Can payment card transaction be a fiscal fraud? Split payment in practice

Let’s remind – from November 1, 2019, taxpayers paying for the delivery of goods or services from the newly added Annex 15 to the VAT Act with a value exceeding PLN 15,000 gross are required to make a payment through the split payment mechanism, i.e. using the so-called split payment, under which the net invoice amount goes to the counterparty’s standard bank account and the VAT amount goes to a separate VAT account. Annex 15 to the VAT Act mainly includes coal products, animal and vegetable oils and fats, drawing inks, emulsions, inks, stretch films, ferro-alloys, steel and rolled products, pipes, pipes, base metals, as well as computers and peripherals, car parts, sale of parts for motor vehicles and motorcycles and construction works. The value of the entire invoice and not the individual product on it is decisive here. More information on this topic can be found in one of our previous entries.

Currently, tax law provisions do not provide for the possibility of making a split payment with a payment card (credit, debit card), nor is it technically possible. Moreover, tax regulations do not include any exemption from the obligation to use the split payment mechanism for card transactions.

Thus, any above threshold payment for a good or service listed in Annex 15 to the VAT Act can only be made in the form of a transfer, using the split payment mechanism.

Violation of this rule through payment by card will have two basic negative consequences:
(i) will constitute a tax offense,
(ii) prevents the expense from being treated as a tax deductible cost.

From the point of view of payment service providers, the key question remains – do they have the technical possibility and legal obligation to block payments above thresholds for goods or services listed in Annex 15 to the VAT Act?