An allegation of participation in a VAT carousel rarely reaches the organizer. It reaches the company that bought or sold the goods and has what the organizer does not: an address, assets, a bank account and records. Since 2006 we have defended businesses, including foreign suppliers and buyers in Polish supply chains, in tax audits, tax proceedings and criminal tax cases, from the first summons to the Supreme Administrative Court.
Describe your situation. We will tell you whether and how we can help, and what we propose as a first step. Phone: +48 22 586 40 00.
You have been accused, or your account has been frozen
The first days
A VAT carousel case usually begins with one of three documents: a notice of audit, an order extending the deadline for a VAT refund, or a message from your bank that the account has been blocked. Each opens proceedings in which the first week matters.
- Secure the records of every transaction with the counterparty in question: contracts, orders, correspondence, transport documents (CMR, delivery notes), proof of receipt, payment confirmations, photographs of the goods, the names of the people you dealt with. These cases are won on the reality of the supply, and that reality must be shown.
- Preserve the evidence of what you checked at the time: printouts from the Polish VAT register (the “white list”), VIES, the company register, licences, the counterparty’s website, references. The authority assesses what you knew then, not what is known now.
- Do not give explanations on the spot. Audit reports and interview records go into the tax file and from there into the criminal tax file. A sentence such as “we trusted the supplier, so we did not check” returns two years later as evidence of a lack of diligence.
- An account freeze under Poland’s STIR system (Article 119zv et seq. of the Tax Ordinance) lasts 72 hours and can be extended by the Head of the National Revenue Administration for up to three months. The extension order can be appealed within seven days and then challenged before the administrative court. In parallel, an application can be made to release funds for salaries and current public dues.
- A security decision (Article 33 of the Tax Ordinance) seizing assets before any tax has been assessed can be appealed within 14 days. This is not a formality: such decisions are used as leverage for a “voluntary” correction, and overturning them restores the company’s liquidity.
- Appoint counsel before the first procedural step, not after it. With counsel, requests are tested against the scope of the audit authorization, explanations are filed in writing after the file has been reviewed, and interviews take place with a defense lawyer present.
Your supplier or customer is under investigation
What it means for your company
Charges against a counterparty are not evidence against you, but they signal that your transactions will be examined. The authority will test three things: whether the supplies were real, whether the terms (price, payment, transport) departed from the market, and whether you knew or should have known of irregularities on the other side. The answers decide whether you keep the right to deduct input VAT on that counterparty’s invoices.
Before the summons arrives, review the transactions with that counterparty for the open limitation period (as a rule five years from the end of the year in which the tax fell due), put the delivery and payment records in order, and identify the transactions the authority will question first: cash payments, payments to accounts outside the white list, prices below market, missing transport documents. For goods listed in Annex 15 to the Polish VAT Act, joint and several liability for the supplier’s unpaid VAT may arise where payment bypassed the split payment mechanism and the buyer knew or had reasonable grounds to expect that the VAT would not be paid. We discuss the limits of that liability after the CJEU judgment in Vaniz (C-121/24) in a separate analysis: Unpaid VAT by a Counterparty: The Purchaser’s Liability.
Due diligence as Polish authorities apply it
Reducing the risk
Due diligence is not defined in the statute. Its content comes from the case law of the CJEU and the Supreme Administrative Court and from the Ministry of Finance’s 2018 methodology, which separates formal criteria from transactional ones. Formal: the counterparty’s VAT registration (white list, VIES), entry in the company register, required licences, the authority of the people who sign. Transactional: a price below market with no economic explanation, cash or payment to an unlisted account, pressure to close quickly, a counterparty with no warehouse or staff, uninsured goods, changes of terms without reason.
The procedure we implement has three layers: verification before the first transaction, monitoring during the relationship (a white list check at every payment, split payment where available) and dated records of every check. This decision trail does not guarantee that no allegation will be made. It gives you something else: proof that the warning signs were examined, which is precisely what the authority must overcome to refuse the deduction.
How we defend VAT carousel cases
In practice, an allegation of participation in a VAT carousel is guilt by association: the authority presents the chain and expects the taxpayer to prove he did not know it. Our work is to restore the proper order of proof.
- The burden of proof lies with the authority. Refusing the right to deduct requires objective evidence that the taxable person knew or should have known that the transaction was connected with fraud (CJEU, joined cases Kittel and Recolta Recycling, C-439/04 and C-440/04, paragraphs 56 to 61, Mahagében and Dávid, C-80/11 and C-142/11, paragraphs 45 and 49, Aquila Part Prod Com, C-512/21, paragraphs 32 to 36, and Global Ink Trade, C-537/22, paragraphs 54 to 57, as well as the judgments of the Polish Supreme Administrative Court of 10 November 2023, I FSK 903/22, and of 27 March 2025, I FSK 2143/21). A closed invoicing chain is circumstantial evidence, not proof, and suppositions that shift the burden of proof onto the taxpayer are not permitted. The fact that VAT went unpaid somewhere in the chain is not that evidence.
- A trader is not a law enforcement agency. The authority may not require a buyer to verify that the issuer of an invoice held the goods, employed staff or paid its VAT (joined cases Mahagében and Dávid, C-80/11 and C-142/11, paragraphs 61 and 62, Global Ink Trade, C-537/22, paragraph 50, and, as regards undeclared workers, CJEU, Tóth, C-324/11). Where there are indications of irregularity, heightened care may be expected, but not checks as complex and far-reaching as those the tax administration itself can carry out (Mahagében and Dávid, paragraph 60, Aquila Part Prod Com, C-512/21, paragraphs 52 and 53, Global Ink Trade, C-537/22, paragraph 39, and the judgment of the Polish Supreme Administrative Court of 2 August 2024, I FSK 679/24).
- We prove that the supplies were real. Goods that existed, were transported, received, paid for and resold leave traces: transport documents, warehouses, insurance, cash flows, witnesses. We answer the “fictitious invoice” allegation with facts, not declarations.
- We assess “should have known” as of the day of the transaction. The authority reads the case backwards, knowing the whole chain from its file. We show what was visible to the buyer at the time and whether the signals the authority now calls obvious existed at all.
- We run both tracks together. The tax decision and the charge under the Fiscal Penal Code (Articles 56 and 62 § 2) or the Penal Code (Articles 271a and 277a) grow from the same file. An explanation given in one proceeding is evidence in the other, so there must be one strategy from day one.
Why the allegation works this way is the subject of our essay Guilt by Association.
What a VAT carousel is
And how the scheme works
A VAT carousel is organized fraud in which a chain of companies in two or more EU states exploits the 0% rate on intra-Community supplies to extract from the state budget a refund of tax that nobody paid. The key link is the missing trader: a company that buys goods from another member state without VAT, sells them domestically with VAT, keeps the tax and disappears. Buffer companies lend the chain the look of normal trade, and the last company, the broker, exports the goods at 0% and claims a refund of input VAT. The same goods are often put through the loop more than once, hence the name.
The organizers operate through companies without assets, registered to front men. When the authority reaches the chain, the missing trader is gone. What remains are companies with an address, assets and a bank account, usually the traders in the middle who bought because the price was good and sold because there was demand. That is why most VAT carousel proceedings in Poland are conducted against companies that did not organize the fraud. The origins of the scheme, its scale and the response of law enforcement are described in our lexicon entry Carousel Fraud (Missing Trader Fraud): Origins, Mechanism, Case Law.
Scope of assistance
Representation in tax audits
and in customs and fiscal audits conducted by the National Revenue Administration (KAS).
Due diligence audits
counterparty verification procedures and training for purchasing and accounting teams.
Why Skarbiec Law Firm
In VAT carousel cases the firm is represented by its advocates and attorneys at law, and the cases are coordinated by Robert Nogacki, attorney at law (radca prawny) and founder of the firm.
We have practiced tax law since 2006, and the firm’s tax advisory team is among the largest in Poland according to the rankings of Dziennik Gazeta Prawna (2023, 2024 and 2025) and Rzeczpospolita (2025). One team handles both tracks of a carousel case, tax and criminal, because splitting them between two firms ends in contradictory explanations in the file.
FAQ: VAT carousel
What is a VAT carousel?
A VAT carousel is organized fraud in which a chain of companies in at least two EU states exploits the 0% rate on intra-Community supplies to claim a refund of VAT that nobody paid. The name comes from the fact that the same goods are often put through the chain several times.
How does a VAT carousel work?
A missing trader buys goods from another EU state without VAT, sells them domestically with VAT, keeps the tax and disappears. Buffer companies resell the goods, and the broker exports them at 0% and claims a refund of input VAT. The organizers’ profit is the VAT the missing trader never paid.
What are the consequences of an allegation in Poland?
On the tax side: refusal of the right to deduct, assessment of the tax with interest, an additional liability of up to 30% and, for invoices documenting supplies that never took place, 100% of the input tax on such invoices where the irregularity resulted from deliberate conduct of the taxpayer or its counterparty of which the taxpayer was aware (Articles 112b and 112c of the VAT Act), and removal from the VAT register. On the criminal side: Articles 56 and 62 § 2 of the Fiscal Penal Code (tax fraud and use of an unreliable invoice, imprisonment of up to five years, with possible aggravation, and a fine), Article 271a of the Penal Code for invoice forgery and, for invoices above PLN 10 million, Article 277a with imprisonment of at least five years. Asset security and account freezes may be applied while the proceedings are pending.
Can I lose the deduction without knowing about the fraud?
No. The deduction may be refused only where the authority proves, with objective evidence, that you knew or should have known that the transaction was connected with fraud (CJEU, Kittel and Recolta, Mahagében and Dávid). Criminal liability under the Fiscal Penal Code requires intent. Polish practice is often stricter than the case law, which is why these cases end up in court, but the law’s starting point favors the honest buyer.
What should I do after my Polish bank account is frozen?
First establish whether it is a STIR freeze (72 hours, extendable by the Head of KAS to three months), a security seizure or an enforcement seizure, because each has a different remedy. A STIR extension can be appealed within seven days and then challenged before the administrative court. At the same time, apply for the release of funds for salaries and current public dues, with a list of liabilities and due dates.
What does due diligence mean in Polish VAT practice?
The checks a reasonable trader performs before and during a transaction to confirm that the counterparty and the supply are real. The statute does not define it. The Ministry of Finance’s 2018 methodology lists formal and transactional criteria, and CJEU case law sets the limit: care may be expected, an investigation may not. What counts is not only the check but its dated record.
How long does a VAT carousel case take in Poland?
An audit and tax proceedings usually take from several months to two years, and court proceedings in both instances another two to three years. The tax liability expires five years after the end of the year in which it fell due, but the opening of criminal tax proceedings suspends that period (Article 70 § 6 (1) of the Tax Ordinance). Courts examine whether such proceedings were opened solely for that purpose (Supreme Administrative Court resolution of 24 May 2021, I FPS 1/21).
When should I contact a lawyer?
At the first document: a request for explanations, an order extending the refund deadline, a notice of audit, a notice of an account freeze. At that stage the material that goes into the file can still be shaped. After the audit report is served there are 14 days for objections, and after a decision 14 days for an appeal, and by then one works on a file built by the authority.
Describe your case
Describe in a few sentences what happened: what letter you received from the office or bank, and what the allegations concern. You don’t need to know all the details or send documents immediately; we’ll discuss the rest during a conversation.
Based on this, we’ll assess whether and how we can help and propose a first step. The deadlines in these cases are short: a complaint against an extension of an account freeze must be filed within 7 days, and an appeal against a freezing decision must be filed within 14 days. If the company has lost access to the funds or the deadline expires within a few days, please contact us by phone: +48 22 586 40 01.
The information provided is confidential and covered by the professional privilege of legal counsel and attorneys.
