The split payment mechanism (MPP) is regulated under Articles 108a–108f of the VAT Act. It was introduced to protect the tax system against fraud but has since become an important part of everyday business transactions in Poland. 

What is a split payment?

The split payment mechanism divides an invoice payment into two parts:

1. The net amount goes to the seller’s regular business account.
2. The VAT amount goes to a special VAT account, assigned automatically by the bank to each entrepreneur.

Although the funds in the VAT account remain the taxpayer’s property, their use is nevertheless restricted mainly to settling tax liabilities.

More importantly, split payment applies only to payments made via business bank accounts. It does not apply to private accounts used by sole traders.

Many business owners choose to delegate financial compliance to experts. Our accounting services help ensure your payments and reporting are fully aligned with VAT rules.

How to make a split payment transfer?

Payment through MPP is carried out using a special bank transfer form (“split payment transfer”). The buyer must indicate:

• the invoice number,
• the seller’s VAT ID (NIP),
• the gross amount (or part of it),
• the VAT amount (or part of it).

The banking system then automatically splits the payment, sending the net amount to the business account and transferring VAT to the seller’s VAT account. One transfer can cover one or several invoices from a given settlement period (from 1 day up to 1 month.)

Voluntary vs. mandatory split payment

The mechanism can be either voluntary or mandatory.

Voluntary MPP

The buyer decides whether to use split payment e.g., when the invoice is below 15 000 PLN or does not concern sensitive goods/services.

Mandatory MPP

It applies ehen two conditions are met:

• the gross invoice amount exceeds 15 000 PLN (also in foreign currencies, converted to PLN)
• the invoice concerns goods or services listed in Annex 15 of the VAT Act.

Even if the seller fails to include the note “split payment mechanism” on the invoice, the buyer is still obligated to make a payment using MPP.

Using funds from the VAT account

Funds from the VAT account may be used to pay for:

• VAT,
• income taxes (PIT, CIT),
• excise duty,
• customs duties,
• tax arrears and related interest.

To use the VAT funds for other purposes, an entrepreneur can apply to the Tax Office for a transfer to their main business account. The authority has 60 days to respond and may refuse.

Which goods and services does mandatory MPP cover?

Mandatory split payment applies to so-called “sensitive goods and services”, listed in Annex 15 of the VAT Act, including:

• construction services,
• electronic and IT equipment,
• automotive and motorcycle parts,
• jewelry,
• selected food products (e.g., oils),
• chemical goods (e.g., inks),
• coal, fuel, and gas.

How to mark an invoice with a split payment?

For transactions covered by mandatory MPP, the seller must include the note: 

“Mechanizm podzielonej płatności” (split payment mechanism). 

Moreover, even if this note is missing, the buyer is legally required to use split payment – otherwise, they risk penalties. 

Benefits for business

While MPP may seem restrictive, it also provides advantages: 

• proof of due diligence in transactions, 
• ability to deduct costs even if payment goes to an account outside the VAT whitelist, 
• faster VAT refunds (25 days), 
• protection from VAT penalties and interest, 
• funds in the VAT account are safe from enforcement actions. 

Penalties

Failure to apply split payment when required may result in: 

• an additional tax liability of 30% of the VAT amount, 
• criminal fines – up to 180 daily rates for the seller and 720 daily rates for the buyer. 

The VAT split payment mechanism safeguars tax revenue and reduces fraud risks. For businesses, it means both restrictions and tangible benefits – from faster refunds to protection against sanctions. 

If you need additional support in accounting and hr&payroll services contact us!

Text based on: https://www.ey.com/pl_pl/insights/tax/split-payment-co-to-jest-mechanizm-podzielonej-platnosci