Criminal Tax Offenses in Poland: Legal Risks and Consequences for International Businesses

In today’s interconnected global economy, international companies operating in Poland face a complex web of tax regulations that, if not properly navigated, can lead to serious criminal liability. The Polish authorities have significantly intensified their approach to tax enforcement in recent years, with the National Revenue Administration (KAS) conducting increasingly sophisticated tax audits and fiscal control proceedings against foreign entities. As a criminal defense attorney specializing in white-collar crime, I’ve observed a concerning trend: many international businesses remain dangerously unaware of the criminal implications of tax irregularities under Polish law.

The stakes couldn’t be higher. What might begin as a routine tax inspection can quickly escalate into criminal tax proceedings, threatening not only substantial financial penalties but also potential imprisonment for company executives and managers. With penalties reaching up to 720 daily rates (where one daily rate can equal up to PLN 33,333) and imprisonment terms of up to 25 years for the most severe tax crimes, international businesses must recognize that tax compliance in Poland is not merely an accounting matter—it’s a critical legal risk management issue with potential criminal dimensions.

What Constitutes a Criminal Tax Offense in Poland?

Under Polish law, criminal tax offenses (przestępstwa skarbowe) are defined primarily in the Fiscal Penal Code (Kodeks karny skarbowy). These offenses typically involve actions that result in diminishing tax obligations or obtaining undue tax refunds. The most common violations include VAT fraud, income tax evasion, and false declarations in tax documentation.

It’s worth noting that Polish authorities distinguish between fiscal crimes (przestępstwa skarbowe) and fiscal misdemeanors (wykroczenia skarbowe), with the threshold typically determined by the value of the diminished tax liability. When the amount exceeds PLN 11,200 (approximately €2,500), the act is classified as a crime rather than a misdemeanor, carrying significantly harsher penalties.

International businesses should be particularly vigilant about invoice fraud schemes, as Polish authorities have recently concentrated enforcement efforts on combating VAT carousel fraud and fictitious transactions designed to generate artificial tax deductions.

How Does the Polish Fiscal Control Process Work?

The fiscal control process in Poland typically begins with a tax audit (kontrola podatkowa) or customs and fiscal control (kontrola celno-skarbowa) conducted by the National Revenue Administration. These proceedings can be initiated based on risk analysis, random selection, or specific intelligence about potential irregularities.

When substantial evidence of tax irregularities is discovered during an audit, the case may be referred to the prosecutor’s office, initiating a criminal investigation. At this stage, the company and its representatives transition from being subjects of administrative proceedings to suspects in criminal proceedings, with all the legal implications that entails.

Companies should understand that Polish tax authorities have extensive powers during fiscal control, including the ability to examine business premises, review documentation, interview employees, and even conduct surveillance in certain circumstances. The right to defense begins at the earliest stages of these proceedings, making immediate legal representation essential.

What Are the Penalties for Tax Crimes in Poland?

The Polish Fiscal Penal Code establishes a graduated system of penalties for tax offenses. For fiscal crimes, penalties include fines expressed in daily rates (from 10 to 720 daily rates), restriction of liberty, or imprisonment ranging from 5 days to even 25 years in the most extreme cases of organized VAT fraud.

Corporate entities themselves cannot be held criminally liable under the Fiscal Penal Code, but board members, directors, CFOs, and other individuals responsible for tax compliance can face personal criminal liability. This creates significant personal risk for executives of international companies operating in Poland.

Additionally, the court may impose supplementary penalties including bans from holding specific positions, engaging in certain activities, or participating in public procurement. Publication of the judgment is another potential consequence that can cause severe reputational damage.

Can Foreign Executives Be Prosecuted for Polish Tax Violations?

Yes, foreign executives and managers can absolutely face prosecution for tax violations committed by their Polish subsidiaries or branches. Polish criminal jurisdiction extends to offenses committed on Polish territory, regardless of the nationality of the perpetrator.

What many international executives don’t realize is that they may be held liable even if they weren’t physically present in Poland when the violation occurred. Under Polish legal principles, criminal liability can extend to those who directed or approved tax decisions from abroad, or who failed to provide adequate supervision over tax matters.

Our law firm, Kopeć & Zaborowski, specializes in defending foreign executives facing such charges. With our comprehensive understanding of both Polish criminal tax law and international business operations, we provide strategic defense tailored to the unique circumstances of international clients. If your company operates in Poland, I strongly encourage you to consult with specialized legal counsel to assess and mitigate your potential exposure.

What Are the Most Common Tax Fraud Schemes Targeted by Polish Authorities?

Based on my experience defending clients in high-profile tax fraud cases, I’ve observed that Polish fiscal authorities are particularly focused on several specific types of tax violations:

• VAT carousel fraud, where goods are passed through a series of companies to fraudulently claim VAT refunds
• Fictitious or deliberately undervalued cross-border transactions
• Unreported foreign income or assets
• Manipulation of transfer pricing to shift profits to lower-tax jurisdictions
• Falsification of invoices or creating documentation for non-existent transactions

International businesses should conduct thorough due diligence on their Polish business partners, as unwitting participation in a fraud scheme can still lead to criminal liability if authorities determine that proper verification procedures weren’t followed.

How Are Tax Audits Converted to Criminal Investigations?

The transition from administrative tax proceedings to criminal investigations often occurs when tax authorities discover evidence suggesting intentional tax evasion rather than mere error or negligence. This critical threshold is crossed when authorities believe they can prove criminal intent (umyślność).

Key triggers that often convert tax audits into criminal cases include significant discrepancies between reported and actual tax obligations, pattern of irregular behavior over time, use of shell companies or complex structures without clear business purpose, and destruction or falsification of financial records.

Once a criminal investigation begins, the procedural landscape changes dramatically. Suspects gain certain rights (including the right to remain silent) but also face more intrusive investigative techniques. The prosecutor’s office takes a leading role, working alongside specialized fiscal intelligence units.

What Preventive Measures Can International Companies Take?

Prevention is invariably more cost-effective than defense in tax criminal matters. International companies operating in Poland should implement comprehensive compliance programs specifically addressing Polish tax regulations and criminal risk areas.

Effective preventive measures include regular internal tax audits conducted by specialists familiar with Polish tax law, thorough verification procedures for business partners and transactions, implementation of whistleblower systems to detect potential irregularities early, and detailed documentation of tax positions and decision-making processes.

At Kopeć & Zaborowski, we offer preventive legal counseling designed to identify and address potential criminal tax risks before they attract the attention of Polish authorities. Our team combines expertise in both white-collar criminal defense and tax compliance to provide comprehensive protection for international businesses.

What Defenses Are Available in Polish Tax Criminal Cases?

Effective defense in Polish tax criminal cases requires a multifaceted approach. Among the most successful defense strategies I’ve employed are challenging the existence of criminal intent (arguing that discrepancies resulted from error rather than deliberate action), demonstrating compliance with professional advice (showing that tax positions were taken based on expert counsel), and questioning procedural irregularities in the investigation.

Another important defense mechanism is the “”voluntary disclosure”” (czynny żal) procedure, which allows taxpayers to avoid criminal liability by self-reporting violations before authorities discover them. However, this option must be pursued correctly and at the right time to be effective.

Technical tax law arguments often form the backbone of successful defenses. These may involve complex interpretations of Polish tax regulations, European Union directives, or international tax treaties that justify the taxpayer’s position.

How Has COVID-19 Affected Tax Enforcement in Poland?

The COVID-19 pandemic has significantly altered the tax enforcement landscape in Poland. Following substantial government spending on pandemic relief measures, Polish authorities have intensified their efforts to address budget deficits through aggressive tax collection and enforcement.

We’ve observed an increase in targeted audits of companies that received COVID-19 financial assistance, with authorities scrutinizing whether these businesses met all eligibility requirements. International companies that restructured their operations during the pandemic should expect heightened scrutiny of these changes from a tax perspective.

Additionally, the digitalization of tax enforcement accelerated during the pandemic. Polish authorities now employ sophisticated data analytics and artificial intelligence to identify potential tax irregularities, making detection of non-compliance more likely than ever before.

What Should You Do If Your Company Becomes Subject to Tax Criminal Proceedings?

If your international company faces tax criminal proceedings in Poland, immediate action is crucial. The first step should be engaging specialized legal counsel with expertise in both Polish criminal defense and tax matters. At Kopeć & Zaborowski, we provide emergency response services for businesses facing sudden tax criminal investigations.

Secure all relevant documentation and implement a communication protocol that protects legal privilege. Inappropriate communications can severely compromise your defense position. Consider conducting an internal investigation parallel to the official one, but only under the direction of legal counsel to maintain privilege.

Remember that cooperation with authorities, when strategically managed, can sometimes lead to more favorable outcomes. However, this approach must be carefully balanced with protecting the company’s legal rights and position.

Conclusion: Strategic Approach to Tax Criminal Risks in Poland

The intersection of tax compliance and criminal law creates a particularly challenging risk landscape for international companies operating in Poland. With authorities increasingly willing to pursue criminal charges for tax irregularities, companies must adopt a proactive, strategic approach to these risks.

Understanding the distinction between administrative tax non-compliance and criminal tax fraud is essential. While the former may result in financial penalties, the latter can lead to criminal records, imprisonment, and devastating reputational damage for both companies and their executives.

As an attorney who has defended numerous international clients against tax criminal charges in Poland, I cannot overemphasize the importance of specialized legal guidance in this area. The complexity of Polish tax criminal law, combined with aggressive enforcement practices, makes professional support not merely advisable but essential for international businesses navigating this challenging terrain.