Tax changes in 2024 - accounting for bank cross-border payments

Tax changes in 2024 – accounting for bank cross-border payments

On 1 January 2024, the Act of 14 April 2023 amending the Goods and Services Tax Act and certain other Acts will come into force, which imposes additional obligations on banks and other financial institutions to report cross-border payments. The new rules require domestic banks, branches of foreign banks, credit institutions, payment institutions and co-operative savings and credit unions (CSCUs) to keep records of payments and cross-border payments in the case of payment services where these entities make more than 25 cross-border payments to the same addressee during a quarter. These records will be stored electronically. The amendments are aimed at combating tax fraud in the e-commerce sector. However, they do not impose additional obligations on payers or payees.
A cross-border payment is a payment where the payer is located in the territory of one Member State and the payee is located in the territory of another Member State or in the territory of a third State. If both the payer and the payee are in the territory of the same Member State or outside the EU, the new obligations do not apply.

The Act of 14 April 2023 amending the Act on Goods and Services Tax and Certain Other Acts (Journal of Laws 2023, item 996) brought Polish rules in line with EU rules on combating tax fraud in the e-commerce sector. The Amendment Act introduces into the Polish legal system Council Directive (EU) 2020/284 of 18.02.2020 amending Directive 2006/112/EC as regards the introduction of certain requirements for payment service providers. The introduced rules are aimed at tightening co-operation between tax administrations and payment service providers.

Who will be affected?

The amendment to the law introduced VAT into Chapter XI, Chapter 2a “General Obligations of Payment Service Providers”. The added rules impose obligations on payment service providers, i.e. domestic banks, branches of foreign banks, credit institutions, payment institutions and credit unions, to maintain, store and send records of cross-border payments to the head of the National Tax Administration. A payment service provider shall keep records of payees and cross-border payments in respect of payment services provided in electronic form for each quarter if, during the quarter, it provides payment services corresponding to more than 25 cross-border payments in favour of the same payee . Individual payment information between the original payer and the intended recipient must be included in the records.
Payment services means the activities specified in Article 3 Section 1 paragraphs 2-6 of the Act of 19.08.2011 on payment services.

IMPORTANT! The obligation to keep records shall not apply to payment services provided by the payer’s payment service providers in respect of a cross-border payment, if at least one of the payee’s payment service providers is located in the territory of a Member State.
The location of the payee’s payment service provider shall be determined on the basis of that payment service provider’s BIC or other identification code which uniquely identifies the payment service provider and indicates its location.

The amended provisions regulate the rules for calculating the cross-border payment threshold and locating payers and payees. Details are also specified regarding the records maintained by the payment service provider.
Payment service providers are also required to keep the records entered in electronic form for 3 years from the end of the tax year in which the payment was made.
The information provided to the Head of National Tax Administration will be stored by him and placed on the EU CESOP system. The CESOP system will collect data provided by the administrations of all member states of the European Union.
The new rules will come into force on 1 January 2024. The changes will affect payment service providers, including: with the need to identify transactions that will be subject to reporting to the Head of the National Tax Administration, as well as establishing appropriate procedures.

If you would like to know more ask questions at office@progressholding.pl