Case study:
A taxpayer, not established in Poland but registered for VAT in Poland sells goods to contractors based in Poland. The goods sold by the taxpayer are not listed in Annex 15 to the VAT Act, so it is not covered by the mandatory split payment (split payment mechanism, i.e. MPP), regardless of the value of the transactions made.
The taxpayer has not opened a bank account in Poland since taxpayers not established in the territory of the country are not obliged to open a bank account in Poland. The obligation to open a bank account in Poland in order to enable the taxpayer to receive payments in the split payment (MPP) mechanism may occur only when the taxpayer trades in goods listed in Annex 15 to the VAT Act.
Pursuant to the Value Added Tax Act of March 11, 2004 (VAT Act), invoices may be issued in PLN or in a foreign currency. An obligatory element of the invoice is that the tax amounts expressed in a foreign currency are shown in PLN. The conversion is made according to the NBP (National Bank of Poland) or ECB (European Central Bank) exchange rate.
Article 31a.
1. Where the amounts used to determine the tax base are specified in a foreign currency, the conversion into PLN shall be made at the average exchange rate of a given foreign currency announced by the National Bank of Poland on the last working day preceding the day when the tax obligation arises. The taxpayer may choose the method of converting these amounts into PLN according to the latest exchange rate published by the European Central Bank on the last day preceding the day when the tax obligation arises; in this case, currencies other than the euro shall be converted using the exchange rate of each of them against the euro.
2. Where the taxpayer issues an invoice before the tax obligation arises, and the amounts used to determine the tax base are specified on the invoice in a foreign currency, the conversion into PLN shall be made according to the average exchange rate of a given foreign currency announced by the National Bank of Poland on the last working day preceding invoice date. The provision of sec. 1, second sentence shall apply accordingly.
Article 106 e.
11. Tax amounts are shown in PLN. Amounts of tax expressed in a foreign currency are presented in PLN using the principles of conversion into PLN adopted for the conversion of amounts used to determine the tax base. Amounts shown in the invoice are rounded up to full grosz, where the endings below 0.5 grosz are omitted, and the endings from 0.5 grosz are rounded to 1 grosz.
Invoice payments
Payments for invoices for goods and services rendered shall be made to the account indicated by the issuer on the invoice. Taxpayers may, but are not obliged to, use the split payment mechanism when making payments.
Article 108a.
1. Taxpayers who have received an invoice with the indicated amount of tax may use the split payment mechanism when paying the amount due under that invoice.
If the invoices, in which the total amount due exceeds PLN 15,000, include the supply of goods or services referred to in Annex 15 to the VAT Act – they should contain the words “split payment mechanism”.
Thus, the obligation to use the split payment mechanism applies in a situation where the following conditions are jointly met:
• the total gross value of the invoice exceeds PLN 15,000,
• the invoice documents the sale of goods or services listed in Annex 15 to the VAT Act,
• the seller and the buyer are VAT payers.
Article 108a
1a. When making payments for purchased goods or services listed in Annex 15 to the Act, documented with an invoice in which the total amount due exceeds PLN 15,000 or its equivalent expressed in a foreign currency, taxpayers are obliged to use the split payment mechanism. The conversion of amounts expressed in a foreign currency into Polish zlotys is subject to the rules of converting amounts used to determine the tax base.
1b. The taxpayer obliged to issue the invoice referred to in art. 106e sec. 1 point 18a, is obliged to accept the payment of the amount due under this invoice using the split payment mechanism.
Taking all the above facts into account payments for goods sold by the non-PL established taxpayer should be made to the bank account provided by the taxpayer in the invoices, regardless of the invoice currency, and the buyer of the goods, due to the lack of technical opportunities should make the payment excluding the use of the split payment mechanism. If this taxpayer ever sells goods listed in Annex 15 of the VAT Act and the value of the sale exceeds PLN 15,000, then the MPP will be mandatory and the seller will be obliged to accept the payment of the amount due under this invoice using the split payment mechanism.
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