Extending the range of entities responsible for tax liability in the case of goods and services tax – additional liability for tax and criminal criminal offences – part 2

The subject matter of the publication concerns the identification of persons or entities who may bear material or other liability related to the backlog of other taxable persons active – in particular capital companies – in the tax on goods and services.

In the first parts Article 1 The issues of responsibility of individuals, among others, were raised. third for tax obligations, members of the board of directors of the capital company and their fiscal penalty.

Parts second The author focuses on the discussion of matters concerning social responsibility in the context of VAT offences , reimbursement of public debt , loss of property benefits from fiscal criminal offence.

Introduction

According to the ruling of the Supreme Court, “from the essence of things cannot matter in the perspective of effect with Article 56(1) Tax Penal Code 2 (k.k.s.) such behaviours of the taxpayer which consist in the transmission to the authority of false information which would not affect the size and content of the tax obligation’ 3 .

Implementation of the criminal record or fiscal misdemeanour the condition laid down in that provision requires a high likelihood of tax being exposed to depletion[4]. The extortion of an undue refund of the tax is laid down in another provision of k.k.s. 5 . Action prohibited from this article, as in the case of Article 56 k.k.s.

can only be committed intentionally (both direct and resultant)[6]. Scope Article 76 k.k.s. includes not only cases of extortion of undue tax refund, but also the crediting of undue reimbursement against tax arrears[7].

In the doctrine, the term ‘tax fraud’, as well as ‘extortion of a public-law tax refund’ or ‘unwarranted tax refund’, functions. The essence of a definite action under Article 76 k.k.s. is misleading, causing exposure to undue reimbursement of public debt. As with Article 56 k.k.s., construction Article 76 k.k.s.

is closely linked to the institution of tax self-calculation by the taxpayer[8].

Provision Article 76 k.k.s. has a blank character, its specificisation occurs in individual tax laws. Not only the taxpayer but any person liable for criminal liability who misleads the competent authority may be the perpetrator[9].

However, it should be taken into account that the perpetrator of a prohibited act under Article 76 k.k.s. is a taxable person or person dealing with the economic affairs of an undertaking[10]. The described construction of the blank rule is not only found in Polish regulations concerning tax sanctions. Application of a similar provision in Germany 11 equivalent Tax Ordinance has been the subject of a TEU ruling, C-285/09.

Purpose of the perpetrator fiscal criminal offence

With reference to the analysis of the subject party of the offence from Article 76 k.k.s., for the attribution of the subject party to the tax fraud, it is necessary to state that the perpetrator included awareness and will (in the form of will or at least reconciliation) all elements of the party's prohibited act. The perpetrator must be aware, therefore, that he is misleading the competent authority by providing incorrect data or concealing the real state of affairs; thus, he presents incorrect circumstances relevant to the basis or amount of the tax return of the public-law debt and that he exposes undue reimbursement of the public-law debt or overpayment of tax arrears or current or future tax obligations.

According to Article 4(1) k.k.s., fiscal criminal offence can only be committed intentionally, but inadvertently only in cases where the law so provides, consequently in the case of criminal offences with Article 76 k.k.s. The legislature does not provide for an involuntary form.

According to the Supreme Court's order 12 „the intention of the perpetrator to act, including offences and offences in the field of tax liability, cannot be derived from the mere fact of the existence of the characteristics of the party concerned. It cannot be presumed, but should be proven, even on the basis of indirect evidence, by logical reasoning, from the entire evidence.’

The perpetrators of the crime with Article 76 k.k.s. should be accompanied by a direct or possible intention to commit the alleged crime.

It should be stressed that the intention of the perpetrator is evidenced by the whole case, at the same time in accordance with the judgment of the Court of Appeal in Katowice of 7 July 2005 13 , the intention of the perpetrator demonstrates the whole subjective and relevant circumstances relating to the performance of a particular act, the intention being determined by the mental attitude of the perpetrator when entering into or in criminal action.

Requests for mental attitude must not only be logically correct, but the only conclusions that are absolutely different also logically excluded. This is also reflected in the judgment of the Court of Appeal in Białystok of 9 August 2012 14 , In particular, according to the view of the judicature, "the question of intent, which has been repeatedly highlighted in the case-law, always requires an in-depth and detailed analysis of the overall circumstances of the incident which must be assessed by the prism of a particular event in a way that takes into account the principles of correct reasoning and the indication of knowledge and experience in life, as well as the principle in dubio pro reo".

Also according to the established view in doctrine 15 , In order to qualify the perpetrator as a intentional offence, it is necessary to attribute to the accused only the effects of his conduct which he intentionally caused[16]. The intentional offence implies “reflection in the consciousness of the perpetrator of all the characteristics of the offence” and their implementation in a direct or possible intention[17].

He rightly stressed that considering the person's mental relationship to the possibility of having an effect (objective characteristic of a possible intention) only makes sense if the person is aware of that effect. This means that ‘the perpetrator’s consciousness must be, as a hub for the design of a possible intention, “provided” 18 .

This emphasis is particularly important in the context of the general design of the concept of intention.

The intention – both direct and possible – includes two components which must be the subject of command: awareness of the possibility of a prohibited act and will, with a direct intention to "want" an unlawful state, and with a possible intention, to approve the possibility of a violation of criminal law.

Reimbursement of public debt

Regarding the party to the offence in question, Article 76 k.k.s., the nature of the protection of the regularity of the performance of tax obligations in the area covered by the criminalisation of this provision is linked to the prevention of the taxpayer or another person from obtaining a refund of a public-law liability In one of the forms provided for in tax law, and thus the deduction of the assets of the State Treasury or other eligible entities.

It should be stressed that the nature of the reimbursement of public debt is linked to a complex procedure of self-calculation, which takes into account the various elements that ultimately shape the content and scope of the tax obligation, including those which are linked to regulations which give rise to a reduction in the amount of the tax liability by the expenditure incurred in connection with the necessity of ‘indirect regulation’ of a given type of tax[19].

This is primarily about the principle of the neutrality of the tax on goods and services, which makes the expenditure incurred by the taxable person for the purchase of goods and services used by him to carry out the activities taxed in respect of the VAT included therein as stated in the Article 86 the VAT Act the basis for reducing the amount of tax due on the taxable person concerned.

The question remains whether the necessary condition for attributing responsibility on the basis of Article 76 k.k.s. is to issue a dimensional decision in respect of the taxpayer (in this case the capital company) concerning the determination of VAT arrears .

This question concerns the situation where unreliable taxpayers take action to prevent tax authorities from issuing and delivering a decision determining the tax arrears for the taxable person from taxing goods and services[20]. This question must be answered negatively, i.e.

the decision in question is not a necessary condition for the attribution of fiscal penalty[21].

The opposite interpretation line was drawn in the judgment of 20 April 2000 Court of Appeal in Kraków 22 : „The independence of the jurisdiction of the criminal court shall not entitle to any tax obligation. Since the determination of this obligation (or lack of duty) and the amount of the tax is the responsibility of the tax authorities under the control of the administrative court, the decisions taken in the relevant proceedings should be regarded as decisions affecting the legal relationship (Article 8(2) Code of Criminal Procedure 23; hereinafter: k.k.s.) and to be regarded as binding in criminal proceedings.’

Following the judgment cited above, also the Court of Appeal in Lublin in the judgment of 17 June 2009 24 stated that ‘where decisions of tax authorities are decisive for determining the existence of a tax liability or its amount, they give rise to certain financial consequences on the part of the taxpayer, they are subject to separate rules providing for their on-the-spot control, including an exceptional remedy, and should be treated as a ‘making legal relationship’ solution within the meaning of Article 8(2) k.p.k.’

It follows from the judgment cited that the criminal court, when assessing whether an act resulting from a tax liability had occurred in a given factual situation, by acting on the basis of Article 8(2) k.p.k.

should examine whether there is a final decision by the tax authority determining (other than the amount of the tax liability indicated by the taxpayer in the declarations). The determination of the amount of the tax liability is a necessary condition for a reduction to be made.

Otherwise, it should be assumed that the amount of tax indicated by the taxable person in the declarations is correct.

A similar position was expressed by the Supreme Court in its judgment 25 , in which it stated that the Court of First Instance’s determination of the obligation to pay the duty in the final decision in the case fiscal criminal offence it must be preceded by a dimensional decision by the tax authority laying down a public liability on the obliged entity and obtaining by that decision a declaration of enforceability as a result of the validation or the immediate enforceability of a ruling establishing a tax liability.

That ruling states that the court imposes on the offender the obligation to pay the impaired amount only if it is due. A charge is one that the tax authority can effectively obtain through the legal means available to it.

However, it should be pointed out that the prescribed jurisprudence direction – as a condition of necessary liability on the basis of Article 76 k.k.s. was a dimensional decision with regard to the taxpayer – is in isolation.

Additional liability in the context of VAT offences

When examining the provisions of the K.k.s. on offences relating to the tax on goods and services, consideration should also be given to the rules on the imposition of additional liability. According to Article 53(40) k.k.s., an entity drawn to this kind of responsibility may be a natural person, a legal person or an organisational unit not having legal personality, which the body conducting proceedings in the case of fiscal criminal offence called for participation in this capacity.

Food liability one only natural persons may be held liable for criminal offences. Based on Article 24(1) k.k.s., for the fine imposed on the perpetrator fiscal criminal offence be made in full, either in part, by the person responsible by force, a legal person or an organisational unit not having legal personality, the separate provisions of which confer legal capacity, if the perpetrator of the prohibited act is a deputy of that entity, conducting his cases as a proxy, administrator, employee or acting in any other capacity, and the replaced entity has received or was able to return from the person concerned fiscal criminal offence any asset benefit.

The purpose of this regulation is to be able to attract entities third to the criminal liability of the tax to safeguard the financial interests of the Treasury[26].

From 17 December 2005 legislator introduced mandatory 27 the use of an auxiliary liability institution where the conditions justifying its establishment are met, i.e. the person in charge has received or may have benefited financially from the action of the offender.

Consequently, parties other than natural persons may also be held liable for additional responsibility, since that liability is purely property. Meal liability may apply only to fines or in the form of a monetary equivalent of the loss of items from fiscal criminal offence or to commit it[28]. This legal structure refers to the question of "the impossibility of imprisonment or restriction of liberty by an entity that is not a natural person".

Subsidiarity is a key feature of the social responsibility. There must be a condition of non-ability to collect fines or criminal measures against the offender in the form of a monetary equivalent of the loss of objects.

It should be stressed that the establishment of the entity itself third, the person responsible for meals does not yet impose criminal liability on him. Its liability is conditional and in most cases expires due to the non-existence of the condition necessary to trigger it.

The condition for the enforcement of the meal responsibility is the ineffective execution of the perpetrator fiscal criminal offence. The indication of the person responsible for meals is therefore intended only to safeguard the effective execution of the fine[29].

Where the offender pays a fine or the monetary equivalent of the forfeiture of the items in respect of each other, he shall no longer be liable to the person who has previously been ordered to do so. third.

The payment of part of the fine on the perpetrator of a criminal tax offence shall give rise to the cessation of the subsidiary's supplementary liability of the entity third in such a certain proportion. What is important is the possible death of the perpetrator fiscal criminal offence, which has failed to pay its fine does not give rise to post-prandial responsibility, but also causes it to arise.

Developed for the purpose of implementing the provisions of the k.k.s. social responsibility as first established an exception to the rule that only natural persons may be held liable for criminal prosecution.

On the basis of the assumptions for the legal structure of the auxiliary responsibility, the regulations of the Act of 28 October 2002 liability of collective entities for criminal offences under penalty[30]. However, the liability resulting from this law differs significantly from the additional liability on the basis of k.k.s.

Under the rules of the Collective Liability Act, the liability there is independent of the execution or non-compliance of the fine by the offender, while the additional liability on the basis of K.k.s. is of an accession nature and strictly depends on it.

Consequently, the institution of supplementary liability provided for on the basis of the K.K.s. cannot provide a direct basis for the possible satisfaction of the State Treasury’s assets claims in respect of entities third in respect of the resulting and unregulated tax arrears (in principle, it concerns the fine in question). However, it should be pointed out that an institution of social responsibility may be appropriate to collect the monetary equivalent of the loss of items. According to Article 29 k.k.s., the loss of items includes:

• • object coming directly from fiscal criminal offence;
• • a tool or other object constituting movable property which has served or was intended to be committed fiscal criminal offence;
• • packaging and subject matter fiscal criminal offence in such a way that they cannot be disconnected without damaging any of these objects;
• • the object whose manufacture, possession, marketing, storage, transport, transfer or transfer is prohibited.

On the other hand, in the absence of a decision in whole or in part of a forfeiture 31 , referred to under Article 29 k.k.s., when the item has been destroyed, lost, hidden or for other factual or legal reasons may not be held, the court shall decide on a criminal measure to collect the monetary equivalent of the forfeiture of the item, unless the forfeiture concerns certain items under Article 29(4) k.k.s.

As a consequence, it should be noted that legal institutions for the forfeiture of items or for the collection of the monetary equivalent of the forfeiture of items on the basis of the K.k.s.

(to which the principle of mutual liability applies in K.k.s.) cannot be used by the State Treasury to satisfy claims on public liabilities/transfer of economic burden to the entity third.

Loss of property benefits from fiscal criminal offence

The question of the forfeiture of assets remains to be considered, regulated under Article 33 k.k.s. It should be pointed out that if the perpetrator has achieved his or her achievement fiscal criminal offence, at least indirectly, a property benefit not subject to the forfeiture of certain items under Article 29(1) or 4 k.k.s. (accuracy of objects), the court decides a criminal measure for the forfeiture of this benefit.

In the event that a criminal measure for forfeiture of assets is not possible, a criminal measure shall be decided to collect its monetary equivalent. For the property benefit achieved by committing fiscal criminal offence benefit is also recognised from the things or rights which constitute the benefit.

In addition, in case of conviction for fiscal criminal offence, of which the perpetrator has obtained, albeit indirectly, a high value asset benefit, or fiscal criminal offence, from which the perpetrator has achieved or was able to obtain, albeit indirectly, a property benefit at risk of imprisonment, the upper limit of which is higher than 3 years, or committed in an organised group or relationship to commit fiscal criminal offence, the property which the offender has assumed in possession or to which he has obtained any title during the period of time shall be deemed to benefit from the offence 5 years before committing fiscal criminal offence until such time as a final judgment has been given, unless the perpetrator or other person concerned provides evidence to the contrary.

If the property constituting the benefit of the offence has been transferred to a natural person, legal entity or organisational unit not having legal personality, in fact or under any legal title, it shall be considered that the property in the personal possession of that person or entity and the property rights of that person belong to the perpetrator, unless, on the basis of the circumstances surrounding their acquisition, it could not be assumed that the property, at least indirectly, came from a prohibited act.

It should be examined whether an undue refund of the tax on goods and services (or a refund of an inflated amount) to the VAT taxable person (in this case a capital company) can be regarded as having obtained an asset benefit, directly or indirectly, by a member of the management board of that entity convicted of an offence from Article 76 k.k.s.

A negative answer should be given to this question. Ex lege – it cannot be assumed that a person acting as a member of the board of directors in a capital company has personally benefited from an economic advantage on the part of the company in the value of an undue/excess refund of the tax on goods and services.

Each case should be analysed separately. Such a case will, of course, occur when the value of the undue return obtained by the capital company is paid to the board member in the form of e.g. salary.

The situation is further complicated when the sole member of the board is also the sole shareholder of a capital company which has obtained an undue refund of the tax on goods and services while the funds have not been paid from the company in any way.

The question is whether the increase in the capital company's assets (by obtaining funds in the form of an undue refund of VAT ) affecting the increase in the value of the shareholder's shares in that capital company can be regarded as achieving, directly or indirectly, the asset advantage of that shareholder. In this case, the affirmative answer should be given.

According to Article 155(7) k.k.s., the prosecution act of the prosecutor or the financial investigation authority shall be accompanied by a request for additional liability if the basis for that liability has been established under Article 24(1) and 2 k.k.s. (the ‘mandatory liability for fines’) and a request for a specific entity to reimburse the State Treasury or the local government unit the property benefit obtained from fiscal criminal offence accused if there are grounds for imposing such an obligation (Article 24(5) k.k.s.).

Note that according to Article 179(4) k.k.s., in the event of a decision of a criminal measure for the forfeiture of a property benefit or for its monetary equivalent, the enforcement authority 32 it also executes the fine, the criminal measure for the forfeiture of items, or for the collection of their monetary equivalent if their security has been previously secured by the head of the tax office, the head of the customs and tax office or the Head of the National Tax Administration.

According to Article 131 k.k.s., if committed fiscal criminal offence or fiscal misdemeanour a criminal measure can also be secured 33 , the obligation to reimburse the property benefit and the payment of a prohibited public-law claim, if there is a legitimate concern that, without such a security, the enforcement of the decision in respect of those measures, the obligation or the recovery of the impaired public-law debt will be impossible or significantly impeded. In addition, fines, fines, fines may also be imposed on the property's assets, loss of the property's assets, and the obligation to repay the property's benefits on the property of the person in charge.

Summary

Introduction of new crimes at risk of even self-punishment 25 years of imprisonment 34 , is intended to deter criminals who are acting against the fiscal interests of the State Treasury.

Institutions for the forfeiture of items in criminal law, for the forfeiture of property benefits or for its equivalent value, and provisions on the so-called extended confiscation 35 to provide additional tools in the fight against tax settlement offences on goods and services.

Finally, there is a question of how these legal institutions are applied in practice by law enforcement authorities, the actual use of available tools (a significant part of the legal institutions described has been in force for many years) and the existence of possible abuses in their application.

Source:

1 No 1 August 2018 „Legal and Tax Advice - RB Newsletter’, Russell Bedford Poland Sp. z o.o.

http://www.russellbedford.pl/o-nas/rb-biuletyn/item/937-rozszerzenie-grona-podmiotow-odpowiedzialnych-za-zobowiazania-podatkowe-w-przypadku-podatku-od-towarow-i-uslug-odpowiedzialnosc-posilkowa-w-zakresie-przestepstw-karnych-skarbowych-i-karnych-czesc-1.html access 1 October 2018

2 Act of 10 September 1999 IRS Code, i.e. Journal of Laws of 2017, item 2226.

3 Judgment of the Supreme Court of 5 March 2015, reference no. III KK 407/14, LEX No. 1678967.

4 P. Cardas, G. Labuda, T. Razowski, Tax Penal Code. Commentary, Issue III , Warsaw 2017.

6 P. Cardas, G. Labuda, T. Razowski, Tax Penal Code, op. cit.

11 Provision section 370 section 1 point 1 Abgabenordnung 1977 (German Tax Ordinance from 1977, BGBl. 1976 I, p. 613, and 1977 I, p. 269) provides for a fine for providing false information on tax-relevant circumstances. In this case, the referring court took the view that this provision is of a blank character, since specificisation takes place in tax laws (as in the case of under Article 56 and 76 k.k.s.).

12 Order of the Supreme Court of 23 May 2002, reference no. V KK N 426/00.

13 Judgment of the Court of Appeal in Katowice 7 July 2005, reference no. II Aka 213/05.

14 Judgment of the Court of Appeal in Białystok of 9 August 2012, reference no. II Aka 137/12.

15 T. Boyarski (ed.), Criminal Code. Commentary, Issue VII , Warsaw 2016.

16 Judgment of the Supreme Court of 8 November 2006, reference no. IV KK 299/06, OSNKW 2007, No. 2, item 13.

18 Judgment of 6 March 2008, reference no. III KK 456/07, Proc. and Pr. 2008, No 7-8, item 1.

19 P. Cardassia, G. Labuda, T. Razowski, Tax Penal Code... op. cit.

20 e.g. by preventing the tax authorities from providing the decision to the capital company (revocation of all members of the entity's board of directors, while the entity has no opponents).

21 Judgment of the Court of Appeal in Katowice 9 April 2014, reference no. II AK of 212/14.

22 Judgment of the Court of Appeal in Krakow 20 April 2000, reference no. II Aka/00.

23 Act of 6 June 1997 – Code of Criminal Procedure, i.e. Journal of Laws of 2017, item 1904.

24 Judgment of the Court of Appeal in Lublin of 17 June 2009, reference no. II Akz 334/09.

25 Supreme Court judgment of 9 January 2012, reference no. V KK 327/11.

26 In certain cases also local government units.

27 The previous provisions only indicated the optional nature of auxiliary responsibility.

28 According to Article 24(2) k.k.s. – recipe section 1 shall be used as appropriate to collect the monetary equivalent of the loss of items.

29 http://taxfin.pl/istota-odpowiedzialnosci-posilkowej-instytucji-charakterystycznej-wylacznie-dla-prawa-karnego-skarbowego-jest-mozliwosc-obciazeniagrzywna- za-przeste/.

31 According to Article 32 k.k.s.

32 32 Enforcement body specified under Article 27 Act on 6 June 1997 the implementing criminal code, i.e. Journal of Laws of 2018, item 652.

33 Criminal measure in question under Article 22(2)(2-4a) k.k.s.