The split payment system, introduced in Poland over four years ago, was designed to combat VAT fraud by separating the VAT portion of payments into a dedicated account. However, recent findings show that fraudulent actors continue to exploit the system, using funds from VAT accounts to settle fictitious invoices, undermining the mechanism’s core purpose.
Key Issues Identified
- Misuse of VAT accounts: Fraudsters have found ways to use VAT funds for illegitimate transactions, including fake invoices.
- Limited deterrent effect: The mechanism did not significantly reduce VAT fraud, as anticipated.
- Operational loopholes: The system’s rigidity has led to unintended consequences, such as liquidity issues for honest businesses.
️ Upcoming Changes
In response, Polish authorities are preparing additional VAT safeguards, referred to as “VAT seals.” While details are still emerging, these measures aim to:
- Strengthen invoice verification processes.
- Enhance transaction transparency between businesses.
- Introduce new compliance tools to detect and prevent fraudulent behavior.
The European Commission has also played a role, recently blocking Poland’s attempt to expand the split payment mechanism to more goods and services, citing concerns over proportionality and market impact.
These developments reflect a broader shift toward more sophisticated digital VAT controls, aligning with EU-wide initiatives like ViDA (VAT in the Digital Age).
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