Extensive payment delays (backlogs)

Payment terms in commercial transaction – key rules

In commercial transactions in Poland the entrepreneurs shall not:

  1. Offer and agree for the payment terms longer then 60 days as this is the maximum allowed payment term in asymmetrical transactions in Poland; and if the agreed payment term is longer, it will be substituted by operation of law by the maximum 60 days payment term; maximum 60 days payment terms also applies to payments in parts (in instalments) with regards to each part;
  2. Offer and agree for the payment terms longer then 60 days in symmetrical transactions unless the parties expressly choose longer payment term and the term will not be manifestly unfair for the creditor;
    • Even if the entrepreneur (exercising this exemption) agrees for the payment terms longer then 60 days, the entrepreneur shall never offer and agree for the payment terms longer then 120 days as that would entitle the creditor to terminate or rescind the agreement at any moment;
  3. Offer and agree for the payment terms longer then 30 days unless the entrepreneur accepts to pay statutory interest from the 31st day until the due date;
  4. Determine the payment term after lapse of 30 days if the payment term was not agreed contractually, unless the entrepreneur accepts to pay statutory interest from the 31st day;

Summary of maximum payment terms in Poland

Transaction description Symmetrical transaction:

debtor and creditor are both SME; or

both are large enterprises; or

debtor is SME and creditor is a large enterprise

Asymmetrical transaction:

creditor is SME while debtor is a large enterprise

Payment term Maximum payment term is 60 days which can be modified by the parties on condition the extension is expressly agreed by the parties and the new, longer term is not manifestly unfair for the creditor The payment term cannot be longer the 60 days from the date of fulfilment of the obligation and delivery to the debtor of an invoice or bill confirming the delivery of the goods or the performance of the service

Qualification of the entrepreneur as one of SME or large enterprise shall be done in accordance with Annex I to the Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty.

If the entrepreneur would be qualified a large enterprise it will be obliged to inform the counter-party of its status at latest at the moment of conclusion of the commercial transaction.

Excessive delays in payment prohibition

The entrepreneur shall never allow a situation where the total sum of overdue payments, as well as payments settled with delay exceeds PLN 2 million in total for three consecutive months (PLN 5 million in 2020/21), as it would be qualified an infringement of prohibition of excessive delays in payment.

In such situation the President of UOKiK would have a right to commence proceedings, which may also include dawn raids, audits and requests to provide information and documents (also from entities which are not parties to the audited transactions) and to impose fines up to EUR 50 million for non-compliance. The auditing period may cover up to 2 years in reverse, but only payments with due dates which fall after 1 January 2020 may be taken into account.

The fine for excessive delays is calculated based on specific formula [= the sum of the fines for each delay calculated in the following way: X (the overdue amount) * Y/365 (number of days overdue/365) * the penalty interest]. Repeated fines are increased by 50%.

Furthermore, information about the commencement of proceedings, as well as on the fines imposed, is published on the official UOKiK website.

Reporting obligation of payment practices

If the entrepreneur meets the requirements defined in art. 27b.2. Corporate Income Tax, i.e.: (1) is tax capital group, and/or (2) exceeded EUR 50 million in revenues in the previous year, it will be obliged to report annually its payment practices to the Minister of Economy.

The reports will be made publicly available, including being published on the official website.

As the regulation just came in force on 1 January 2020, the first reporting period will be from 1.01.2020 to 31.12.2020. Reports are due by 31 January of each following year and are to be submitted through an online reporting system. Members of the management board are personally liable for reporting, and non-compliance is subject to a fine. The first payment practices reports will be published in February 2021 and will cover the payment practices in 2020.

The payment practices report shall cover payments received and payments made in the thresholds of less than 30 days, 31 to 60 days, 61 to 120 days, and over 120 days from the invoice, delivery of goods, or performance of services, as well as payments that have been or have not been received within the terms provided for in the underlying agreements.

Expert team leader DKP Legal Michał Dudkowiak
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