Michał Gosek

Tax adviser (Poland)
Associate Partner
Phone: +48 61 624 49 39

Agnieszka Szczotkowska

Tax adviser (Poland)
Phone: +48 616 24 49 22

Reduction of payment bottlenecks

The amended Act on Payment Deadlines in Commercial Transactions is going to come into force on 1 January 2020. Among other things, the lawmakers have:

  • shortened deadlines for payment in commercial transactions,
  • given the President of the Office for Competition and Consumer Protection powers to prosecute enterprises which cause the biggest payment bottlenecks,
  •  obliged the largest enterprises to submit annual reports on their payment practices. 

Shorter deadlines for payment in commercial transactions

The amended act introduces shorter deadlines for payment in commercial transactions where the debtor is a large enterprise and the creditor is micro, small or medium-sized. According to the act's new wording, the payment term cannot exceed 60 days. Any contractual arrangement of a longer term will be invalid. The regulation applies only to transactions between unequal enterprises. Where the enterprises are equal (e.g. two medium-sized ones), the burden of proof that the payment term is grossly unfair (if longer than 60 days) will rest with the debtor.

Higher statutory late payment interest

The amended act increases the statutory late payment interest rate in commercial transactions by 2 percentage points – the current rate is 9.5% and it will be 11.5%. The lawmakers hope that this change will make the crediting at the expense of other enterprises more expensive than other sources of financing and will discourage businesses from withholding payment.

CIT and PIT bad debt allowance

The amended act introduces also a bad debt allowance to the income tax acts. Following the suit of the VAT Act's mechanism, a creditor who does not receive a payment within 90 days of the due date set in the contract or invoice will be entitled to reduce the taxable base by the amount of the claim (at the same time, the debtor will be obliged to increase the taxable base by the amount he has not paid).

Additional obligations for the largest enterprises

Not all the regulations introduced by the amendments are good for enterprises – the lawmakers have imposed new reporting obligations on the largest ones. By virtue of the new regulations, tax-consolidated groups and organisations which earn income exceeding EUR 50 million annually will be obliged to report their payments terms in commercial transactions to the Minister of Entrepreneurship and Technology (ME&T). The electronic report will have to be submitted by the management by 31 January every year.

Information to be reported

The new regulations oblige the largest enterprises to report the following information to the ME&T (the list is non-exhaustive):

1. value of payments made and received in the previous calendar year:

  • within 30 days,
  • between 31 and 60 days,
  • between 61 and 120 days,
  • after 120 days

of the date of issue of the invoice or bill for the supply of goods or services,

2. value of payments not received in the previous calendar year within the due date set in the contract and the percentage of such payments in the total receivables of the year,

3. value of payments not made in the previous calendar year within the due date set in the contract and the percentage of such payments in the total liabilities of the year.

The ME&T is going to make this information public.

Administrative penalties for enterprises which cause payment bottlenecks

The amended act gives the President of the Office for Competition and Consumer Protection the right to impose administrative penalties on enterprises which pay their liabilities too late. In the first place, the authority will assess (ex officio or on request) if the delay is excessive. If it concludes that the delay is excessive, it will impose an administrative penalty on the enterprise in the amount depending on the unpaid (or late-paid) amount, the length of the delay after the due date, and the amount of the statutory late payment interest.

Moreover, an unjustifiably long payment term will be on the list of unfair competition acts.

The above regulations do not come into force until 1 January 2020 but enterprises should keep them in mind already. Although the legislators’ attempt at eliminating payment bottlenecks is clearly a step in good direction, we cannot forget about another set of reporting obligations imposed on the largest enterprises. If you would like to know more on that subject, please contact Rödl & Partner advisers.

Michał Gosek,

Agnieszka Szczotkowska