A Warsaw-based trading company receives a PLN 18,000 invoice from a Polish supplier. The finance team processes it as a standard transfer. Two weeks later, a tax audit by the Krajowa Administracja Skarbowa (National Revenue Administration, KAS) flags the payment as non-compliant. The company faces a 30% additional tax sanction on the VAT amount – and the liability is immediate.

Poland's mechanizm podzielonej płatności (VAT split payment, MPP) is mandatory for B2B transactions that meet two cumulative conditions: the invoice value exceeds PLN 15,000 gross and the supply covers goods or services listed in Annex 15 to the VAT Act. When both conditions are met, the buyer must route the VAT portion directly to the supplier's dedicated VAT account. Failure triggers a 30% sanction on the VAT amount shown on the non-compliant invoice, plus potential personal liability for the company's management board.

This alert covers the three questions that matter most: which transactions are caught, what the consequences of non-compliance are, and what your finance and legal teams should do right now. The rules have been in place since November 2019, but KAS enforcement has intensified significantly since 2024.

Which transactions trigger mandatory split payment?

The MPP obligation applies when three elements align. First, both buyer and seller must be VAT-registered in Poland. Second, the gross invoice value must exceed PLN 15,000 – or its foreign-currency equivalent. Third, the invoice must relate to goods or services in Annex 15 of the Polish VAT Act.

Annex 15 covers a broad range of sensitive sectors. The list includes construction services, steel and metal products, electronic goods (phones, laptops, tablets), fuel, car parts, and certain chemical products. It also captures wholesale trade in food commodities and selected financial services. If your company operates in any of these sectors, every invoice above PLN 15,000 is presumptively caught.

One point that surprises many clients: the threshold applies per invoice, not per transaction or per month. A supplier who splits a PLN 30,000 order into three PLN 10,000 invoices does not escape the obligation – the National Revenue Administration (KAS) treats artificial splitting as tax avoidance. The Naczelny Sąd Administracyjny (Supreme Administrative Court, NSA) has confirmed this position in several rulings since 2022.

  • Both parties must be Polish VAT payers
  • Gross invoice value exceeds PLN 15,000
  • Supply falls within Annex 15 categories
  • Invoice must carry the annotation mechanizm podzielonej płatności
  • Payment must be made via a bank transfer using the dedicated MPP message format

Foreign companies registered for VAT in Poland are equally subject to MPP. A German investor's Polish subsidiary purchasing steel components for a manufacturing plant in Silesia must comply on every qualifying invoice – there is no exemption for foreign-owned entities. For context on how Polish digital invoicing requirements interact with cross-border supply chains, see our analysis of what KSeF means for your business in Sweden.

What are the penalties for non-compliance?

The consequences of missing the MPP obligation are severe and, in part, irreversible. Polish tax law imposes a 30% additional tax liability calculated on the VAT amount shown on the non-compliant invoice. This sanction applies to the buyer who fails to use split payment – not the supplier. The Urząd Skarbowy (Tax Office) issues the additional assessment automatically upon audit.

Beyond the 30% sanction, the buyer loses the right to deduct input VAT on the non-compliant invoice. That forfeiture is permanent. Correcting the payment method after an audit has commenced does not restore the deduction right – the window closes the moment KAS opens a formal proceeding. This is the irreversible consequence that makes early compliance so important.

We secured a reversal of a 30% MPP surcharge exceeding PLN 280,000 for a manufacturing client in the Mazowieckie region (autumn 2025). The case turned on whether the supplier's invoice annotation was legally sufficient – a technical point that most in-house teams miss entirely.

Personal liability is a further risk. Under Polish corporate legislation, board members who knowingly authorise non-compliant payments may face fiscal penal liability. The Kodeks karny skarbowy (Fiscal Penal Code) provides for fines and, in aggravated cases, restriction of liberty. For companies with foreign shareholders, this exposure can affect directors' ability to operate across jurisdictions – a point relevant to transfer pricing and group treasury structures alike.

Our team obtained interim protection of a VAT account balance exceeding EUR 1.2m for a logistics operator in Lower Silesia (spring 2026), preventing premature release of funds during a pending KAS audit. Acting within 48 hours of the audit notice made the difference.

What should your company do right now?

Immediate action is needed on three fronts: invoice review, payment process, and supplier communication. Start with a 90-day lookback on all outgoing payments above PLN 15,000. Cross-reference each against Annex 15. Any payment that should have used MPP but did not represents an open liability – consider a voluntary correction before KAS identifies it first.

Voluntary correction filed before an audit commences reduces the 30% sanction to 15% under Polish tax law. That 50% reduction is available only if the correction is spontaneous and complete. Once KAS opens a proceeding, the reduced rate is no longer accessible. The deadline to act is therefore the date of any audit notification – not the date of the original transaction.

What to prepare for an MPP compliance review:

  • List of all B2B invoices above PLN 15,000 gross in the past 12 months
  • Confirmation that each Annex 15 supply carried the correct MPP annotation
  • Bank records showing MPP-format transfers for qualifying payments
  • Supplier agreements identifying the goods or service categories supplied

For companies with complex group structures, MPP intersects with transfer pricing documentation and IP Box regimes. Intra-group supplies of qualifying goods must also comply – the related-party relationship does not create an exemption. A tax advisor Warsaw-based teams can consult should map all intra-group flows against Annex 15 before the next audit cycle. For cross-border structuring considerations that interact with MPP, our article on the double tax treaty between Poland and the Netherlands addresses relevant payment routing issues. Companies exploring equity incentive structures should also review ESOP structuring for Polish startups and tech companies for related compliance touchpoints.

Finally, update your accounts payable procedures. Every payment instruction above PLN 15,000 should include an automated Annex 15 check. Polish law does not provide a good-faith defence for buyers who rely on incorrect supplier categorisations – the obligation rests entirely with the paying party.

Your company's specific exposure depends on transaction volume, sector, and whether prior non-compliant payments remain uncorrected. Each of those factors affects the size of the open liability and the time available to act before KAS identifies the gap.

To receive an expert assessment of your MPP compliance position and any open correction window, contact info@kordeckipartners.com. Our tax team will map your qualifying transactions, quantify the residual liability, and file any voluntary corrections before the audit clock starts.

Frequently asked questions

Q: Does mandatory split payment apply to foreign companies without a Polish establishment?

A: Yes, if the foreign company is registered as a VAT payer in Poland. Registration for Polish VAT purposes – whether through a fiscal representative or directly – brings the company within the full scope of MPP obligations. There is no reduced regime for non-resident VAT payers. A company registered solely for import VAT recovery purposes should verify its status with a qualified Polish tax advisor before processing any Annex 15 supplies.

Q: How long does a voluntary MPP correction take, and what does it cost?

A: A voluntary correction typically takes two to four weeks from instruction to filing, depending on the volume of non-compliant invoices. The correction involves amended VAT returns and a supplementary payment of the 15% reduced sanction. Legal and advisory fees vary by complexity, but acting before a KAS audit notification is always materially cheaper than defending a full audit assessment. Early correction also preserves the input VAT deduction right, which cannot be recovered once an audit commences.

Q: Is MPP the same as KSeF Poland requirements?

A: No – they are separate obligations, though they interact. MPP governs the payment method for qualifying invoices. KSeF Poland is the national e-invoicing system that will govern invoice issuance for most B2B transactions from 2026. Under KSeF, the MPP annotation will be embedded in the structured invoice data rather than added manually. Companies preparing for KSeF onboarding should treat MPP compliance as a prerequisite, since non-compliant payment histories will be visible to KAS through the integrated data systems.

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to tax compliance, VAT advisory, and KAS audit defence. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.