The slogan "aggressive optimization" has recently become an unusual tool, using which offices and services break into companies, often unjustly destroying them or at least interfering with their work. The position of the Chief Administrative Court may cool down the zeal of the inspectors.
The ultimate objective of sealing the tax system is slowly becoming a scare for companies that often have no way of defending themselves against participation in the tax carousel. Yeah, they often don't even realize they're involved in a network of frauds.
The government was to deal with those who put the carousel up and invite unconscious companies to their seats. These, despite fulfilling all the requisites of due diligence, may not see who put the carousel in motion. Usually, the impostor runs fast, collects a toll on the ride, then disappears from the country.
And for his actions, they beat honest entrepreneurs.
The NSA overturned the provincial court's judgment and disagreed that paying for the goods in cash violated the principle of due diligence in verifying the counterparties.
Officials considered that in order to meet the conditions of due diligence in the cash transaction, it was necessary to meet the seller, preferably at the premises of his company. The WSA has no choice but to reconsider the case, this time taking into account the line of the Supreme Administrative Court.
This gives hope to honest companies for whom the coat protecting against lack of due diligence is definitely ill-suited.
Due diligence in EU law
The jurisprudence of the TEU has been trying for years to determine the extent of good faith and to define the concept of due diligence. Judgments usually take on defenses implicated in a tax carousel.
For example in joined cases C-439/04 Axel Kittel and C-440/04 Recolta Recycling SPRL ( curia.europa.eu ), The Court pointed out Under point 53, that ‘in accordance with the case-law of the Court, if an economic operator has taken any action which can reasonably be expected from him, in order to ensure that the transactions in which he participates do not involve a criminal offence, whether in the field of VAT or in any other area, he may presuppose the legality of those transactions without the risk of losing the right to deduct input VAT’.
On due diligence, the ECJ also commented on: C409/05 Teleos and MecsekGabona Kft and C-324/11 Gábor Tóth v Nemzeti Adó- és Vámhivatal Észak-magyarországi Regionális Adó Főigazgatósága.
The ECJ consistently recognises that "the right of the taxable person making transactions to deduct input value added tax must not be affected by the fact that, in the supply chain of which those transactions are part, which the taxable person does not know or cannot know, another transaction, earlier or later in relation to the one which he has made, constitutes a fraud in respect of value added tax".
The TEU judgments are binding on the Member States.
Breakthrough NSA judgment
Under EU law, a taxpayer cannot in principle be regarded as a controlling authority, and therefore should only be guided by reasonableness and generally accepted standards when checking counterparties. It is enough to check that the company is registered and complete the necessary purchasing procedures.
However, in the practice of Polish courts ruling on matters concerning tax fraud, the matter looks different. The ruling of the Supreme Administrative Court on the one from the Silesian scrap companies. November and December 2009 the company bought goods from several companies and deducted VAT in accordance with the provisions.
After four years, the company learned that the purchases were involved in the tax carousel and therefore the US demanded a refund. The WSA in Gliwice sustained a relentless line of fiscals.
Meanwhile, the NSA overturned the provincial court's ruling and disagreed that paying for the goods in cash violated the principle of due diligence when verifying the contractors.
Officials considered that in order to meet the conditions of due diligence in the cash transaction, it was necessary to meet the seller, preferably at the premises of his company. The WSA has no choice but to reconsider the case, this time taking into account the line of the Supreme Administrative Court.
This gives hope to honest companies for whom the coat protecting against lack of due diligence is definitely ill-suited.
Author:
Katarzyna Kołbuś
Editor leading RB Magazine. From Over 10 years related to industry press, including the Financial Gazette and portal ipip.com.pl, which is devoted to finance, taxation, law, politics and the economy. She graduated from Polish philology at the UMCS and the language editing of the text at the University of Warsaw.