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Split payment does not apply to insurance recourse


The Ministry of Finance has confirmed that the split payment mechanism should not be used for insurance recourse. Insurers recovering debts from the debtor will apply the old payment rules.

The new rules on the split payment mechanism, in force since the beginning of July, have raised concerns among insurers. Will the business of insuring short-term debts and paying compensation to customers who have not received payment on time for the goods or services supplied be subject to the new rules? This settlement model is called insurance recourse and according to the law it is treated differently than the assignment of receivables.

The Ministry of Finance clarified this issue in response to a question addressed to the Ministry by the Federation of Polish Entrepreneurs (FPP).

In the case of contracts under which the payment of compensation does not involve any assignment of the claim to the insurer, the split payment mechanism should not be applied. In this case, receiving a refundable claim from the person responsible for the loss (the debtor) is not a payment of the invoice documenting the transaction between the contracting parties - the position of the Ministry of Finance reads. 

The FPP points out that, although that position must be regarded as correct, there are still issues which the Ministry of Finance will have to clarify in order to eliminate possible contradictions in the interpretation of the new provisions. This concerns, for example, joint and several liability and the way in which incorrectly paid VAT funds are to be recovered.