Brexit is now set to go ahead on 31 January, with the terms of the Withdrawal Agreement of 17 October 2019 applying (although, as at publication, the European Parliament has not yet formally ratified this). The agreement stipulates a transition period up to 31 December 2020, during which the UK will remain in the EU VAT zone and VAT impacts for business should be minimal. The post-transition regime is yet to be laid out in detail. For a full copy of the agreement see here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/840655/Agreement_on_the_withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union_and_the_European_Atomic_Energy_Community.pdf
Split payment mechanism on certain supplies in place from November 2019
As of November 2019 taxpayers in Poland are obliged to apply a split payment mechanism when making the bank transfer payments to their suppliers in respect of supplies above PLN 15k (GBP 3,5k; EUR 4k; USD 4.5k) in value, or all supplies in certain high risk sectors.
For supplies falling under the mandatory split payment mechanism, the supplier should have included a statement ‘Split payment mechanism’ on the invoice.
Under the split payment mechanism the purchaser splits the payment when making the bank transfer to the supplier, with the net amount being paid to the supplier’s regular account and the VAT amount being paid to a special ‘VAT account’ of the supplier held by his bank.
Funds held by a taxpayer in its ‘VAT account’ can be used to make the payments of VAT, corporate income tax, excise, customs and social security liabilities. A taxpayer can also apply to the Polish tax authorities for the funds gathered on the ‘VAT account’ to be transferred to its regular bank account.
You can read more about the system (in Polish) on the Polish government website here https://www.gov.pl/web/rozwoj/bezpieczna-transakcja-mechanizm-podzielonej-platnosci-split-payment-w-praktyce
New obligation from January 2020 to verify suppliers in ‘White List’ of taxpayers
Starting from 1 January 2020, businesses registered for VAT in Poland making bank transfers to their suppliers in respect of invoices documenting transactions of supplies exceeding PLN 15k (GBP 3,5k; EUR 4k; USD 4.5k) should verify whether the bank account of the supplier is listed in the so-called ‘White List’ of verified taxpayers.
The ‘White List’ is an online database run by the Polish tax authorities allowing companies to verify the VAT status (e.g. VAT registered vs. unregistered), as well as certain other information, about their business counterparties.
Penalties for paying to a non-White list account can be avoided if, within 3 days from ordering such a payment, he notifies the local tax office of the supplier of the bank account details, to which the payment was made. Alternatively, a company can pay the invoice using the split payment mechanism to avoid the joint and several liability for VAT purposes.
According to the recently published by the Polish Ministry of Finance ‘Explanatory Notes’ of 20 December 2019 concerning these new obligations, the foreign bank accounts will not be displayed within the ‘White List’ database.
You can access the White List search page here https://www.podatki.gov.pl/wykaz-podatnikow-vat-wyszukiwarka
This story was originally posted on VAT Life, Quipsound’s quarterly newsletter in association with Essentia Global Services. Click here to see the story and more on VAT Life.