Poland amends Act on Payment Delays – what changes will enterprises face?

Poland
Available languages: PL

On 14 November 2022, the Amended Act on Payment Delays was signed by the President of the Republic of Poland, which introduces numerous changes to the current legislation, applicable to, among other things, the reporting obligations and proceedings concerning excessive payment delays. Some of the provisions of the Act will come into effect 14 days after its publication.

The amendments are aimed to clarify the existing regulations, simplify the reporting obligation and enhance the effectiveness of payment delay proceedings.

Changes concerning reporting obligations

The Act introduces numerous changes concerning the due date for reports prepared by enterprises, including reporting obligation exclusions, reporting deadlines and accountability for report filing.

  • One of the key changes for enterprises will be extension of the deadline for submission of the report on the due dates of payment in commercial transactions in the preceding calendar year, from 31 January to 30 April.

  • The values of monetary payments arising from commercial transactions made as part of insurance and reinsurance activity as well as transactions entered into only by entities being part of the same capital group will not be reported. According to the legislator, in the above areas payment delays do not occur at all or they do not have any effect on the external market.

  • Past due payments will be excluded from the reporting scope. In practice, this means that the report will not include payments for which the three-year period of limitation under Article 118 of the Civil Code has expired.

  • The Amended Act specifies that the reporting obligation will be imposed directly on the entity, while the entity’s manager will be accountable for the fulfilment of this obligation. The Act also clarifies that the entity’s manager must be a member of its management board or another governing body, a person who fulfils the function of that body, and where no such body exists the person responsible for managing the entity’s operations.

Changes concerning payment delay proceedings

New solutions have also been introduced regarding the authority of the President of the Office of Competition and Consumer Protection (UOKiK) to send out a so-called soft summons, the penalty calculation mechanism, penalty reductions or increases, and the possibility of deferring its payment or splitting it into instalments. The new solutions include:

  • In accordance with the new legislation, the President of the UOKiK will have an option to send out a summons to an enterprise without instigating any formal proceedings. This preventive measure will enable preliminary clarification of certain issues without any formal action being taken.

  • A new mechanism has also been introduced to calculate the amount of the penalty imposed for excessive payment delays. Based on the new methodology, separate penalties will no longer have to be calculated for each payment.

  • Pursuant to the amended legislation, the monetary penalty will be reduced by 20% if it is paid in whole within 14 days and the enterprise waives its right to request re-examination of the matter.

  • Additionally, the Act provides for the imposition of a heavier penalty in the case of another breach. If, within the period of two years of the first decision becoming final, the President of the UOKiK identifies another payment delay by the enterprise, the penalty will be increased by 50% of its value.

  • The President of the UOKiK may also defer the payment of the monetary penalty or split it into instalments on the grounds of an important interest of the enterprise, which will be possible at the request of the enterprise.

Other changes

The Amended Act will also introduce a number of other significant changes, including: 

  • The obligation to submit a representation on maintaining, acquiring or losing the status of a “large enterprise” must be fulfilled by the entity regardless of whether it acts as a debtor or a creditor in a commercial transaction.

  • In transactions where a large enterprise is a debtor and a micro, small or medium enterprise is a creditor, a contractual exclusion or limitation of the creditor’s right to assign the receivables will be ineffective if no payment is made at the due date agreed in the contract.

  • The amounts of monetary payments in foreign currency that were or were not received or made in the preceding calendar year will be translated into Polish currency in line with the accounting principles adopted by the enterprise. The above solution is intended to facilitate report preparation, in addition to ensure reported data consistency with accounting records.

Entry into force

The Act is to enter into force 14 days after its publication.

The foregoing will not apply to the provisions regarding ineffectiveness of the contractual exclusion or limitation of the creditor’s right to assign receivables, which will come into effect two months after the publication date, as well as the provisions regarding the reporting obligations, which will enter into force on 1 January 2023.

Previous measures taken by UOKiK

Thus far, the President of the UOKiK has conducted numerous payment delay proceedings, against entities from the food and beverage, processing, chemical, cosmetic, automotive and other industries. According to the report of the UOKiK, in 2021 19 decisions identifying excessive delays in monetary payments were issued, with penalties totalling PLN 1.42 million.

The text of the Act is available here: Act amending the law on counteracting excessive delays in commercial transactions and the public finance law (Polish version)

For more information on the Act, contact your CMS client partner or local CMS experts.