VAT Refund Fraud

Actions involving the provision of false information in tax returns for the purpose of unjustified tax refunds are punishable in Poland and can result in liability in the form of multi-million dollar fines of up to PLN 33 million (EUR 8,25 million) and imprisonment. It is not always possible to speak only of a tax refund here, the act can also be committed when the taxpayer, by his behavior, leads to the credit of the tax surplus to tax arrears or current or future tax liabilities.

An offense related to VAT refunds will be the very attempt to obtain a VAT refund, resulting from a return filed with the tax authority. The taxpayer must bear in mind that it is therefore punishable to act in a way that will result in the exposure of depletion of budget revenues. In practice, VAT refund fraud can be committed with violations of other laws in force in Poland, in particular the so-called intellectual forgery. The VAT invoice in the legal system is considered a special type of document, and the person obliged to issue it, if he confirms unreliable transactions in it, exposes himself to criminal liability under Article 271a of the Polish Criminal Code and 62 § 2 of the Polish Fiscal Criminal Code. In the case of issuing or using unreliable invoices relevant to the determination of the amount of tax liability, containing the amount of receivables, the value of which or the total value of which is greater than PLN 10 million (EUR 2,5 million), the taxpayer commits a special crime, which is punishable by imprisonment from 5 to 25 years.

Another element that can be crucial in a VAT refund fraud case is the possibility of filing a correction to the tax return. However, all the circumstances of the case should be carefully examined, as a filed correction of the tax return does not always protect against liability for all tax crimes and offenses under the Fiscal Criminal Code. This has been confirmed by the Supreme Court, indicating that not all offenses stipulated in the Fiscal Criminal Code can be “remedied” by filing a correction to the tax return and paying the depleted public receivable (and therefore with interest for late payment).

Applying for repayment of the tax will, as a rule, trigger control actions by the tax authorities and the interest of the criminal tax authorities. In the case of multimillion-dollar VAT invoices and so-called carousel schemes, perpetrators often face arrest and the risk of detention on remand. The first procedural activities involving the taxpayer are extremely important from the perspective of creating a defense line. So, as you can see, the role of defense counsel in proceedings related to VAT refund fraud is to extensively investigate the circumstances of the initiation of criminal fiscal proceedings. Also at stake is the earliest possible filing of requests for evidence that can clearly relieve the suspect of the charges against him of involvement in a carousel scheme or other VAT refund fraud.

Our support for taxpayers includes:

• providing legal advice;
• analysis of evidence;
• preparation of recommendations for further action and litigation strategy;
• analysis of recent rulings that may be beneficial to the client;
• active participation in the proceedings, including submission of evidence and participation in hearings;
• representation of the client at all stages of the proceedings;
• filing appeals against procedural decisions,
• conducting training in the above-mentioned areas.

Our offer is addressed to:

• persons suspected of committing VAT refund fraud;
• accountants, finance directors and other financial professionals;
• companies seeking support in the area of criminal compliance;
• entities wishing to make effective adjustments to tax returns.