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August 23, 2019

RSM Global comments on VAT changes in Poland

The Polish tax authorities have announced that, with effect from 1 November 2019, Poland is introducing what is known as a Split Payments Mechanism (SPM). Non-resident businesses that are registered for Value Added Tax (VAT) will need to have a bank account in Poland, and will require an additional VAT bank account that is dedicated to receiving and making VAT payments, says RSM Global.

Under an SPM arrangement, the seller of certain goods must include some additional wording in its sales invoices, indicating that the sale is being made under this regime. When the purchaser comes to settle that invoice, it must select a particular banking document which notifies the bank that the payment they are making should be split between the net value and the VAT amount. The bank then credits the net value to the seller’s regular account and the VAT amount, which must be paid in Polish zloty, to the seller’s dedicated VAT account.

Funds in the VAT account may only be used to settle tax debts with the authorities. With a standard VAT rate of 23% in Poland, RSM Global warns this could represent a significant funding challenge for some businesses. The new rules will apply to business-to-business (B2B) transactions covering a limited range of goods and services.

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