After the amendment of law, which came to force on 1 March 2017, VAT fraud is punishable by imprisonment of up to 25 years. Invoice issuers and buyers who knowingly use forged invoices or invoices which certify false information in tax settlements, may face criminal liability. Law enforcement authorities recognize VAT fraud as one of the most serious offenses against the state's financial interests.
On August 10th, new guidelines on VAT fraud were issued by the Attorney General (Minister of Justice).
The guidelines emphasize the need to pursue perpetrators who play a leading role in VAT scams. According to the guidelines, prosecutors should make use of the newly implemented option of extended confiscation of property for up to five years before the offence was committed (we have described the extended confiscation in our Law-now alert of April 18, 2017). Confiscation can also be applied to property transferred by perpetrators to other people free of charge, or well below its market value.
The suspicion of VAT fraud justifies undercover monitoring of potential offenders. Law enforcement authorities may also use wire-tapping, make video recordings of other events related to their activities, and monitor their e-mail or postage. The Attorney General emphasizes the possibility and need to use data protected by professional secrecy (e.g. bank secrecy).
The guidelines also stress the need for cooperation and mutual transfer of information and evidence between the tax authorities, police and prosecution. VAT fraud cases should be handled by high-ranking authorities and officers who specialize in this kind of crime.
One of the most important issues concerning the prosecution of VAT fraud is the prosecution of forged or fraudulent invoices. However, according to the Attorney General, persons, who unintentionally make a mistake, even if due to negligence, should not be prosecuted. If there is no evidence of intent to certify false information, prosecutors should assume that the perpetrator's behaviour was the result of a mistake.
Perpetrators may expect a lighter punishment if they return all or part of the benefit from the crime. However, if the value of fraudulently obtained VAT exceeds 1 million PLN, prosecutors should seek the imprisonment of the perpetratorwithout suspended the sentence.