The European Commission has allowed Poland to continue with its mandatory split payment system as the initial EU Council-approved measure was due to expire on 28 Feb 2025.
The measure applies to any payment for goods or services set out in Schedule 15 to the Polish VAT Act, if such payment is made to a taxable person under an invoice whose total amount exceeds PLN 15,000 (or equivalent in foreign currencies). In such cases, the customer’s payment must be made by wire transfer and is split so that, in practice, the supplier receives the net amount onto its main account while the VAT amount is credited to its dedicated bank account called ‘VAT account’.
The Commission’s decision refers to a report accompanying Poland’s application according to which the measure, which has been in operation in Poland since 2019, has helped limit revenue losses due to VAT fraud and reduce the number of related investigations. In addition, VAT refunds have become faster and the overall administrative burden has been reduced due to a partial replacement of the reverse charge mechanism which involved additional reporting duties.
Poland will continue applying the split payment measure until 28 February 2028. The Commission’s decision is yet to be approved by EU Council.
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