Compulsory split payment for hardware from 1 November 2019
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As of 1 November 2019, the mandatory split payment mechanism comes into force. The list of goods covered by the split payment includes consumer electronics and IT equipment.
IT hardware on the list of goods covered by split payment
In the split payment mechanism (SPM), payment for goods or services purchased is made in such a way that the net sale value is paid by the buyer to the supplier’s billing account or otherwise accounted for by the buyer. The remaining payment, which corresponds to the amount of VAT on the invoice, is paid to a special bank account of the supplier – a VAT account.
This mechanism applies only to transactions made by transfer in PLN to other VAT payers. SPM applies to all entrepreneurs in Poland: micro, small, medium and large enterprises.
The new method of payment will cover 150 groups of sensitive goods and services specified in Appendix 15 to the VAT Act, and will apply to transactions whose value exceeds PLN 15 000. The goods included in this annex include scrap metal, waste, fuel, car parts, coal, electronics and computer hardware. As of 1 November, it is obligatory to use split payment in the trade of computers, mobile phones and smartphones, game consoles, HDDs and SSDs, processors, inks and toners for printers and copiers, digital cameras and cameras and TV sets.
At the same time, the mandatory SPM eliminates the reverse VAT burden on electronics.
Four conditions of the SPM mechanism
In order to apply the compulsory split payment mechanism, four conditions have to be met:
– tax liability, the supply of goods or services and the date of invoice are after 31 October 2019,
– the gross value of the transaction is more than PLN 15 thousand or its equivalent,
– at least one item of the invoice is included in Annex 15 to the amended VAT Act,
– The seller and the recipient are taxpayers (B2B transaction, regardless of whether the buyer is an active VAT taxpayer or an exempt VAT taxpayer).
The Ministry of Finance argues that the SPM will eliminate carousel VAT frauds. Honest entrepreneurs are to benefit from cleaning the market of fraudsters. Entrepreneurs are still waiting for explanations of the regulations on how to treat sets, where one product is covered by split payment and another is not.