Split payment in Dynamics AX – modification for VAT changes

At the beginning of next year, a new mechanism of divided payment for enterprises into VAT settlements will be introduced in Poland. This artcile discusses all the changes, which are related to split payment and show what you need to customize company’s information system to new payment model.

What is split payment?

This is a new method of divided payment into VAT settlements in Poland, introducing from January 2018. After entering this settlement method, the invoice will be distributed to the net amount paid by the buyer, on the current supplier account and the amount of VAT to be paid on the VAT bank account.

The new payment mechanism is a solution proposed by the European Commission, which main objective is the ability to prevent fraud at an early stage of the transaction. Tax authorities can control the amount of VAT, when a new transaction is started and they will have access to the taxpayer’s VAT account. Thanks to this solution tax authorities can processed every transaction in real time.

Two split payment mechanisms – manual and automatic settlement system

The split payment mechanism distinguishes between two basic payment options. First of these is the automatic split payment. In this case the buyer makes a single payment but the whole amount is divided into net amount and VAT amount.

In case of manual split payment, we need to execute two transfer orders – one for net value, addressed to the seller and a separate transfer only with the sum of VAT.

Split payment – obligatory, but with incentives for taxpayers and benefits for resellers

A new payment method is not mandatory. As a result, the Ministry of Finance has made several incentives in the draft regulations to make the largest possible group of entrepreneurs decide on a split payment model. The main benefits are:

• The additional penalty VAT rates will not apply
• The penalty increased interest rate will not apply
• They will bear no joint and several liability
• Faster VAT return for sellers

Customize split payment for enterprise IT systems

If company decides to choose split payment method, it is necessary to adjust the business operations, which are recorded in IT systems.

Sii has a ready solution in the form of split payment modifications in Dynamics AX 2012 and D365. Modification is started for the selected supplier or recipient by using a parameter that can be switched on or off at any time. As a result of the inclusion of the parameter in the system, the automatic posting of the liability to the supplier will be made net and VAT at the time of posting the purchase invoice. In addition, two bank accounts will be added to the sales invoice – one for the net amount and the other for the VAT payment.

We encourage you to contact with Sii expert for split payment details.