On 12 April, amended VAT, CIT and PIT acts were passed. As of 1 January 2020, more stringent provisions concerning payments for transactions exceeding PLN 15,000 will be in force. Any failure to meet statutory conditions will result in joint and several liability of the purchaser for the vendor’s VAT accounting and denied right to recognise this expenditure as tax deductible. Under the new regulations, foreign entities regitered for VAT purposes in Poland will have to open bank accounts in Poland. New regulations are going to cover limited companies, partnerships and sole proprietorships.
Regulations in force until the end of 2019
The VAT Act in force does not provide for the purchaser being jointly and severally liable with the vendor in the event in which a payment is made to a bank account other than the one shown in registration documents, which means that taxpayers must prepare for such regulations well in advance.
When it comes to income taxes, similar regulations are already in force, though. At present, when making a payment for transaction exceeding PLN 15,000, taxpayers are under obligation to use bank accounts; otherwise, taxpayers do not have the right to include this expenditure in their tax deductible costs. However, taxpayers do not have the obligation to make payments solely to registered bank accounts as for today.
White List of VAT taxpayers
In September 2019, the so-called “white list of VAT taxpayers”, being a register of details of active, exempt, non-registered, de-registered and re-registered VAT taxpayers, was launched. The register includes a full range of information, among others numbers of bank accounts in Poland used for business purposes, which is going to force foreign entities to open a bank account in Poland.
Not that much into finance and taxes but overwhelmed by documents you’re not sure how to read?
FIND OUT MORE
Regulations in force as of January 2020
As of January 2020, entrepreneurs will be in fact forced to use only those bank accounts that are disclosed in the White List of VAT Taxpayers. If a payment is made to other accounts of your contractors, expenses exceeding the statutory thresholds will not be recognised as your tax deductible costs. What is more, if a payment is made to a non-registered bank account, the purchaser of the goods or services will be jointly and severally liable with the payment recipient for any input VAT accounting of such receivables.
These regulations are a blow for foreign entities which have not yet had their bank accounts in Poland.
It should be noted, as well, that entities that make payments on behalf of other taxpayers (e.g. factors) will have to exert special caution, because if they make a payment to a bank account that is not shown on the White List of VAT Taxpayers, the amount of this payment may be recognised as income.
How to prepare for the changes
Given the negative consequences of transactions with entities not included in the “white list of VAT taxpayers”, foreign entities registered for VAT purposes in Poland should start preparing for opening their bank accounts in Poland as soon as possible.
What is more, on the day of making a bank transfer, entrepreneurs will be obliged to check whether the bank account provided by the recipient is shown on the “white list of VAT taxpayers”. If you make a bank transfer to a bank account that is not included on the White List, you will have 3 days to report this to competent tax authorities. By doing so, you will retain the right to recognise this bank transfer as tax deductible cost and be released from joint and several liability with the payment recipient.
Given the scope of changes, we recommend adjusting your procedures to the aforesaid regulations, namely to:
- open a bank account in Poland (in the case of foreign entities that do not have a bank account in Poland);
- add bank account verification to your in-house procedures;
- prepare for the process of reporting non-registered bank accounts.
Subscribe to RSM Poland Newsletter to stay up-to-date on all legal, financial and tax matters. Benefit from the expertise of our professionals.
Should you have any questions or need to discuss the topic, we encourage you to contact out expert, Daniel WIĘCKOWSKI:
tel. +48 61 8515 766
fax +48 61 8515 786