Entrepreneurs should make or accept payments related to their business activities through a bank account whenever (i) another entrepreneur is a party to the transaction from which the payment results, and (ii) the one-time value of the transaction exceeds the equivalent of EUR 15,000. The above follows from Article 22 of the Law on Freedom of Economic Activity. However, there has never been a sanction for making settlements using a private savings and checking account (so-called ROR) instead of a dedicated business account.
Hence - Many sole proprietors use private accounts for business purposes. The motivation for doing so most often happens to be laziness for the sake of opening a business account and/or fear of fees for a business account, which are almost always higher.
Surprisingly, this approach can bring the 'lazy' an added benefit of a chance to bypass the split payment mechanism.
This is also because the law introducing the split payment mechanism (split payment) does not require taxpayers who use ROR for their business to open a business account. According to information from banks, confirmed by the Finance Ministry, The split payment mechanism will not cover taxpayers who use a private ROR in their business activities. This is because banks only adjust business accounts to split payment.
What will an entrepreneur using a private account for his business gain?
More liquidity. This is because there will be no VAT freeze for tax payments. Such an entrepreneur will be able to freely trade funds, i.e. as it was before. The treasury will also not block VAT on the VAT sub-account, as it will not have such capabilities.
Who will benefit?
Mostly small entrepreneurs, especially the self-employed, who have not yet set up a business account despite being in business.
Until when will this idyll last?
It is difficult to say. In my opinion, it can end in 4 ways and will continue:
- Until such time as banks start enforcing their bylaws prohibiting the use of private accounts for business, and especially introducing sanctions in the form of contractual penalties or the possibility of termination. A partial removal of tax transfer functionality for such accounts is also a sure alternative; either
- Until the Ministry explicitly leads the obligation to make company settlements using a dedicated company account while introducing a sanction for non-compliance, which could be an administrative penalty or the inability to account for BUI or input VAT on payments made using a private account; or
- Until the split payment mechanism becomes compulsory (rather than voluntary, as it is now); or
- Until a stronger counterparty (e.g., a recipient of b2b services) places a condition on the execution of spit payment transfers thus forcing the micro-entrepreneur to set up a corporate account. This is especially possible when dealing with large companies, which will not want to undermine the tax and apply uniform corporate standards.
What happens when a contractor (entrepreneur) makes a split payment transfer to a private (entrepreneur) account?
The transfer will be rejected.
In this particular case, you can see that laziness sometimes produces better results than overzealousness.
This entry is the first in the "split payment" category - certainly not the last.
