As from November 1, 2019 in Poland there is an obligation to apply the split payment mechanism (MPP) in certain sectors of the Polish industry. The obligatory split payment applies only to payments for purchased goods or services from Annex 15 to the VAT Act. Additionally, the split payment can be used only for transactions between VAT taxpayers and must be used only in the case the purchase is documented by an invoice in which the amount of the receivables exceed 15000 PLN or its equivalent in a foreign currency.
Among the services affected by the change there are construction services which till the October 31, 2019 were listed in Annex 14 to the VAT Act. These services were in certain situations liable to reverse charge mechanism irrespective of their value – the status of the subcontractor was crucial in the case of construction works. The regulations in this respect caused many doubts as it was not always obvious which company in the chain of the services is a subcontractor. After the change of the Polish VAT law, the obligatory split payment has covered the same categories of construction works that were previously subject to the reverse charge, but low value works have been excluded from the regulations.
Check our service Tax Advisory here https://europe-tax.com/services/tax-advisory/