Recently, the Minister of Finance published a draft amendment to the VAT Act, which introduces an obligation to apply the split payment mechanism. According to the draft, the split payment mechanism will apply to invoices documenting payments exceeding PLN 15,000, which refer to goods or services listed in schedule no. 15 to the VAT Act (attached).
The goods and services that are to be subject to the mandatory split payment mechanism include construction works (item 98-144 of the schedule). Other goods and services include e.g.
- steel products, precious metals, and non-ferrous metals;
- waste, scrap, and secondary raw materials;
- electronics – including: processors, smart phones, telephones, tablets, notebooks, laptops, game consoles, inks, toners, hard drives;
- fuels for vehicles, fuel and lubricating oils;
- greenhouse gas emission quotas;
- trading in car and motorcycle parts.
Due to the introduction of the afore-indicated obligation, the reverse charge mechanism will not be applied with respect to goods and services subject to mandatory split payment.
Furthermore, the draft Act stipulates sanctions for failure to comply with the new obligations. A penal fiscal sanction is to be introduced for persons responsible for issuing VAT invoices in the form of a fine amounting up to 720 daily rates (approximately PLN 21,600,000). Furthermore, a separate sanction is provided for taxpayers other than natural persons in the form of an additional tax liability in the amount corresponding to 100% of VAT indicated on the invoice with respect to which the split payment mechanism obligation was not complied with.
If the draft enters into force in this form, the amendments will be applicable from 1 September 2019.