Consequences of making a payment outside the whitelist
Taxpayers running a business must remember about many tax obligations imposed on them by the provisions of the Act. One of such obligations is the need to make payments to contractors to a bank account listed on the white list. In the article below, we will analyze what the tax implications of making an off-white list payment are.
What is the white list of VAT payers?
The white list of taxpayers is kept by the Head of KAS in electronic form and contains a list of entities:
for which the head of the tax office did not register or deleted from the register as VAT taxpayers;
registered as VAT payers, including entities whose registration as VAT payers has been restored.
This list is generally available for each taxpayer and is updated on an ongoing basis in the event of data changes.
The white list of taxpayers contains the following data of VAT taxpayers:
company (name) or name and surname;
2a. entity status:
for which the registration was not made or who was removed from the register as a VAT taxpayer,
registered as an "active VAT payer" or "exempt VAT payer", including the entity whose registration has been re-registered;
REGON identification number, if granted;
registered office address - in the case of an entity which is not a natural person;
the address of the permanent place of business or the address of the place of residence, in the case of no fixed place of business - in relation to a natural person;
the names and surnames of the members of the body authorized to represent the entity and their tax identification numbers;
names and surnames of proxies and their tax identification numbers;
name and surname or business name (name) of the partner and his tax identification number;
the date of registration, registration refusal or deletion from the register and re-registration as a VAT taxpayer;
the legal basis for refusal to register, deletion from the register and re-registration as a VAT taxpayer, respectively;
numbers of settlement accounts opened in connection with the conducted business activity.
One of the elements of the white list of VAT taxpayers is the bank account number related to the business activity.
Obligation to make payments between entrepreneurs using bank accounts
Another provision that we must pay attention to is Art. 19 of the Act - Entrepreneurs Law.
The regulation contained therein indicates that making or accepting payments related to the conducted business activity takes place via the entrepreneur's payment account, whenever:
a party to the transaction from which the payment results is another entrepreneur and
one-time transaction value, regardless of the number of payments resulting therefrom, exceeds PLN 15,000 or its equivalent, while transactions in foreign currencies are converted into zlotys according to the average exchange rate of foreign currencies announced by the National Bank of Poland on the last business day preceding the transaction date .
Such a regulation forces entrepreneurs who make mutual transactions to use bank accounts to make payments. As a result, when the transaction value exceeds PLN 15,000, payment must be made via the payment account. In this case, however, it is unacceptable to make payments in cash.
It is worth emphasizing that this type of obligation does not apply to payments if the party to the transaction is a natural person who does not conduct business activity. The law requires entrepreneurs to use bank accounts to make mutual payments, when the one-off transaction value exceeds PLN 15,000.
Tax consequences of making a payment out of the white list
Tax law provisions, specifically art. 22p of the PIT Act, refer to the tax consequences related to the violation of the obligation to make a payment through a bank account.
As we read in Art. 22p paragraph. 1 items 1-2 of the PIT Act, taxpayers conducting non-agricultural economic activity do not include the cost in the part in which the payment for the transaction referred to in Art. 19 of the Act - Entrepreneurs Law:
was made without the use of a payment account or
was made by bank transfer to an account other than that included on the date of the transfer order in the list of entities referred to in Art. 96b paragraph. 1 of the act on tax on goods and services - in the case of the supply of goods or services, confirmed by an invoice, made by a supplier of goods or a service provider registered for the purposes of tax on goods and services as an active VAT taxpayer.
In the light of the above provision, the tax consequences of making a payment in cash or to an account other than that resulting from the white list are very severe for the taxpayer. The payment made in this way cannot be considered a tax deductible cost.
As a result, although the taxpayer incurs an expense related to the conducted business activity and the general conditions of costs specified in Art. 22 sec. 1 of the PIT Act, due to the failure to fulfill the obligation to pay the amounts due to the bank account, the value of the expenditure does not constitute a tax cost.
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It should be noted that there are some exceptions to the above provision, which constitute a lifeline for taxpayers and ultimately allow the expense to be recognized as tax costs.
In this regard, first of all, let us point out that the limitations in including costs do not apply if the payment of the amount due by the taxpayer was made by bank transfer to an account other than the one included in the white list of VAT taxpayers on the date of the transfer order, and the taxpayer made the first payment by bank transfer to this account notification of ZAW-NR to the head of the tax office competent for the taxpayer who made the payment, within 7 days from the date of ordering the transfer.
At this point, it should be emphasized that pursuant to Art. 15zzn of the Act on special solutions related to the prevention, counteracting and combating COVID-19, other infectious diseases and emerging crisis situations, the deadline for submitting the ZAW-NR notification is extended to 14 days from the date of ordering the transfer. The main consequence of making a payment to a bank account other than that resulting from the white list of VAT taxpayers is the inability to classify this expense as tax costs as part of business activity. The way out of this situation is to notify the head of the Tax Office of this fact within 14 days from the date of ordering the transfer via the ZAW-NR form. Moving on to the summary of our findings, it should therefore be pointed out that the tax sanctions for making payments outside the white list of VAT taxpayers are very strict. Taxpayers must remember about the necessity to pay amounts due to the contractor's bank account. Moreover, it must be an account on the list referred to in Art. 96b of the VAT Act, commonly referred to as the white list of taxpayers.