Proposals to limit payment backlogs – continued…

In September 2018, we devoted a newsletter to the Polish government’s plans to introduce legislative changes devised to reduce payment delays in the Polish economy (please see Newsletter No. 84).

In May 2019, the draft legislative Act regarding amendment of certain acts with a view to reducing payment backlogs was formally submitted to the Sejm, the lower chamber of Poland’s parliament (form no. 3475). The first reading of the draft took place on 12 June, whereupon it was referred for further work in the Public Finance Committee and the Economy and Development Committee.

It might be recalled at this point what the major changes to the legislative Act of 8 March 2013 regarding payment deadlines in commercial transactions will comprise (apart from the name itself, in that the statute will now be entitled “the legislative Act regarding counteraction of excessive delays in commercial transactions”):

1. Reduction to 30 days of payment deadlines in transactions involving a public entity – the only entities which, by way of an exception, would benefit from payment deadlines of up to 60 days would be health care providers;
2. Institution of a 60-day deadline (counted from service of the invoice on the debtor) for remittance by a large entity to an SME, with any contractual provisions stipulating a longer payment deadline to be rendered invalid by operation of the law.

Annex 1 to European Commission Regulation (EU) No. 651/2014 of 17 June 2014 defines SMEs as comprising micro, small and medium-sized enterprises, i.e. enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 mln, and/or an annual balance sheet total not exceeding EUR 43 mln, with the following sub-categories:

• A small enterprise is one which employs less than 50 people and which has an annual turnover and/or annual balance sheet total not exceeding 10 mln EUR;
• A micro enterprise is one which employs less than 10 people and which has an annual turnover and/or annual balance sheet total not exceeding 2 mln EUR.

1. Increase of statutory interest for late payments to where it corresponds to the reference rate of the National Bank of Poland plus 10 percentage points (at the present moment, application of this formula would yield a rate of 11.5%); once again, health care providers will be subject to different treatment, in that, in their case, it is proposed that the interest rate remains unchanged, at the National Bank of Poland reference rate plus 8 percentage points, i.e. 9.5%.
2. Varied rates of compensation for the costs of recouping amounts due, depending on the value of the claim:

• Up to PLN 5,000: EUR 40;
• between PLN 5,000 and PLN 50,000: EUR 70;
• Over PLN 50,000: EUR 100.

1. Obligation incumbent on members of the Management Board (or other managing body):

• of capital groups (defined in a tax law context), whatever their revenue level,
• of taxpayers other than capital groups whose revenue in the given tax year exceeded the equivalent of EUR 50 mln (at the average exchange rate announced by the National Bank of Poland for the last business day of the calendar year preceding that in which individual data of the taxpayers is released to the general public)

to submit to the minister competent for economic matters, by 31 January of each year, information about the payment deadlines applied by the given taxpayer in the previous year in commercial transaction. Failure to fulfil this duty may incur a fine. The information thus submitted will be subject to publication in the Public Information Bulletin (BIP).

1. The Office of Competition and Consumer Protection (UOKiK) will now be empowered to initiate proceedings against entities which excessively delay satisfaction of their debts, i.e. in cases where, over a period of three consecutive months, the sum total of overdue liabilities and liabilities which had been satisfied late amounts to at least PLN 2 mln (and totals at least PLN 5 mln in the case of proceedings initiated in 2020 and 2021).
2. Where UOKiK establishes that a party to such proceedings is in fact guilty of excessive delay in satisfying payments, it may impose a financial penalty in accordance with the formula set out in art. 13v of the draft act, and a decision to this effect will be published on the UOKiK website.
3. Information about suspected payment delays will be forwarded to UOKiK by the National Treasury Administration (KAS). In the course of its proceedings, UOKiK may opt to search the premises of the enterprise in question, also with police escort.

The legislative proposals presently being considered also provide for complementing the legislative Act regarding counteraction of unfair competition and the legislative Act regarding counteraction of abuse of contracting advantage in dealing in agricultural produce and foodstuffs with a clause to the effect that unjustified application of excessively long payment deadlines in settlements for goods and services is unlawful. Similar additions are mooted for the Polish Civil Code (which would also provide for payment injunctions).

The draft statute would also introduce amendments to the Tax Ordinance, to the CIT and PIT Acts, and the legislative Act regarding flat rate tax on certain revenues accruing to natural persons.

For further information, we invite you to contact:

Bernadeta Kasztelan-Świetlik
Partner, attorney at law
b.kasztelan@gessel.pl
+48 22 318 69 57