Split Payment — When is it Mandatory and How Does it Work?

What is the Split Payment Mechanism?

Split payment (MPP) is a system in which payment for an invoice is divided into two bank transfers:

• First transfer (net amount) — goes to the seller's standard bank account
• Second transfer (VAT) — goes directly to the seller's special VAT account (MPP taxpayer account)

Purpose: Reduce VAT fraud. The system forces the buyer to send VAT through a separate channel, making it harder to commit VAT fraud and trade in fake invoices.

When is Split Payment Mandatory?

Split payment is mandatory if and only if all four conditions are met simultaneously:

Condition	Explanation
1. Gross value ≥ 15,000 PLN	Invoice must exceed 15,000 PLN threshold (one document)
2. Good from Annex 15	At least one good/service from Annex 15 of VAT Act
3. B2B (taxpayer to taxpayer)	Both seller and buyer are VAT taxpayers
4. Domestic sale	Does not apply to exports or intra-EU transactions

Which Goods are Subject to Split Payment (Annex 15)?

Annex 15 of the VAT Act contains over 150 commodity and service items. Most common:

• Metallurgy: steel, aluminum, copper, secondary materials
• Chemistry: plastic materials, heating oils, fuels
• Electronics: computers, electronic components, phones, TVs
• Automotive: car spare parts, tires
• Services: construction services, international transport
• Other: wood, cardboard, industrial machinery, medical devices

Where to find the complete list? Biznes.gov.pl — Split Payment Mechanism or ISAP (Internet System of Legal Acts).

Examples: When is Split Payment Mandatory?

Example 1 (split payment mandatory):

• Sale: Steel manufacturer sells bolts (Annex 15 good) for 18,000 PLN gross
• Buyer: Factory (VAT taxpayer) in Poland
• Result: Split payment MANDATORY (all conditions met)

Example 2 (split payment not mandatory):

• Sale: Seller sends goods for 20,000 PLN, but 18,000 PLN stationery plus 2,000 PLN fuel
• Buyer: Personal vehicle (natural person, not VAT taxpayer)
• Result: Split payment NOT mandatory (buyer not VAT taxpayer)

Example 3 (not mandatory — below threshold):

• Sale: Electrical goods for 12,000 PLN (below 15,000 PLN)
• Buyer: VAT taxpayer
• Result: Split payment NOT mandatory (value below threshold)

How to Complete an Invoice with Split Payment

On every invoice subject to mandatory split payment, you must include the following information:

"Split payment mechanism — art. 116 para. 2 of VAT Act" or short: "Split payment"

The information should be placed in a field or note on the invoice, clearly visible. Modern accounting software (Enova365, Comarch, LibreOffice Calc) already has this feature built-in.

Penalties for Not Using Split Payment

If buyer fails to apply mandatory split payment, the following consequences apply:

Penalty	Amount
Additional tax obligation (VAT surcharge)	30% of VAT from invoice
Loss of VAT deduction right	Complete loss of deduction possibility
Fine for insufficient security	Up to 10% of obligation amount
Seller's joint and several liability	Seller liable for buyer's tax

Example of penalties: Buyer fails to use split payment on 50,000 PLN invoice (VAT 23% = 9,150 PLN). They face additional obligation of 2,745 PLN (30% of 9,150 PLN). Additionally, they lose VAT deduction of 9,150 PLN, resulting in actual cost of 11,895 PLN for the company.

Does Split Payment Protect Against Tax Audit?

Yes, if you apply split payment correctly, you get additional protection against "joint liability for VAT" (joint and several liability). This means if your counterparty fails to pay VAT to the tax office, you (as seller) won't be liable, provided that:

• You correctly entered split payment information on invoice
• You kept proof that information was visible to buyer
• Order and payment were finalized through split payment

Split Payment — Important Deadlines and Changes for 2026

History: Split payment has been in effect in Poland since July 1, 2020. The Finance Ministry has repeatedly expanded the list of goods (Annex 15).

Current status (2026): The split payment mechanism is in effect until February 29, 2028, unless the European Commission grants another extension. There are no signs of abandoning this system in the near future.

Practical Checklist for Business Owners

• Check if invoice exceeds 15,000 PLN gross
• Check if good/service is on Annex 15 list
• Confirm that buyer is VAT taxpayer
• Add to invoice: "Split payment — art. 116 para. 2 of VAT Act"
• Software: Set up split payment in your accounting program
• Settlement: Report split payment in JPK-VAT (relevant fields)
• Documentation: Keep proof of split payment use for 5 years
• Advice: If uncertain — consult your tax advisor

FAQ: Frequently Asked Questions

What happens if I forget to write split payment on the invoice?

If you forget to note split payment on an invoice where it was mandatory, your buyer loses the right to VAT deduction and faces a 30% surcharge. You, as seller, may be held jointly and severally liable.

Can I apply split payment voluntarily?

Yes. While split payment is mandatory only under the conditions above, you can apply it voluntarily to any transaction. This provides additional protection against joint liability.

Does split payment change my cash flow?

Yes. VAT is transferred separately, so your buyer's cash flow changes. However, your actual net income remains the same — the buyer just splits the payment into two channels.

Do I need special permission to use split payment?

No. Every VAT taxpayer in Poland can use split payment. Your bank must support it (most major banks do). You just need to provide your VAT account number to your buyer.

What if my buyer is from outside Poland?

Split payment applies only to domestic transactions (Poland-Poland). For exports and intra-EU transactions, reverse charge or other mechanisms apply instead.

Can I recover VAT paid through split payment?

Yes, VAT goes to a special VAT account, but it's still your tax liability. If conditions are met, you can claim it back as input VAT in the normal way through JPK-VAT.