Reverse Charge / Split Payment & “Call Off Stock” in Poland
The reverse charge mechanism is applicable to specific domestic supplies of goods and services. Under this system, the seller issues invoices without adding VAT, and the responsibility of accounting for VAT shifts to the buyer.
The buyer then settles the transaction and reports both output and input VAT on their purchase invoices. However, in Poland, this mechanism is primarily relevant for transactions between Poland and other countries. For domestic transactions within Poland, the reverse charge mechanism has been replaced by the split payment mechanism.
The split payment mechanism is a system where the payment for goods or services made by the purchaser to the supplier is divided as follows:
- The net sale amount (excluding VAT) is credited to the supplier’s primary settlement account.
- The VAT portion of the payment is directed to a dedicated VAT account, automatically established by the bank as an additional account linked to every business or trading settlement account.
Funds in the VAT account remain the taxpayer’s property, but they cannot be freely managed. These funds are specifically earmarked for the payment of VAT on goods or services and for settling tax liabilities with the Tax Office.
From November 1, 2019, the mandatory split payment mechanism (SPP) has been implemented for invoices that fulfill all the following criteria:
- The total amount due from the invoice (i.e., the gross value of the entire invoice) exceeds PLN 15,000.
- The invoice includes at least one item related to sensitive goods or services, as listed in Annex 15 to the VAT Act.
- Both the seller and the buyer are registered VAT payers.
SPP applies to payments for:
- Steel, steel products.
- Scrap, waste.
- Precious metals (e.g. gold, silver) and non-precious metals (e.g. copper).
- Stretch film.
- Tablets, smartphones, consoles.
- Construction services.
- Parts and accessories for motor vehicles.
- Coal and coal products.
- Electrical machinery and equipment and their parts and accessories.
The obligatory SPP covers goods and services, mainly subject to a reverse charge so far, i.e., shifting the VAT settlement obligation from the seller to the buyer or tax liability.
A detailed list of goods and services for which a mandatory SPM is introduced is included in Annex 15 of the VAT Act.
Reverse Charge for non-established companies in Poland
For domestic supplies of goods in Poland by companies not established there (those without a registered office or a fixed business location in Poland and not VAT registered in Poland), the responsibility to settle VAT lies with the Polish companies (purchasers). This implies that a foreign entity, not registered for VAT in Poland, should not charge VAT on domestic supplies of goods to Polish businesses. Instead, VAT should be accounted for by the Polish purchasers on a reverse charge basis.
Regarding the provision of services, the reverse charge mechanism applies when services are provided by non-established companies in Poland (without a registered office or fixed business location in Poland) to a Polish purchaser who is VAT-registered. This rule holds regardless of whether the foreign service provider is VAT-registered in Poland or not. However, this does not apply to services connected to specific real estate where the supplier is VAT-registered in Poland.
Selling in Poland?
Poland – “Call off stock”
In simple terms, “call-off stock” refers to a situation where a supplier sends goods to be stored in a third-party warehouse in another EU Member State. In contrast, “consignment stock” occurs when a supplier stores their goods in a warehouse they own in another Member State. The key distinction lies in who controls access to and uses the stock, which in turn affects the point of VAT liability and the compliance requirements.
For consignment stock transactions between two EU countries, the supplier traditionally needed to register for VAT in the customer’s country. However, until 2020, many countries adopted a simplification to prevent this need for VAT registration. The concept of call-off stock has been introduced to replace consignment stock, bringing clearer terminology to help foreign entrepreneurs understand the basic principles of stock operations and the differences between these two methods.
To be eligible for the call-off stock simplification, certain criteria must be fulfilled:
- Both the supplier and the customer must be taxable entities with valid VAT identification numbers.
- The supplier should not have any fixed establishments in the client’s country.
- The supplier needs to know the client’s identity.
- The supplier must maintain records of the goods’ movement and report this in an ECSL (European Community Sales List) return. Depending on the volume, the supplier might also need to fulfill Intrastat obligations.
- The goods should not remain in the client’s warehouse for more than 12 months.
Last Updated: 25/01/2022
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
Poland – “Import VAT”
Goods imported into Poland are subject to Value Added Tax (VAT), and this includes items that are duty-free or have partial or full duty suspension, as well as goods qualifying for preferential, reduced, or zero duty rates.
Traditionally, businesses had to pay VAT at the time of importation and could only claim a deduction for this VAT after submitting their VAT return. However, starting from 1 July 2020, Poland has implemented a deferred import VAT accounting system. This system allows VAT-registered businesses in Poland to delay the payment of VAT at the point of importation. The VAT amount is then accounted for in the subsequent VAT return, effectively neutralizing any immediate cash flow impact.
The customs authorities need to be informed of the import VAT liability within 10 days. The introduction of postponed import VAT accounting is a major simplification aimed at improving cash flow for businesses engaging in import activities.
Last Updated: 11/01/2024
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
