Split payment – mandatory until 2028

Payments made in the split payment procedure do not go in full to the payee’s account but instead are split into the net value and VAT. The net amount goes to the seller’s account, while the VAT amount goes to his special VAT account. Although the money accumulated in the VAT account remains the supplier’s property, it can be used for purposes specified in the statute only. 

The split payment procedure is mandatory for VAT payers who sell or buy so-called sensitive goods (listed in Annex 15 to the VAT Act) and their invoice exceeds 15 thousand zloty gross or equivalent in a foreign currency. In other cases, the split payment mechanism is voluntary. ​

The split payment procedure causes a number of doubts, especially when it comes to classification of transactions. Supplies of goods for assembly are generally not subject to the split payment procedure, but it does apply to construction of e.g. certain buildings, renovation of existing buildings, construction of bridges and tunnels, installation of heat, ventilation and air conditioning systems. Also problematic is the correct application of the procedure to construction services divided into stages. Businesses often find it difficult to unequivocally assign a transaction to the right category. This may prompt doubts and a risk of failure to apply the split payment procedure (despite the obligation to do so).

The correct classification of the transaction is key because incorrect classification exposes the company to sanctions and deficiencies in VAT accounts.

If you wonder how to apply the split payment procedure or if you do not know which transactions are covered, do not hesitate to contact us. Our experts will answer all questions you may have about the split payment and​ V​​AT​​.