Tax Crimes & VAT Fraud in Poland: How the Country Fights Carousel Schemes & Illegal Invoice Trading

Poland, as a member of the European Union, faces significant challenges in the realm of VAT fraud and other tax crimes. Over recent years, authorities in Poland have heightened their efforts to detect, prosecute, and deter sophisticated schemes-especially carousel frauds and illegal invoice trading-that drain public coffers and distort fair competition. This article explores the legal framework, enforcement tools, notable cases, and preventive strategies. In closing, it also highlights how expert legal representation-such as that offered by Attorney Maciej Zaborowski-can be critical for entities and individuals facing investigations.

What Is VAT Fraud? Key Mechanisms and Tactics
VAT fraud in Poland (and more broadly in the EU) refers to fraudulent manipulation of value-added tax systems to evade tax or claim undue refunds. One of the most notorious forms is carousel fraud (also known as Missing Trader Intra‑Community, or MTIC, fraud).

In a typical carousel scheme, goods move across multiple companies (often in several EU countries) without the VAT being remitted to tax authorities. The fraudster (the missing trader) collects VAT from the purchaser but disappears before paying it to the state, while the subsequent party reclaims the input VAT.

Other related tactics include:

• Fictitious invoices or phony supplier chains-issuing invoices for non-existent deliveries
• Circular trading or “round‑tripping”-goods or services being passed through chains purely for the VAT effect
• Fraudulent refund claims-presenting false data or concealing real operations to claim undue VAT refunds
• Invoice “warehousing” or resale with manipulation-where invoices are bought and used to mask illicit activity

Legal & Institutional Framework in Poland

Polish Penal Fiscal Code and Relevant Offences
In Poland, tax crimes and fiscal offences are governed under the Penal Fiscal Code (Kodeks Karny Skarbowy).

The Penal Fiscal Code distinguishes between tax offences (less serious, fixed fines) and tax crimes (punishable by fines, imprisonment, or both).

Some typical offences include:

• Failure to disclose the tax base or subject matter (Article 54)
• Tax fraud by submitting false or incomplete tax declarations (Article 56)
• Wrongful issuance or use of invoices (Article 62)
• Unjustified tax refund (Article 76)

Importantly, many tax crimes require intentional conduct (dolus). Unintentional negligence generally does not trigger criminal liability, except in narrowly defined cases (e.g., supervisory fault).

Penalties: Fines, Imprisonment, and Asset Seizure

Poland imposes serious penalties for tax crimes:

• Fines are expressed in daily rates, with courts setting both the number of rates (from 10 up to 720) and the rate amount based on the offender’s financial circumstances.
• As of 1 July 2024, daily rates may range from PLN 143.34 to PLN 57,336; the minimum fine begins around PLN 1,433, and the maximum can exceed PLN 41 million.
• For severe schemes (large-scale false invoicing), penalties may include imprisonment up to 25 years.
• In 2017, an amendment explicitly allowed sentences of up to 25 years for major VAT fraud cases.
• For large cases, courts may refuse parole for long periods; e.g., false invoice fraud exceeding PLN 10 million can carry 25‑year maximum sentences with restricted remission.
• Forfeiture of profits derived from the crime is mandatory under Article 33 of the Penal Fiscal Code.

Corporate / Entity Liability

Polish law also recognizes collective (corporate) liability: legal entities may face fines ranging from PLN 1,000 up to PLN 5,000,000, but not exceeding 3% of the entity’s revenue in the fiscal year of the offense.

To hold an entity liable, prosecutors must show shortcomings in organizational oversight, supervision, or internal controls.

Anti‑Fraud Tools and Enforcement Mechanisms in Poland

Mandatory Split Payment Mechanism (SPM)
One of Poland’s key defenses against VAT fraud is the split payment mechanism. Under this mechanism, the VAT portion of a transaction is paid into a dedicated VAT account, separate from the seller’s general funds, limiting misuse.

SPM was introduced in 2018 and expanded in 2019. It is mandatory for certain high‑risk transactions (those exceeding PLN 15,000 and involving goods or services listed in Annex 15 of the Polish VAT Act) until at least February 2028.

This measure helps prevent perpetrators from diverting VAT receipts before remittance to the treasury.

Digital Reporting, Real‑Time Monitoring, and Audit Files (JPK, KSeF)

Poland has implemented JPK (Standard Audit File for Tax / SAF-T) for VAT, which requires businesses to submit detailed transaction data on a regular basis.

Further, Poland is advancing KSeF (Central Electronic Invoicing System), aiming to centralize invoice issuance and monitoring in real time, reducing opportunities for false invoicing. (While KSeF is still evolving, it represents a structural shift toward digital transparency.)

Interagency & Cross‑Border Cooperation

• Poland’s National Revenue Administration (KAS) coordinates tax investigations and enforcement operations.
• The Central Anti‑Corruption Bureau (CBA) and Central Bureau of Investigation (CBŚP) work on criminal investigations tied to large-scale fraud.
• Poland cooperates with OLAF (European Anti-Fraud Office), Eurofisc, and the European Public Prosecutor’s Office (EPPO) on cross-border TVA fraud cases.

For example, in April 2025, Polish authorities, working with OLAF, uncovered a large VAT import fraud scheme involving imports from China, which led to arrests and searches at 50 sites in Poland.

In the broader EU landscape, Investigation Admiral – the largest known VAT fraud probe – has exposed links between Baltic criminal networks and VAT carousel schemes across multiple states.

In EPPO-led operations, Polish entities have been implicated in multi‑million cross-border schemes, including a €10 million carousel fraud involving Apple products.

Prominent Polish Cases

CBA Dismantles PLN 7 Million Fraud Scheme
In a high-profile action, Poland’s CBA dismantled a group accused of issuing and using fraudulent VAT invoices totaling nearly USD 1.8 million (≈ PLN 7 million).

The suspects, spanning sectors like construction, renovation, and automotive, faced multiple charges including participation in a criminal group, usage of false invoices, and money laundering.

Historic VAT Fraud Networks

A criminal group operating between 2012 and 2018 was estimated to have perpetrated VAT fraud of around PLN 1.3 billion. The network included foreign individuals from Denmark, Romania, Belarus, China, and others.

Also, in the broader EU context, EPPO has targeted carousel fraud linked to luxury car trade amounting to nearly €100 million, implicating cross-border rings involving Poland.

Legal Risks and Consequences

Criminal Exposure for Individuals
Individuals implicated in VAT fraud or tax crimes face:

• Imprisonment (potentially up to 25 years in extreme cases)
• Fines in daily rates (10 to 720 rates)
• Forfeiture of illegally obtained gains (mandatory under Article 33)
• Travel restrictions, bail, supervision orders, and asset freezing during proceedings (as applied in recent cases)
  For serious offenses, courts may restrict or delay parole and impose long probation or expungement periods.

Foreign nationals, or corporate officers of foreign entities, are not exempt-Polish courts can prosecute and sanction them if operations implicate Polish jurisdiction.

Implications for Companies

Companies themselves may face:

• Corporate fines (PLN 1,000 to 5,000,000, capped at 3% of revenue)
• Forfeiture of profits linked to fraud
• Disqualification of directors, reputational damage, public listing of judgments
• Loss of civil rights and exclusion from public procurement
• Heightened scrutiny in tax audits and revision of past returns

Distinction: Tax Audit vs. Criminal Proceeding

A tax audit (administrative review) can lead to additional tax assessments, interest, and administrative penalties-but not necessarily criminal prosecution. Criminal proceedings require proof of intentional wrongdoing and often greater egregiousness or scale.

Courts have emphasized that allegations of participation in a carousel scheme must rest on clear, reliable evidence. Mere suspicion or tax authority inferences are insufficient.

Defending Against VAT Fraud Allegations

Early Legal Intervention

Once a business or individual faces scrutiny or investigation, immediate engagement of experienced defense counsel is essential. Delay can lead to irreversible loss of privileged information or exposure.

Strategic Defense Elements

1. Challenging Intent

• Demonstrate lack of awareness or negligence, rather than intentional wrongdoing
• Show that transactions were commercially justified and documented

2. Due Diligence and KYC

• Present evidence of counterparty vetting, credit checks, internal compliance procedures
• Show that invoices and contracts aligned with usual industry practices

3. Procedural and Evidentiary Challenges

• Scrutinize investigative flaws, unlawful search or seizure
• Challenge tax authority assumptions, chain of invoices, or reconstruction logic

4. Negotiation and Settlement Options

• In less severe cases, negotiate plea arrangements or mitigate penalties
• Voluntary disclosure (self-correction) may reduce exposure in narrow circumstances under Polish fiscal law (Article 16a)

5. Concurrent Civil and Criminal Strategy

• Prepare for appeals or parallel civil tax litigation
• Use expert valuation, forensic accounting, and international cooperation

The complexity of cross-border chains, shifting goods, and multiple jurisdictions often demands sophisticated coordination and deep knowledge of Polish and EU law.

Prevention: Best Practices for Businesses

To reduce exposure to VAT crime risk, companies operating in or trading with Poland should:

• Install robust onboarding and vetting procedures for new counterparties (due diligence, financial health, background checks)
• Document all transactions fully – contracts, delivery documentation, reconciliation, audit trails
• Monitor invoice patterns – large volumes from unknown or new suppliers may be red flags
• Enforce internal compliance controls and alert mechanisms for suspicious flows
• Use the mandatory split payment method (SPM) where applicable
• Stay current on the legal regime, reporting obligations, and digital tools like KSeF
• Seek local legal and tax advice early when entering high-risk transaction segments

Especially for international businesses, aligning domestic compliance with Polish anti‑fraud tools is indispensable.

Sponsored Legal Assistance Note

If a business or individual finds themselves under investigation or facing allegations of VAT fraud, tax crimes, or illegal invoice trading in Poland, securing expert legal representation is critical. Experienced counsel can not only mitigate the risks but also structure a robust defense from the outset.

Attorney Maciej Zaborowski, a distinguished practitioner in criminal and economic law, offers specialized legal support in complex white‑collar and fiscal crime cases. Clients may contact his practice via KKZ Law Firm. Additional resources and legal networks include KKZ Law Firm, CriminalLawPoland.com, and LawyersinPoland.com