UOKiK vested with new rights – Beginning in 2020, it may penalise companies which pay their invoices late
In light of the new laws, payment deadlines in “asymmetric” transactions – i.e. ones between large enterprises and ones from the SME (small and medium-sized enterprise) category – may not, under any circumstances, exceed 60 days, or 30 days where the debtor is a public entity (other than a medical institution, which will be bound by the general 60-day deadline). While, in some instances, the parties to a commercial relation may agree upon a payment deadline longer than 60 days by making express contractual provisions to this effect, and provided that such an arrangement is not blatantly unfair vis a vis the creditor, no such avenue exists in the case of contracts between large enterprises and SMEs. It shall be up to the debtor to demonstrate that a payment deadline in excess of 60 days is not blatantly unfair vs a vis the creditor.
1.UOKiK receives new rights
In cases where non-public entities excessively delay performance of pecuniary benefits, the Office of Competition and Consumer Protection (UOKiK) may initiate proceedings and impose a fine on a business enterprise which, in the space of 3 consecutive months, has aggregate payment arrears of at least:
- PLN 5 mln (in 2020-2021)
- PLN 2 mln (as of 2022)
Such proceedings may be initiated ex officio once UOKiK has performed a probability analysis assessing excessive delay in payments. Such analysis, comprising identification of the areas in which the risk of such delays is greatest, will focus on:
- The estimated value of invoices unpaid, or paid late, by the entity concerned, and
- The number of creditors affected by such failure to pay or late payments.
Information about probable delays will be passed on to UOKiK by the National Treasury Administration, working on the basis of fiscal data at its disposal. Apart from that, a suspicion of excessive delay in payment may be reported by any entity in possession of such information (the details of such a report and the identity of its author will be confidential).
In the course of the relevant proceedings, UOKiK may request any and all information and documents (it may also enjoin the enterprise to present all or some of its tax documents and accounting evidence in electronic form) as well as auditing enterprises within the relevant scope, even ones which are not party to the commercial transaction. Faced with reasonable grounds to expect resistance or obstruction in the course of an audit, UOKiK may seek assistance of the police with respect to:
- Establishing the identity of individuals,
- Ensuring order on the scene of the audit and the personal safety of those in attendance.
An audit within any given proceedings may not last longer than 20 days.
As it assesses whether there occurred excessive delays in settlement of financial liabilities, UOKiK will not take into account outstanding or delayed payments which had fallen due more than 2 years before commencement of the proceedings.
An enterprise found guilty of excessive delays in settling its liabilities will face a penalty calculated as the sum total of unitary penalties for liabilities not paid or paid late due within the period covered by the proceedings (again, without those where the deadline for payment had elapsed more than 2 years before commencement of the proceedings). The unitary penalty, meanwhile, shall be calculated in accordance with the following formula:
JKP (unitary penalty) =
WŚ (value of payments outstanding / remitted late) x n/365 (n-no. of days of delay) x OU (statutory interest)
Moreover, UOKiK may levy a fine corresponding to up to 5% of the revenue achieved by the offending enterprise in the previous fiscal year, up to a cap of EUR 50 mln, if the enterprise:
- Did not present the information requested by UOKiK or presented information which was untrue or misleading;
- Prevents or impedes UOKiK’s audit.
In the event that the enterprise in question had no revenues last year, or if that revenue cannot be established, the administrative penalty shall be not more than EUR 50 mln.
3. Duties of a large enterprise
An entity which is too large to qualify as an SME will be bound by law to present to its contracting party, not later than at execution of their contract and in the same form, a declaration of its “large enterprise” status.
Certain business enterprises will be obligated, by 31 January every year, to draw up and present to the minister competent for economic matters a report on payment deadlines applied in its commercial transactions. The duty to file such reports shall apply to:
- Equity groups (in the fiscal sense), whatever the level of their revenues;
- Taxpayers other than equity groups whose revenue for the fiscal year exceeded EUR 50 mln.
The first reports of this sort will have to be submitted for the fiscal year 2020. In the case of an equity group, a report must be submitted by the management of every member company. Entities which fail to file a declaration or report, or which present untrue information, may be liable for a fine.
4. Penalties may be avoided...
- ... and the matter closed with a caution, where the value of unpaid / delayed payments for which unitary penalties have been assessed is equal to, or less than, receivables collected by the given entity during the period in question past their deadline, or not collected at all;
- ... if excessive delays in payment are occasioned by force majeure;
- ... where the circumstances merit closing the case without a penalty.
5. Other new rules
Other noteworthy changes include:
- The amendments to the Polish Civil Process Code: art. 485 (payment injunction) and art. 730 (security);
- A new offence distinguished in the legislative Acts regarding counteraction of unfair competition (art. 3.2 and art. 17 g) and contracting advantage (art. 7.3.4) – unwarranted prolongation of payment terms for goods delivered or services performed;
- Changes to the rates of interest and compensation for delayed payments;
- Provision for “bad debts” for purposes of corporate and personal income tax.