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On 1 September 2019, the law introducing the electronic list of active VAT taxpayers (the so-called taxpayer white list) entered into force. Entrepreneurs can use it to find information about their business partners, including VAT registration, deregistration and taxpayer status, as well as bank account numbers.
Importantly, the introduction of the taxpayer white list will have consequences for entrepreneurs under PIT and joint and several liability. Let us examine how to avoid adverse consequences and verify business partners. Taxpayer white list – let us start with the theory. Under Article 96b(1) of the VAT Act, the head of KAS must keep an electronic list of entities that the head of the tax office did not register or removed from the VAT register, as well as entities registered for VAT, including those whose VAT registration has been restored.
The list is available in the Ministry of Finance’s public bulletin.
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Taxpayer white list – what consequences face taxpayers?
Income-tax consequences.
The taxpayer white list is intended to make it easier to verify business partners and prevent entrepreneurs from trading with disappearing VAT taxpayers. Apart from this convenience, however, lawmakers require taxpayers to check whether a seller’s bank account number appears on the white list, and say that a buyer should pay only into such an account. This obligation arises only if:
- the one-off transaction value, regardless of the number of payments, exceeds PLN 15,000 or its equivalent; foreign-currency transactions are converted into zlotys at the National Bank of Poland’s average exchange rate for the last business day before the transaction;
- the seller is an active VAT taxpayer.
The bank account should be checked on the day the transfer is planned. Thus, when the above conditions apply, the taxpayer should always pay into the seller’s account shown on the list. Otherwise the buyer cannot record the expense for tax purposes and thereby reduce taxable revenue (Article 22p(1)(2) of the amendment to the PIT Act).
Mandatory bank-account verification will apply only from 1 January 2020; from that date PIT and joint-liability consequences arise for the taxpayer.
If a cost documenting a transaction of at least PLN 15,000 with an active VAT taxpayer was included in tax-deductible costs but paid into an account not on the list, one must:
- reduce tax-deductible costs, or
- if costs cannot be reduced, increase revenue
in the month in which the transfer was ordered.
The right to recognise the expense as a tax-deductible cost is restored if the buyer submits a notice containing:
1) the identification number, company name and registered-office address; for an individual taxpayer, their name and permanent place-of-business address, or, if none, their residential address;
2) the invoice issuer’s details shown on the invoice (identification number, name and address);
3) the number of the account to which payment was made;
4) the amount transferred to the account in point 3 and the date the transfer was ordered
to the head of the tax office competent for the invoice issuer within three business days of ordering the transfer.
Example 1.
Entrepreneur Marek bought goods from ABC worth PLN 16,000 gross. The purchase was documented by an invoice (30-day deferred payment, issued on 2 January 2020). The cost was entered in the tax revenue and expense ledger in January. Marek ordered the transfer on 17 February 2020. Unfortunately, after transferring, he realised he had not checked the account on the list. When he checked on 20 February 2020, the account turned out not to be listed. As three business days had elapsed since the transfer was ordered, Marek cannot notify the tax office. In February 2020, he must:
- reduce tax-deductible costs, or
- if costs cannot be reduced, increase revenue.
Example 2.
Monika is a sole trader and bought a machine for resale on 3 February. Its gross value was PLN 20,000. She received an invoice with a 30-day deferred payment date, issued on 3 March 2020. The cost was entered in the tax revenue and expense ledger in February. Monika ordered a transfer on 17 February 2020. Soon afterwards she realised she had not checked the account on the list. She checked the same day and found that the account was not listed. She therefore has three business days from ordering the transfer to notify the seller’s competent tax office and avoid reversing the cost.
A case where, as a rule, the buyer will always need to notify the tax office is when the seller has only a private account. This is because personal current accounts are not included in the list.
Penalties – joint and several liability
If the buyer pays into a different account not on the list and the seller fails to pay VAT on the transaction, the buyer is jointly and severally liable with the seller up to the amount of the VAT liability on that transaction.
Importantly, there are two ways to avoid this penalty:
notify the head of the tax office competent for the seller no later than three days after transferring funds to the wrong bank account;
pay the amount due using the split-payment mechanism.
Transfers ordered to accounts other than those listed by 31 December 2019 do not incur penalties.
Example 3.
An entrepreneur bought a passenger car for PLN 16,000 gross and transferred the full amount to an account absent from the taxpayer list. The seller did not settle the VAT on the sale. The tax office may demand the outstanding VAT from the buyer. An exception applies if the buyer voluntarily paid by split payment or notified the seller’s tax office within three business days of the transfer that the account was not on the list. The buyer then does not answer for VAT left unpaid by the seller.
The Ministry of Finance did not anticipate several problems that could arise from introducing the taxpayer white list. The following table presents some of them and possible solutions:
Questions concerning the taxpayer white list
| Unable to identify the account when paying by debit or credit card
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Lawmakers say they will adjust the rules by the end of 2019, before the provisions imposing adverse consequences on taxpayers take effect.
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| Payments to foreign business partners
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If a foreign partner is not registered as an active VAT taxpayer in Poland, the new rules do not apply to payments to that partner.
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| Payment through an intermediary
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When paying through an intermediary, the buyer checks only the intermediary’s account against the list. If it is listed, the buyer faces no consequences if the intermediary pays into an unlisted seller account; the intermediary bears them instead.
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The Ministry of Finance says it will issue tax explanations of the white-list rules. These should probably resolve the uncertainties, and are likely to be published in autumn.
How do you verify partners on the taxpayer white list?
An entrepreneur can check a partner’s status in one of two ways:
1) use third-party software linked to the Ministry of Finance API. That software may connect to the white list using the following method:
- search– enter one piece of information about the partner (such as NIP, part of the name, REGON or bank account number) and the date for which the data should be shown. The taxpayer then receives:
- the full range of list data for the entities returned by the query,
- a unique identifier, an electronic key confirming the query (the entity identifier requested, the date for which the answer was given and the query date);
2) check – enter three pieces of information (NIP, REGON, bank account number and the date for verification); the taxpayer receives:
- YES or NO – indicating whether the account is assigned to the specified entity number on the selected date,
- an electronic key confirming the query (entity identifier, the date for which the answer was given and the submission date).
At the end of August, the Ministry published a test API so that software makers, for example accounting software providers, could build working white-list integrations. There was very little time to integrate before the rules came into force. API use is limited: a taxpayer can make ten queries daily, each for up to 30 entities (300 in total). Once the daily limit is reached, access is blocked until midnight.
The tax authority also wanted to provide financial institutions – banks and credit unions – with VAT taxpayers’ settlement-account data so that they could create a tool allowing entrepreneurs to check automatically, when ordering a transfer, whether the recipient account is on the white list. Unfortunately, whether such a solution is implemented and offered to entrepreneurs depends on the banks.
Unfortunately, some financial institutions say that “banks are not obliged to give clients tools for checking accounts used to pay VAT invoices against the white list. The taxpayer alone bears the risk and responsibility for ensuring that the recipient’s account appears on the white list on the transfer date.”
Taxpayer white list – how do you prepare?
To avoid adverse consequences from failing to check a partner, or from transferring to an unlisted account despite checking, an entrepreneur acting as buyer should above all:
- after 31 December 2019 check bank accounts of partners in transactions worth PLN 15,000 or more, especially partners with whom they are working for the first time;
- if an account is not listed, clarify this with the partner immediately before paying.
Sellers receiving payments of more than PLN 15,000 should check their own white-list details, particularly the accounts reported to the tax office (for a company in KRS) or through CEIDG (for a sole trader). A missing or incorrect account exposes buyers to penalties and may damage the seller’s market credibility.
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