On 6 August 2019, the President of the Republic of Poland signed the Act of 19 July 2019 Amending Certain Acts in Order to Reduce Payment Backlogs. This amendment, aimed at strengthening the financial liquidity of businesses, introduces an obligation for certain entrepreneurs to submit annual reports on applied payment terms to the Minister of the Economy.
The report is supposed to include the company’s identification data (business name and VAT number) along with the value of cash considerations received, provided, not received and not provided within specific deadlines (30, 31-60, 61-120 and over 120 days) in the previous calendar year.
The reports are supposed to be submitted online by managers of the following entities:
- tax capital groups, regardless of the amount of generated revenue;
- taxpayers other than tax capital groups, whose value of revenue generated in the fiscal year exceeded the equivalent of EUR 50 million converted into PLN according to the average EUR exchange rate announced by the National Bank of Poland on the last working day of the calendar year.
Entity managers shall mean members of the Management Board or any other managing authority of a given entity, and in the case where the entity has a multi-person managing authority: members of this authority. In limited joint-stock partnerships, the function of the manager is performed by the general partner. What is more, in certain cases a liquidator, receiver or an administrator appointed in restructuring proceedings shall have the reporting obligation.
Reports shall be submitted for the previous year by 31 January every year. According to the new regulations, the first reports for 2020 shall be filed online by 31 January 2021. The reports will be published by the Minister of the Economy in the Public Information Bulletin.
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Under the regulations, a fine may be imposed if the report has not been submitted or has been submitted late. Any ruling in the case on a failure to report or a late report shall be made in accordance with the provisions of the Act of 24 August 2001 – Code of Procedure for Misdemeanours.
Penalties for excessive late payments
In accordance with the adopted regulations, excessive payment delays shall be followed by an intervention of the President of the Office of Competition and Consumer Protection (UOKiK), who is going to have the right to step in if the total of delayed cash considerations of a given entity amounts to at least PLN 5 million within 3 consecutive months by 2021 and PLN 2 million in the following years. Proceedings shall be initiated ex officio and shall take a maximum of 5 months. A notice of missing payment may be filed by anyone: both the entrepreneur who has not received his consideration and a person who suspects that a given entity is not paying its contractors. If delayed payments are identified, the President of the UOKiK shall impose a financial penalty on the entrepreneur; its amount shall be calculated according to a formula defined in the amendment. The amount of the penalty shall depend on the identified arrears and delayed payments.
The goal behind the amended regulations is to combat payment backlogs, as they seem to be on the rise recently. They are particularly distressing for micro and small businesses providing their services to large companies. However, the reporting obligation means that certain taxpayers will have more administrative obligations, and there are many of them already.
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Should you have any questions or wish to discuss the topic further, we encourage you to contact our expert, Tomasz BEGER:
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