The European Commission (EC) has published a proposal for a Council Implementing Decision on 14 January 2025, authorising Poland to extend its split payment system for VAT collection.

After a period of a voluntary split payment system, Poland introduced, following Council Implementing Decision (EU) 2019/310, the mandatory split payment mechanism about certain supplies of goods and services susceptible to fraud. This means that if a supply of goods or services takes place within the scope of that mechanism (invoices for goods and services within the scope, with a total gross amount (including VAT) above PLN 15 000), the supplier has, in addition to his regular bank account, to have a separate and blocked so-called VAT account.

The net amount (excluding VAT) is transferred to the supplier’s regular bank account and the VAT amount is transferred to that separate VAT account. While the funds on the blocked account remain the property of the supplier, these funds can only be used for specific purposes, such as the payment of VAT due to the tax authority or VAT resulting from invoices received from other suppliers. In case of surplus of input VAT over output VAT, a refund has to take place within 60 days to the taxable person’s regular account.

As for the system to function, it is necessary that invoices, for supplies within the scope of the split payment mechanism, include a special statement that VAT shall be paid to the separate VAT bank account of the supplier for payments made by bank transfers. As to enable this, it is necessary to derogate from Article 226 of the VAT Directive that lays down that only details, enumerated in that article, can be required on invoices; details as regards a split payment mechanism are not provided for in that article.

After, as mentioned above, a first extension for a period until the end of February 2025, Poland has now requested another extension as they consider that the derogating measure, necessary for the functioning of the split payment mechanism, had a positive impact.

Apart from the extension, Poland has asked to replace the current annex of goods and services of which the supplies are subject to the split payment mechanism. Currently, the list is based on the Polish Classification of Goods and Services (PKWiU 2015).

However, it is planned in national legislation to replace the national classification system by the Combined Nomenclature for the identification of goods. To avoid the need to update the derogation during its application period, Poland has requested to replace the list with 150 individual items by an aggregated and simplified list of 13 categories covering the same subject matter. Poland has confirmed that, by introducing this simplified list, the scope of the derogation will not be extended.

Earlier, Poland has introduced a new deposit-refund system for beverage packaging for retail and wholesale sellers, which went into effect on 1 January 2025.