What are the legal consequences of issuing false invoices?

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When running a business, in order to reduce the value of VAT payable, entrepreneurs use unlawful practices such as forging invoices or issuing fictitious invoices. On March 1, 2017, new regulations came into force, tightening the existing sanctions, as a result of which - by reducing the value of the VAT tax liability - entrepreneurs may be subject to imprisonment for up to 25 years. What determines the amount of the penalty for issuing false invoices? Let's check it out!

What are the penalties for using or issuing false invoices?

Pursuant to Art. 270a of the Criminal Code, sanctions may be imposed on entrepreneurs who used a counterfeit, processed or untrue invoice as authentic. If such an invoice is shown in the VAT register, on the basis of which the value of the tax liability is determined or the amount to be refunded, resulting from the submitted declarations, the entrepreneur may be subject to imprisonment. The amount of the sanction depends on the amount of the false invoice (s).

Article 270a of the Penal Code:
"§ 1. Whoever, in order to use it as authentic, forges or modifies an invoice in the scope of the factual circumstances that may be relevant for determining the amount of public law debt or its return or reimbursement of another tax debt or such invoice as authentic, shall be subject to the penalty of deprivation of liberty from 6 months to 8 years.
§ 2. If the perpetrator commits the act specified in § 1 against the invoice or invoices containing the total amount due, the value of which or the total value is greater than five times the amount determining the property of great value, or the commission of the crime has made himself a permanent source of income, shall be punishable by imprisonment freedom for a period of not less than 3 years.
§ 3.In the event of a minor, the perpetrator of the act specified in § 1 or 2 shall be subject to a fine, the penalty of restriction of liberty or the penalty of deprivation of liberty for up to 2 years. "

Example 1.

Mr. Jan runs a grocery store and in June 2021 he received an invoice for the purchase of goods, the net value of which is PLN 1000 and the VAT value is PLN 230. In order to avoid paying VAT in connection with obtaining income, significantly exceeding the value of the costs incurred, Mr. Jan decided to convert the received invoice, changing its net value to PLN 10,000 and PLN 2,300 VAT. Therefore, he lowered the VAT that is payable to the office. What is the penalty for reworking an invoice in this way?

The conversion of an invoice, which results in a reduction of the tax base, is subject to a penalty pursuant to art. 270a of the Criminal Code. Due to the fact that the amount of the understatement of the tax liability did not exceed a small value, the modification of the invoice by Mr. Jan will be subject to a fine, restriction of liberty or imprisonment for up to 2 years.

Property of significant value is property that at the time of the commission of the prohibited act exceeds the amount of PLN 200,000. On the other hand, property whose value at the time of committing the prohibited act exceeds the amount of PLN 1,000,000 is called property of great value.

Pursuant to Art. 271a of the Criminal Code, in a situation where the entrepreneur issues a false invoice, which will result in the understatement of the tax liability or this action will have an impact on increasing the amount of tax overpayment resulting from the submitted declaration - he is subject to imprisonment from 6 months to 8 years.

Article 271a of the Criminal Code:
"§ 1. Who issues an invoice or invoices containing the total amount due, the value of which or the total value is significant, certifying untrue facts as to the factual circumstances that may be significant for determining the amount of public law debt or its return or refund of another tax debt or such invoice?" or invoices, is punishable by imprisonment from 6 months to 8 years.
§ 2. If the perpetrator commits the act specified in § 1 against the invoice or invoices containing the total amount due, the value of which or the total value is greater than five times the amount determining the property of great value, or the commission of the crime has made himself a permanent source of income, shall be punishable by imprisonment freedom for a period of not less than 3 years.
§ 3. In the event of a minor, the perpetrator of the act specified in § 1 or 2 shall be subject to the penalty of deprivation of liberty for up to 3 years. "

Whether the trader uses an authentic, counterfeit or forged invoice and issues a false invoice, the trader may be subject to imprisonment from 5 to 25 years. This sanction may be imposed if the value of a false invoice exceeds 10 million. zloty.

In the judgment of the Supreme Court of July 10, 2013 (reference number II KK 20/13), we can read that: "(...) a person who creates or co-creates an economic entity only in order to use the procedure of overpaid VAT refund and undertakes actions for achieving this goal by acquiring or counterfeiting documents related to this tax, then submitting them to the appropriate tax authority, without conducting any other economic activity settled with the State Treasury, a common crime referred to in Art. 286 § 1 of the CC, and not the fiscal offense under Art. 76 § 1 of the Criminal Code (...) ”. The court's judgment confirms that issuing false invoices is synonymous with committing a crime.

Example 2.

Ms Anna, who runs the company XYZ, which, on the basis of an agreement concluded with a contractor, performs self-invoicing in order to avoid paying VAT in connection with obtaining income significantly exceeding the value of costs incurred, decided to issue an invoice in the net value of PLN 10,000 and PLN 2,300 VAT, documenting the delivery of goods which did not take place. Therefore, it lowered the VAT that is payable to the office. What is the penalty for issuing a false invoice?

Issuing a false invoice, which results in a reduction of the tax base, is punishable under art. 271a of the Criminal Code. Due to the fact that the amount of the understatement of the tax liability did not exceed a small value, Ms Anna may be imprisoned for up to 3 years.

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Is an incorrectly issued invoice punishable for invoice forgery?

By entering into transactions with other entities, entrepreneurs may unknowingly fall prey to tax fraudsters. One of the most common situations in which a trader mistakenly issues an invoice may also occur. It is worth emphasizing that entrepreneurs may be held responsible only when their intentional actions are proven. Therefore, taxpayers who issued an invoice by mistake, after completing the appropriate steps, do not have to worry that they will be imprisoned. The expediency of the entrepreneur's actions may be confirmed by witness testimonies, e-mail correspondence or other documents that confirm that the taxpayer was aware of the incorrectness of the issued invoice. Therefore, even in a situation where an entrepreneur who received an invoice from another entity and used a false invoice when determining the tax liability, he will not be held criminally liable if his intentional action is not proven. At the time of self-detection of irregularities, the taxpayer should correct the VAT declaration, pay the arrears and possible tax interest to the office's account, and submit the so-called active grief.

What is the criminal liability for issuing false invoices?

An entrepreneur issuing a false invoice may be held criminally as well as penal and fiscal. Issuing false invoices is synonymous with a criminal and fiscal offense. This is due to the fact that the taxpayer deliberately reduces the value of the tax liability to be paid.

Art. 54. Fiscal Penal Code:
Ҥ 1. A taxpayer who, by avoiding taxation, fails to disclose to the competent authority the subject or base of taxation or fails to submit a declaration, thus exposing the tax to depletion, shall be subject to a fine of up to 720 daily rates or imprisonment, or both.
§ 2. If the amount of the tax subject to depletion is of low value, the perpetrator of the offense specified in § 1 shall be fined up to 720 daily rates.
§ 3. If the amount of the tax subject to depletion does not exceed the statutory threshold, the perpetrator of the prohibited act specified in § 1 shall be subject to a fine for a tax offense. "

Pursuant to Art. 53 § 14 of the Fiscal Penal Code, a small value is considered to be an amount that did not exceed, at the time of committing a prohibited act, two hundred times the amount of the minimum wage (in 2021 the value of the minimum wage is PLN 2,800).

The legislator in Art. 53 § 15 of the Fiscal Penal Code indicated the definition of the determination of large value, as it is an amount which at the time of committing a prohibited act exceeds five hundred times the amount of the minimum wage.

If, however, at the time of committing a prohibited act, the value exceeds a thousand times the amount of the minimum wage, then pursuant to Art. 53 § 16 of the Fiscal Penal Code we are dealing with an amount of great value.

Pursuant to Art. 8 par. 1 of the Fiscal Penal Code, if a given offense is subject to penalties imposed by separate provisions, each of these provisions shall apply. Reading further, Art. 8 par. 2 introduces a limitation according to which only the most severe of the penalties is enforceable. In addition, if, in addition to the most severe penalty, the prohibited act is also punishable by a fine for several reasons, it may be imposed, but not in the total amount, but only as the most severe of them.

Example 3.

Mr. Jan, who runs the XYZ company, intentionally did not submit the JPK_V7 file in May 2021. After the tax inspection was completed, Mr. Jan converted one of the cost invoices increasing its net value from PLN 1,000 to PLN 10,000 and the value of VAT from PLN 230 to PLN 2,300. Mr. Jan submitted the overdue JPK_V7 file for May, in which he showed the underestimated value of VAT. Due to the deliberate failure to submit the JPK file on time, a fine of PLN 1,000 was imposed. Additionally, the tax authorities discovered the fact that the invoice had been processed, which resulted in the imprisonment of Jan for 6 months. Despite the imposition of a prison sentence, is Mr. Jan obliged to pay the imposed fine?

Pursuant to Art. 8 par. 2 of the Fiscal Penal Code, if the act is subject to several penalties at the same time, only the most severe of the penalties is subject to execution. However, it should be remembered that in addition to the most severe penalty, a fine may also be imposed, therefore, in addition to imprisonment, Mr. Jan is obliged to pay the fine imposed on him.