Starting from June 1, 2019, the the law on so-called payment bottlenecks is to enter into force in the event of its adoption by the parliament

On 1 June 2019, a bill prepared by the Minister of Entrepreneurship and Technology for amending certain laws to limit payment bottlenecks may come into force after its adoption by the parliament.

Definition of payment bottleneck

The author of the billdefined a payment bottleneck as delayed performance of deferred payments, which in turn causes problems with financial liquidity on the part of entrepreneurs. In addition, in the justification for the bill, attention was also paid to other negative phenomenon which effects are very similar to the first ones, namely the use of long terms, which are unjustified by their economic nature, of payment transactions.

In connection with the above, it was decided to make a number of changes in the Code of Civil Procedure, income tax laws, law on combating unfair competition, on liability for violation of public finance discipline, on payment dates in commercial transactions and other acts.

The most important changes

The most important changes proposed in the bill are the following:

1. In commercial relations between a large entrepreneur and a medium, small or micro entrepreneur the payment deadline will be limited to 60 days by law. Provisions of the contract that do not comply with this provision will be null and void,

2. In transactions between entrepreneurs, if none of them is a large entrepreneur, the maximum payment period will be in the same way limited to 60 days, however, the parties have the right to apply a longer period, provided that such a provision will not be grossly unfair to the creditor,

3. If the party ofthe transaction (the debtor) is a public entity, the maximum payment period will be 30 days. The exception is made for medical entities – 60-day maximum period will be kept,

4. Capital groups and taxpayers, exceeding income EUR 50 million annually, will be required to provide the Minister of Finance with an annual report on the applicable payment terms,

5. Transfer of the burden of proof that the agreed payment date is not unfair will be transferred to the debtor, and demand of recognition of such a term as unfair can be submitted within 3 years from the date of contract performance,

6. The creditor’s right to withdraw from the contract or to terminate it in the event of excessive extension of the time limit, the determination of which was grossly unfair to the creditor (in the case of fixing the payment date over 120 days),

Moreover, as announced by the current Minister of Entrepreneurship, Jadwiga Emilewicz, if the act is passed, entrepreneurs will pay taxes only after obtaining payment for goods or services. It will be called „exemption for bad debts”.

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