and the payment is documented in a way that triggers the split payment obligation, the advance should be reviewed under the MPP rules.

How should I report split payment transactions in JPK_V7?

Transactions subject to mandatory MPP should be reflected consistently in JPK_V7, including the relevant MPP marker where required.

Does offsetting (kompensata) require split payment?

The part settled by legal set-off is treated differently from the part settled through an actual bank payment. If only part of the liability is offset and the remainder is paid, the paid part may still need to follow MPP rules.

Looking Ahead: SPM Valid Until 2028

For businesses operating in Poland, the main message is clear: split payment should be treated as a stable feature of the compliance environment, not an exceptional measure.

Even if the legal framework evolves further, several points are already evident:

• mandatory MPP remains important in fraud-sensitive sectors;
• it continues to shape invoicing, payment, and reporting obligations;
• tax authorities expect process-level compliance, not only legal awareness;
• companies should review the full transaction lifecycle, from contract and invoice to payment and JPK_V7.

For this reason, the best approach is not only to ask whether MPP applies, but also whether the company’s systems, teams, and controls are strong enough to apply it correctly every time.

Summary Table: Split Payment Mechanism in Poland

Element	Description
Name	Split Payment Mechanism (SPM / MPP)
Mandatory since	1 November 2019
Current extension referred to in this article	Through 28 February 2028
Main trigger	Domestic B2B invoice above PLN 15,000 gross including Annex 15 goods/services
Payment flow	Net amount to regular account, VAT amount to VAT account
Legal basis	Polish VAT Act, including Article 108a et seq. and Annex 15
Invoice wording	“mechanizm podzielonej płatności”
Reporting impact	JPK_V7 MPP reporting and consistency checks
Risk areas	Mixed invoices, advances, instalments, foreign-currency invoices, offsets
Main challenge	Liquidity and process complexity
Main benefit	Reduced VAT fraud risk and stronger compliance trail

Sources and Legal References

• Act of 11 March 2004 on Goods and Services Tax (Polish VAT Act), as amended. VAT Act
• Council Implementing Decision 2025/373 of 18 February 2025 authorising Poland to continue applying a special measure derogating from the VAT Directive in relation to the mandatory split payment mechanism Decision
• https://www.biznes.gov.pl/en/portal/004159#9

Need Expert Support?

Mandatory split payment in Poland affects tax, accounting, banking, ERP design, and cash-flow management. If your business needs support with MPP implementation, invoice reviews, JPK_V7 consistency checks, or audit readiness, our VAT team can help.

Contact us at office@intertax.pl to review your split payment processes and reduce compliance risk.