As from November 2019 invoices for the gross amount of over PLN 15 thousand on which at least one item pertains to goods and services listed in Appendix No. 15 to the Polish VAT Act must be settled with the use of the split payment method. In exchange the legislator introduced additional types of payments that may be effected from the VAT technical account without the necessity to apply for a release of funds.
The split payment mechanism works in such a manner that net amounts from each invoice (invoices), e.g. for a purchase, are transferred to a specific settlements account of the seller from which the purchase was made. The entire amount of VAT is transferred to a technical VAT account assigned to a farmer pursuing agricultural activity as an active VAT payer.
Additionally, invoices marked as payable with the split payment method must be settled with the use of a special transfer note (Split Payment Model). After selecting this transfer note the entered invoice amount is automatically split into the net amount (due to the seller) and VAT.
Each technical VAT account is created by the bank automatically (as an additional sub-account) and assigned to a specific account for the purposes of pursuing agricultural activity (active VAT). If more than what is due is transferred to a VAT technical account, those additional funds are frozen.
It is noteworthy that a technical VAT account may be credited not only with VAT payments on account of invoices settled under the split payment method. Amounts on account of corrected invoices (reimbursement of overpaid VAT) and VAT returns from the tax office will also be transferred to this account. Thus, those amounts will not be credited to the bank accounts we use to pursue business activity.
Funds collected on a technical VAT account are still the property of their owner. However, the owner cannot freely use them. What bank transactions can be executed with the use of additional funds collected on the technical VAT account?
What can be done with the funds accumulated on the technical VAT account?
An active VAT payer can make the following payments with the use of funds accumulated on a technical VAT account:
- Transfer VAT to the tax office, including VAT on account of import of goods;
- Reimburse a specific VAT amount, e.g. on account of a corrected invoice;
- Settle social security contributions (for the farmer’s own benefit and that of employees);
- Settle tax obligations, including interest on account of default on VAT payments and default on additional tax obligations;
- Settle personal and corporate income tax and advances towards those taxes (including default interest);
- Settle excise tax, all prepayments on account of excise tax and daily payments (as well as default interest on payment of excise tax and interest on prepayments on account of excise tax);
- Settle all VAT liabilities on account of intra-community purchase of motor fuels to a VAT account of a VAT payer.
However, if you want to use the funds accumulated on a technical VAT account for a purpose not listed above (e.g. repayment of a bank loan), you will have to apply to the head of the tax office (in which you settle your tax accounts) for a release of a specific amount frozen on the technical VAT account.
