In early 2025, the split payment mechanism in Poland was extended until February 2028. First introduced in 2019, this anti-fraud measure appears to have been successful in reducing Poland’s VAT gap by bringing greater clarity and transparency to transactions.
What is the Split Payment Mechanism?
When using the split payment mechanism (MPP), payments for goods or services are divided into two parts and transferred into designated bank accounts.
- The net amount is transferred into the seller’s account.
- The VAT amount is transferred into a separate VAT account, and money in this account can only be used for statutory payments.
Why has the Split Payment Mechanism Been Extended?
The split payment mechanism in Poland helps counteract tax fraud by increasing the transparency of transactions. Poland was able to secure the extension after successfully demonstrating improved VAT collections and faster refunds of credits for taxpayers since the mechanism came into force in 2019.
Is the Split Payment Mechanism Mandatory?
The split payment mechanism in Poland can be used voluntarily, but in some cases it is mandatory. Split payment is compulsory for transactions exceeding PLN 15,000 for over 150 “high-risk” goods and services listed in Annex No.15 to the VAT Act.
These Include:
- Metal products
- Laptops and processors
- Recyclable materials
- Fuel for cars
- Construction services
What is the Penalty for not Using the Split Payment Mechanism in Poland?
Both sellers and buyers can be faced with penalties for improper split payment mechanism usage. If a seller of goods or services in one of the mandatory categories fails to specify “Mechanizm podzielonej płatności” (split payment mechanism) on an invoice, they will face a fine of 100% VAT. On the flipside, if a buyer does not pay using the split payment mechanism, they will also be handed a 100% VAT sanction.
How can the Split Payment Mechanism in Poland Benefit Businesses?
All VAT taxpayers are included in the Ministry of Finance’s “white book of taxpayers”. Among other details, this book contains the correct bank account numbers of businesses registered for VAT in Poland. Businesses must be paid into the accounts listed, and face penalties for using unpublished bank accounts. Being able to verify bank account numbers against this database can help buyers establish trust in a seller.
Contact Leinonen for Support With VAT in Poland
By staying compliant with regulations surrounding VAT in Poland, your business can avoid problems and penalties in the future. Leinonen has been providing local expertise to 70+ small and large businesses in Poland for more than 15 years. Specialising in foreign-owned business, our tailor made services can give you the peace of mind that you are staying compliant with unfamiliar and ever-changing regulations.
Unsure how the split payment mechanism affects you, or need more advice on payroll, accounting, or tax and VAT in Poland? Connect with one of our local experts today.
