Poland extends VAT joint liability to IT, consulting & other services

See our Poland VAT guide for more details.

It brings mainstream corporate expenditure including IT, software, accounting, advertising, consulting, market research and business support services within the anti-fraud regime. Parliamentary discussions have also referred to management and administrative services.

Buyer potentially liable for supplier’s VAT

Poland already operates joint and several VAT liability rules, originally introduced to tackle fraud involving higher-risk goods such as metals and electronics.

The principle is that the tax authorities may pursue the customer for VAT which should have been remitted by the supplier.

Under the new rules, this principle is extended to selected intangible services where the buyer knew, or had reasonable grounds to suspect, that the supplier would fail to pay the VAT due.

Importantly, this is therefore not an automatic transfer of the supplier’s VAT liability to every customer purchasing these services. The knowledge or reasonable-suspicion condition remains central to the application of the measure.

PLN 15,000 per invoice threshold

The legislation has evolved during its passage through parliament.

Earlier proposals contemplated applying joint liability to the designated services irrespective of transaction value. Following consultation concerns, a monetary threshold was introduced. Parliamentary material describes the regime as applying to invoices exceeding PLN 15,000, with provisions also addressing purchases exceeding PLN 50,000 from the same supplier during a month.

The threshold is important because it largely removes routine low-value purchases from the measure while concentrating the anti-fraud control on more material expenditure.

Split payment provides protection

The practical consequence is likely to be increased use of Poland’s split payment mechanism (MPP) for affected services.

Under split payment, the customer separates the payment so that the net amount is paid to the supplier’s ordinary account while the VAT is transferred to a restricted VAT account.

Using MPP generally provides the purchaser with protection against joint liability. Poland is therefore effectively giving businesses a compliance route for mitigating the new supplier risk.

There is an important anti-abuse qualification. Parliamentary material indicates that voluntary split payment will not protect a purchaser where it knows that the invoice involves circumstances such as a fictitious supplier, sham or non-existent transaction, or amounts which do not reflect reality.

Why Poland is targeting services

The extension reflects the changing nature of VAT fraud controls.

Joint liability was historically easier to associate with physical goods susceptible to carousel or missing-trader fraud. Intangible services create a different problem because their actual supply can be considerably harder to establish.

Polish parliamentary debate explicitly highlighted this issue, pointing to IT, accounting, marketing, advertising, consulting, market research and administrative services as areas where there is no physical product to verify.

That makes fabricated or inflated invoices for services potentially useful in VAT fraud and artificial input VAT deduction schemes.

Another layer in Poland’s VAT digital controls

The change is particularly notable alongside Poland’s wider tightening of VAT controls, including the rollout of mandatory KSeF e-invoicing.

KSeF gives the tax authority much greater visibility over invoices and transaction relationships. Joint liability tackles the problem from another direction by increasing the incentive for purchasers to consider the VAT compliance risk of their suppliers.

For businesses, that makes VAT increasingly a procure-to-pay control, rather than something dealt with only when preparing the VAT return.