One of the goals of introducing the National E-Invoice System is to combat dishonest taxpayers and close the VAT gap. The introduction of standard audit files and the split payment method had a similar goal. All of these tools, as data from the Ministry of Finance indicates, have reduced the tax gap, but not completely closed it. Therefore, it's important to remember that the introduction of the National E-Invoice System won't completely eliminate tax fraud either.
In the past, unwitting contractors of tax fraudsters have suffered the consequences of their fraudulent activities. The date of entry into circulation of structured invoices may be a potential source of abuse. This is generally considered to be the date of entry into the system.
The regulations governing the National Tax and Customs Code (KSeF) do not provide a procedure for dealing with "empty" invoices or in cases of suspected fraudulent conduct by the issuer. Therefore, existing administrative court case law and the "Methodology for Assessing Due Diligence by Purchasers of Goods in Domestic Transactions" developed by the Ministry of Finance should be consulted.
Pursuant to Article 86(1) of the VAT Act, a taxpayer has the right to deduct input VAT on expenses incurred for the purchase of goods or services used to perform taxable activities. However, this right cannot be abused and used to fraudulently claim input VAT. A taxpayer cannot deduct tax if they knew, or based on objective circumstances, should have known, that a given activity involved VAT irregularities. Therefore, demonstrating due diligence is essential.
The Ministry of Finance provides examples of circumstances that should be considered in order to exercise due diligence. These include:
- resale of the goods to a previously designated buyer,
- cash payment of an amount exceeding PLN 15,000,
- payment by transfer to two accounts,
- unjustified, non-market price,
- transaction terms inappropriate for the industry,
- payment without the mandatory split payment mechanism,
- payment to an account not on the white list,
- failure to document transactions.
However, according to the case law of administrative courts, a lack of due diligence cannot be attributed to a taxpayer who:
- did not verify the source of financing of the contractor's activities,
- contacted the contractor only by e-mail,
- met with the contractor outside his company's headquarters,
- met with the contractor once before making the transaction.
The introduction of the National e-Invoice System will not change the rules for handling invoices that do not document actual economic events. Nor will the system curb unfair business practices. To protect their interests, every entrepreneur should verify new business partners to the greatest extent possible and exercise due diligence in their business dealings. In such a situation, entrepreneurs who unknowingly participate in unfair business transactions will not face sanctions.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of August 31, 2023
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