Detection of Unreliable VAT Payers
To avoid the risk of paying VAT on behalf of your business partner, use our integrated SAP solution, which enables the verification of suppliers, customers and their bank accounts.
The solution also allows you to check individual items (tax documents) that may be subject to VAT liability, as well as payment orders, before they are sent to the bank.
The amendment to the Value Added Tax Act introduced the concept of the so-called unreliable payer and VAT liability. The status of unreliable payer is acquired from 1 January 2013 by a VAT payer who seriously fails to meet their obligations in relation towards tax administration. This information is published on the Register of VAT Payers website.
Furthermore, since 1 October 2014, the Financial Administration has been introducing stricter conditions for the application of this legislation. Changes have been made to the classification of entities that may be included in the list of unreliable VAT payers.
The most significant changes include a reduction in the VAT arrears threshold and the addition of situations that may be evaluated as grounds for declaring a payer unreliable (e.g. failure to meet deadlines for mandatory filings, inability to provide required information, etc.).
A customer is liable for paying VAT on behalf of their supplier if the supplier:
- Is marked as an unreliable VAT payer, or
- Uses a bank account to which the invoice was paid that is not published in the Register of VAT Payers and is not a foreign bank account.
The practical consequence of VAT liability is that the entrepreneur must pay the VAT on behalf of their business partner. In certain cases, the supplier may also be liable for VAT paid by their customer, for example, in the case of issued credit notes.
Solution Description
Our solution uses the CRPDPH web service operated by the Ministry of Finance to retrieve the necessary information.
The goal is to answer the following questions:
- Is the supplier a reliable VAT payer?
- Is the supplier’s bank account registered with the Tax Office?
- Is the registered account a domestic account?
The solution includes a dedicated report directly in SAP that performs mass checks of VAT payer reliability and bank account registration at the following levels:
Supplier and customer master data
- Verification of VAT reliability and all bank accounts maintained in the master record
- Suitable for one‑time or regular checks of the entire supplier and customer database
Individual supplier and customer items
(e.g. supplier invoices and customer credit notes)
- Determination of VAT reliability for specific documents
- Verification of the specific bank account linked to the document
- Used for ongoing checks of unpaid liabilities and retrospective checks of already paid documents
- Option to limit checks to documents exceeding a defined value threshold
Payment proposals
- Batch verification of items planned for bank payment
- Identification of payments directed to unreliable VAT payers, unregistered accounts, or foreign accounts.
Additional Features
History view
- Within the mass check report, it is possible to view the history of individual suppliers who were temporarily classified as unreliable VAT payers.
Bulk payment blocking
- Ability to block payments in bulk at the level of individual items and/or master records.
Flexible control
- For individual checks, users can define whether the identification of an unreliable VAT payer should generate only a warning or completely stop the processing workflow.
Solution Benefits
- Significant time savings thanks to full integration within SAP
- Transparent report with the option to display only “problematic” records
- Monitoring of the historical reliability status for suppliers and customers
- Ability to block unreliable payers and related documents from payment directly during the check