Since 1 November 2019, the split payment mechanism has been obligatory with regard to invoices of total gross amount exceeding PLN 15,000 for the goods or services listed in Annex 15 of the Polish VAT Act. However, achieving compliance with these rules in practice gives rise to a number of issues for businesses.
INVOICES PAID IN INSTALLMENTS, PARTIAL PAYMENTS
Article 108a(2) of the VAT Act provides that a payment made using the split payment mechanism may relate to the whole or part of the invoice amount. This means that part of the amount due may be paid by bank transfer under the split payment rules and the remaining part may be paid by ordinary transfer to the supplier’s settlement account or in other way, e.g. by deductions of mutual receivables and liabilities or in cash. If the split payment mechanism applies to the whole invoice, the taxpayer can pay the remaining due amount later by split payment, providing the partial gross amount, invoice number and NIP.
PRO FORMA INVOICES, ADVANCE PAYMENTS
Following 1 November 2019, the split payment mechanism also applies to payments, specifically to prepayments, advance payments or deposits, exceeding PLN 15,000 made before the delivery of goods or provision of services provided in Annex 15 of VAT Act. In such cases, the word zaliczka (advance payment in Polish) should be entered in the dedicated transfer message, instead of the invoice number.
BULK PAYMENT FOR SEVERAL INVOICES
Since 1 November 2019, it is possible to pay with the split payment mechanism for more than one invoice issued by the same vendor. According to Article 108a(3a) of VAT Act, if a single supplier or service provider issues a taxpayer more than one invoice in a period of not less than one day and not more than one month, the payment under the split payment mechanism may relate to more than one invoice. In this case, the transfer message concerning bulk payment must include the total VAT amount and the sum of gross amounts of all the invoices issued by the single party within the period specified. Instead of an invoice number, the settlement period of the payment should be provided.
INVOICE PAYMENT IN A FOREIGN CURRENCY
According to the Polish VAT Act, the tax amounts on invoices paid under split payment should be shown in PLN. However, if the net amount is provided in a foreign currency, to make the payment using the split payment mechanism, two transfer messages must be used. In one split payment transfer message, the VAT amount in PLN should be given as both the tax amount and the gross amount. In a separate foreign currency transfer message, the taxpayer should specify the net invoice amount in the foreign currency.
If a summary invoice exceeding PLN 15,000 issued by a single supplier contains the goods or services included in Annex 15 of the VAT Act as well as items not specified under the Annex, the invoice is subject to split payment. However, the mechanism is obligatory only with regard to the items specified in Annex 15 and with the remaining items it is voluntary. Therefore, the VAT amount provided in the transfer message may include all the invoice items or just those required by law.
SETTLEMENT BY MEANS OF OFFSETTING / DEDUCTION
Settlements by offsetting or deduction of mutual receivables and liabilities do not involve payments or bank transfers. Therefore, according to the Ministry of Finance, the split payment mechanism does not apply to such settlements up to the deducted amount.