On 1 July 2018 the split payment mechanism was introduced into the Polish VAT system as another measure against VAT fraud. The mechanism can only be used in business to business (B2B) transactions.
The essence of this mechanism is that the payment in PLN of a VAT invoice via wire transfer shall be automatically separated into two parts and credited to two of the seller’s bank accounts. The net amount of the invoice goes to the seller’s 'regular' bank account and the VAT amount shown on the invoice goes to his so-called VAT bank account (a sub account). The funds in the VAT account are not easily accessible to the seller. This means the seller may only use those funds to:
Though the mechanism is available to every VAT payer, making use of it is not obligatory. In fact, the customer has the right to opt for the split payment.
Using the split payment method gives the customer who pays the invoice the following advantages:
Nevertheless, the seller may insist on excluding the split payment, given that it affects his cashflow. Thus contracting parties may even expressly exclude the mechanism in a contract.
However, using this method can lead to many formal obstacles.
In light of the above, a transaction by transaction analysis on possible advantages for Polish companies of the effects of the split payment is recommended. If the analysis shows that split payment may harm Polish subsidiaries we recommend renegotiating the contracts to secure against the undesirable effects.