The Polish Government plans to introduce an obligatory split payment process for certain supplies of goods and services (and has already received a respective draft consent from the European Commission). Under a split payment arrangement, the customer's payment for a supply is split between the value amount (paid to the supplier) and the value-added tax (VAT) amount (paid to the tax authorities) Split payment procedures may be introduced as early as 1 March 2019.

This new process will result in significant changes in settling VAT invoices that will impact certain taxpayers including:

1. Those currently applying a reverse charge (metals, waste, electronics, construction services)
2. Those covered by joint and several liability (e.g., fuel)
3. Other taxpayers, currently not recognized as trading in so-called "sensitive goods" (e.g., automotive parts, coal)

The changes would also impact taxpayers purchasing the above goods and services.

The impact of these changes include the need to:

• Verify the obligation to apply a split payment as a purchaser and supplier, verification of upcoming changes to the VAT rates matrix and considering applying for Binding Tariff Information.
• Adapt ERP systems to perform correct bank transfers, estimating costs of implementation of changes, and organizing training for employees.
• Plan cash flow and control cash resources (many taxpayers have already started forecasting the impact of split payment on their cash flow).

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CONTACTS

For additional information with respect to this Alert, please contact the following:

EY Doradztwo Podatkowe Krupa sp. k., Warsaw

• Dorota Pokrop
  dorota.pokrop@pl.ey.com
• Tomasz Wagner
  tomasz.wagner@pl.ey.com

EY Doradztwo Podatkowe Krupa sp. k., Gdansk

• Wojciech Kieszkowski
  wojciech.kieszkowski@pl.ey.com

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ATTACHMENT

PDF version of this Tax Alert