Changes to joint and several VAT liability from 1 October 2026

August 18, 2026

For a long time, the split payment mechanism (MPP) has served as one of the key protective safeguards available to businesses. Payment made using this mechanism effectively protected purchasers against joint and several liability for VAT not paid by the supplier. From 1 October 2026, however, this principle will be subject to significant limitations. The amendment to the VAT Act currently being considered by the Polish Parliament (draft bill UD314) introduces circumstances in which the tax authorities will be able to pursue a purchaser’s funds, even where payment of an invoice has been properly made using a VAT account.

Why is the Ministry of Finance introducing new measures?

The explanatory memorandum to the draft amendment explicitly states that the split payment mechanism is being deliberately abused by dishonest market participants. Funds accumulated in VAT accounts are used to pay for fictitious invoices, allowing those funds to be extracted and effectively “laundered” within the system. In this context, the Ministry of Finance relies on the concept of abuse of law, a mechanism that allows tax authorities to deny protection arising from formally compliant actions where their sole purpose is to obtain a tax advantage contrary to the intention of the legislation.

When will split payment cease to protect the purchaser?

Under the proposed legislation, protection against joint and several liability through the use of the split payment mechanism will not be available where the purchaser:

• knew that the invoice paid under the split payment mechanism documented transactions that had not actually taken place;
• knew that the invoice had been issued by a non-existent entity;
• knew that the information contained in the invoice was inconsistent with reality;
• participated in a transaction that lacked economic justification, particularly where the price significantly deviated from market value.

A key concern may be the criterion of the purchaser’s knowledge and awareness. The draft provisions state that a purchaser will be liable for the supplier’s VAT if they knew, or had reasonable grounds to suspect, that the transaction was fictitious in nature. Such broadly drafted provisions may give rise to numerous interpretative disputes, as the distinction between actual knowledge and the obligation to possess such knowledge is often difficult to establish in practice.

Extension of joint and several Liability to intangible services

In addition to the changes concerning the split payment mechanism, the draft legislation significantly expands the scope of transactions subject to joint and several liability. Until now, such liability has applied exclusively to goods listed in Appendix 15 to the VAT Act. From 1 October 2026, the new Appendix 16 will cover selected intangible services, including:

• consultancy and management services;
• advertising and marketing services;
• accounting, bookkeeping and audit services.

However, joint and several liability in relation to intangible services will be conditional. A purchaser may be held jointly and severally liable for a contractor’s VAT arrears where the value of the transaction is at least PLN 15,000 and the tax authority determines that the transaction price differed from arm’s length market conditions.

Practical implications for businesses

These changes will require businesses to adopt a significantly more proactive approach to counterparty verification than has previously been the case. The mere use of the split payment mechanism will no longer be sufficient to avoid liability. Instead, businesses will need to carry out genuine due diligence on their counterparties, including verification of their VAT status, their history on the White List of VAT taxpayers, and the economic rationale of the transaction.

Particular attention should be paid to transactions involving consultancy, advertising and accounting services, especially where they are carried out with related parties or exceed PLN 15,000 in value, as the pricing of such services may be challenged as not reflecting market rates.

The VAT amendment scheduled to take effect on 1 October 2026 represents a significant shift in the existing rationale underpinning the split payment mechanism. Businesses should review their counterparty verification procedures as soon as possible, update their compliance frameworks, and consider whether their contractual provisions adequately address the new risks associated with joint and several liability.

Tags joint and several liability, mechanizm podzielonej płatności, odpowiedzialność solidarna, split payment