Fictitious transactions in Polish tax law

A fictitious transaction (fikcyjna transakcja) is an economic event documented by an invoice, a contract or a book entry that did not take place at all, or took place differently from what the documents record: between other parties, with a different subject matter or for a different amount. Polish tax law does not define the term, but attaches specific consequences to it: an invoice documenting an act that was not performed gives no right to deduct input VAT (Article 88(3a)(4)(a) of the Act of 11 March 2004 on Goods and Services Tax, the VAT Act), and its issuer must pay the tax shown on it (Article 108(1) VAT Act); the expense is not a deductible cost in income tax, and issuing or using such an invoice may constitute a fiscal offence or a common criminal offence where the statutory elements of the relevant offence are met. Whether a transaction was fictitious is decided not by the document but by the evidence of what actually happened.

Key points

• Four forms of unreliability: a transaction that never took place (an invoice empty as to its subject matter); a transaction that took place but was performed by someone other than the issuer of the invoice (an invoice unreliable as to the parties); a transaction whose amount is inconsistent with reality; and a sham transaction within the meaning of Article 83 of the Civil Code, which may conceal another act. The tax consequences differ for each.
• In VAT, where no actual supply took place, a substantive condition of deduction is missing (Articles 86(1) and 88(3a)(4)(a) VAT Act), and the issuer pays the tax under Article 108(1) even though no chargeable event occurred. Civil-law invalidity or sham status alone, however, does not justify refusal of deduction: the Court of Justice requires proof that the act was not performed or that fraud or abuse within the meaning of EU law occurred (judgment of 25 May 2023, C-114/22). Where the invoice is unreliable as to the parties, the authority examines whether the actual supplier had the status of a taxable person (judgment of 9 December 2021, C-154/20 Kemwater ProChemie) and, separately, whether the purchaser knew or should have known of the fraud (judgments in C-439/04 and C-440/04 Kittel and Recolta, C-80/11 and C-142/11 Mahagében and Dávid, C-277/14 PPUH Stehcemp).
• In income taxes an expense not supported by a real event is not a deductible cost (Article 15(1) of the CIT Act, Article 22(1) of the PIT Act), and books containing fictitious entries are unreliable in that part (Article 193(4) and (6) of the Tax Ordinance Act of 29 August 1997, the Tax Ordinance); estimation of the tax base comes into play only where the remaining data and evidence do not allow it to be determined (Article 23(2) Tax Ordinance).
• Issuing an unreliable invoice or using one is a fiscal offence under Article 62(2) of the Fiscal Penal Code and, since 1 March 2017, intentionally forging an invoice or certifying untruth in one where the total amount receivable exceeds PLN 200,000 is also a common offence under Article 270a or 271a of the Criminal Code, punishable by 6 months to 8 years’ imprisonment; for invoices whose total amount receivable exceeds PLN 5,000,000, or where the offender has made the offence a regular source of income, the penalty is 3 to 20 years (Article 271a(2)), and above PLN 10,000,000 from 5 to 25 years (Article 277a(1)). Understating tax is tax fraud (Article 56 Fiscal Penal Code), and obtaining an undue VAT refund falls under Article 76 Fiscal Penal Code and Article 286 Criminal Code.
• The authority establishes what really happened on the basis of the whole file (Article 191 Tax Ordinance), determining the content of an act according to the parties’ concurrent intention (Article 199a(1)) and attaching the consequences of the act hidden behind a sham where such an act was actually performed (Article 199a(2)). Fictitiousness must be proven; the counterparty’s lack of premises, payment in cash or missing transport documents are assessed together with the rest of the file and in themselves decide neither the fictitiousness of a specific supply nor the purchaser’s knowledge of fraud.
• Fictitiousness differs from artificiality: a genuine transaction whose main purpose, or one of whose main purposes, was a tax benefit contrary to the object or purpose of the statute, carried out in an artificial manner, is not fictitious and in income taxes falls under the general anti-avoidance rule (Article 119a Tax Ordinance); that rule does not apply to VAT (Article 119b(1)(4)), where its counterpart is the abuse of law provision of Article 5(4) and (5) VAT Act.

Forms of invoice unreliability and their consequences

The distinction matters for the defence. Against the charge that a transaction never existed, the taxpayer proves that the goods or services were delivered: warehouse records, correspondence, photographs, employee testimony, the results of the work. Against the charge that the invoice is unreliable as to the parties, the dispute shifts to the status of the actual supplier and the purchaser’s knowledge and diligence, since the existence of the supply is no longer contested. Against the charge of a sham, the issue is the classification of the act, not its existence, and the dispute is governed by civil law rules, Article 199a and the EU standard set in C-114/22.

How the authority proves fictitiousness

The burden of showing that a transaction was fictitious rests on the authority (Articles 122 and 187(1) Tax Ordinance). The typical evidence is the result of a cross-check at the counterparty, data from SAF-T files and the National e-Invoicing System, interview records from criminal proceedings against the issuers of the invoices, information on the absence of technical facilities and staff, and bank account histories. The administrative courts require the authority to prove fictitiousness in respect of the specific transaction rather than infer it from the general profile of the counterparty: the fact that a supplier filed no returns or disappeared proves the supplier’s unreliability, not that the supply did not occur. Cash payment and the absence of a bank account do not decide fictitiousness. Since 4 November 2025, irresolvable doubts as to the facts in proceedings initiated ex officio are resolved in the party’s favour (Article 122(2) Tax Ordinance), which matters in fictitiousness cases because the charge often rests on a chain of presumptions. The rules on gathering and evaluating evidence are described in the entry on evidence in Polish tax proceedings.

In establishing the facts, the authority assesses the content of a legal act according to the parties’ concurrent intention and purpose rather than its literal wording (Article 199a(1)), and where the evidence leaves objective doubt as to the existence of a legal relationship it must apply to a civil court for a declaration (Article 199a(3)). The provision is rarely used, but the taxpayer may insist on it where the authority assumes fictitiousness against the documents and the testimony of both parties to the contract.

Consequences in value added tax

The right to deduct exists to the extent that goods and services are used for taxable transactions (Article 86(1) VAT Act) and arises only where the invoice documents a real act. Article 88(3a)(4) VAT Act excludes deduction on invoices recording acts not performed, stating amounts inconsistent with reality, or confirming sham or void acts (Articles 58 and 83 of the Civil Code). The last limb has an EU boundary: in C-114/22 the Court held that the authority may not refuse deduction merely because it regards the act as a sham or void under civil law; it must show that the act was not performed or that fraud or abuse of law within the meaning of the VAT Directive occurred. The issuer of an invoice that documents no actual act pays the tax shown regardless of whether the act took place (Article 108(1) VAT Act), and that obligation extends to invoices issued by an employee without the employer’s knowledge where the employer failed to exercise due diligence in supervision (judgment of 30 January 2024, C-442/22). The operation of Article 108 and the possibility of correction are discussed in the entry on empty invoices, and the employee scenario in our article on employee responsibility for fictitious invoices.

The case law of the Court of Justice draws the line between a sanction for the fraudster and protection for the honest purchaser. Refusal of deduction is permissible where it is shown on objective grounds that the taxable person knew or should have known that it was participating in a transaction connected with fraud (judgment of 6 July 2006, C-439/04 and C-440/04 Kittel and Recolta Recycling); the authority may not require the purchaser to check whether the issuer holds the goods and meets its own obligations (judgment of 21 June 2012, C-80/11 and C-142/11 Mahagében and Dávid); an invoice from an entity that formally did not exist or was not registered does not exclude deduction if the supply took place and the purchaser acted in good faith (judgment of 22 October 2015, C-277/14 PPUH Stehcemp). Good faith does not, however, replace the substantive conditions: where the invoice names a supplier other than the actual one, the actual supplier has not been identified and nothing shows that it was a taxable person, deduction may be refused without proving the purchaser’s knowledge of fraud; identification of the supplier is not required where the circumstances establish with certainty that it had that status (C-154/20 Kemwater ProChemie). The Court also allows refusal where the purchaser did not know of the fraud but, on objective grounds, should have known of it; lack of diligence is an element of that assessment rather than a free-standing ground for refusal, and it cannot be replaced by a failure to carry out the steps on an official checklist (judgment of 11 January 2024, C-537/22 Global Ink Trade). In Polish practice the standard of diligence is set by the Ministry of Finance methodology of 25 April 2018 on the assessment of due diligence by purchasers in domestic transactions. The general rules of deduction are set out in the entry on VAT deduction and the entry on value added tax in Poland, fictitious transactions in chains involving a missing trader on the service page on VAT carousel fraud, and the way Polish courts treat the Court’s rulings in our article on the binding force of CJEU jurisprudence.

Consequences in income taxes and under the Tax Ordinance

A deductible cost is an expense actually incurred to earn income or to preserve or secure its source (Article 15(1) of the Corporate Income Tax Act of 15 February 1992; Article 22(1) of the Personal Income Tax Act of 26 July 1991). An invoice for a non-existent service does not document an expense incurred for that purpose, even if the money was transferred, because a transfer for nothing is not a cost. For transactions unreliable as to the parties the case law is not uniform: some panels accept that, since the goods were acquired and resold, the cost of acquisition exists although the invoice names the wrong supplier; others refuse the cost for want of credible evidence that the expense was incurred towards a specific entity. Whatever the VAT outcome, the taxpayer must therefore prove that the expense was actually incurred and connected with its income. Fictitious entries make the books unreliable in the part that does not reflect reality (Article 193(2), (4) and (6) Tax Ordinance); rejecting those entries does not automatically mean estimation, because the authority refrains from estimating where the data from the books, supplemented by other evidence, allow the tax base to be determined (Article 23(2) Tax Ordinance); see the entry on unreliable books.

In VAT, an understatement of the liability or an overstatement of the refund triggers an additional tax liability assessed at up to 30 percent, with reduced rates on correction and certain exclusions (Article 112b VAT Act). Where the irregularity resulted from the deliberate conduct of the taxpayer or of its counterparty of which the taxpayer was aware, and stems from invoices issued by a non-existent entity, recording acts not performed, stating amounts inconsistent with reality or confirming sham or void acts, the additional liability in the part relating to the input tax on those invoices is 100 percent (Article 112c VAT Act); it is not assessed against an individual who bears fiscal penal liability for the same act. A separate institution is lending one’s name (firmanctwo): where a taxpayer, with another person’s consent, uses that person’s name or business name to conceal the business or its true scale, the person lending the name is jointly and severally liable with the taxpayer, with all their assets, for tax arrears arising during that business activity (Article 113 Tax Ordinance).

Criminal and fiscal penal liability

Whoever issues an invoice unreliably or uses such an invoice is liable to a fine of up to 720 daily rates, to imprisonment for not less than one year, or to both (Article 62(2) of the Fiscal Penal Code); where the tax amount resulting from the invoice or invoices is small, the penalty is a fine of up to 720 daily rates or imprisonment, or both (Article 62(2a)), and in a case of lesser gravity the act is a fiscal misdemeanour punishable by a fine (Article 62(5)). Understating tax by giving false information in a return is tax fraud (Article 56 Fiscal Penal Code), and misleading the authority to obtain an undue VAT refund is an act under Article 76 Fiscal Penal Code, concurrent with fraud under Article 286 Criminal Code. Since 1 March 2017 the Criminal Code has contained separate intentional offences: forging or altering an invoice as to circumstances that may affect the amount of a public levy (Article 270a) and certifying untruth in an invoice as to such circumstances (Article 271a), both concerning an invoice or invoices whose total amount receivable exceeds PLN 200,000 (property of significant value, Article 115(5) Criminal Code) and both punishable by imprisonment from 6 months to 8 years. Where the total amount receivable exceeds PLN 5,000,000, or the offender has made the offence a regular source of income, the penalty is 3 to 20 years (Articles 270a(2) and 271a(2)); where the amount exceeds PLN 10,000,000 the penalty is 5 to 25 years (Article 277a(1)). The thresholds refer to the amounts receivable on the invoices, not to the tax understated, and cases of lesser gravity carry milder penalties (Articles 270a(3), 271a(3) and 277a(2)); see our articles on invoice fraud and on intellectual falsification of documents. The same act may constitute both a fiscal offence and a common offence (Article 8(1) Fiscal Penal Code), and funds derived from fictitious invoices are frequently the subject of a money laundering charge under Article 299 Criminal Code and of asset freezing. The conditions for avoiding punishment by correction are set out in the entry on active remorse: active remorse under Article 16 Fiscal Penal Code requires notification before the act is detected, correction of a return under Article 16a covers acts connected with filing a return or sending a book, and neither institution extends to liability under the Criminal Code. The criminal dimension of understatement is discussed in our article on tax evasion as the crime of silence, and the position of a purchaser accused of buying invoices in the entry on the purchase of fictitious invoices.

Fictitious, sham and artificial

Three concepts are often conflated in decisions, and each triggers a different regime. A fictitious act does not exist; the authority disregards it entirely and applies Article 108 VAT Act and the criminal provisions. A sham act exists as a declaration of intent made for appearance with the other party’s consent and is void (Article 83(1) Civil Code); an absolute sham conceals nothing, a relative sham conceals another act, and then the tax consequences follow the hidden one (Article 199a(2) Tax Ordinance). In VAT, civil-law sham status alone does not decide the refusal of deduction unless the authority shows the absence of an actual act or fraud or abuse within the meaning of EU law (C-114/22). An artificial act is real and valid, but obtaining a tax benefit contrary to the object or purpose of the statute was its main purpose or one of its main purposes, and the manner of acting was artificial, meaning one that a reasonable person pursuing lawful aims would not have chosen; the authority then determines the tax consequences as if the appropriate act had been performed (Article 119a Tax Ordinance), after separate proceedings conducted by the Head of the National Revenue Administration. The rule of Article 119a does not apply to VAT (Article 119b(1)(4)); in that tax the authority applies the abuse of law construction of Article 5(4) and (5) VAT Act, derived from the Court’s case law. The charge of fictitiousness is thus the furthest-reaching but the hardest to prove; the charge of artificiality requires no proof of untruth but does require the anti-avoidance procedure described in the entries on the GAAR clause in Poland and on tax avoidance in Poland. The taxpayer should ensure that the authority does not obtain the effect of the anti-avoidance rule through a charge of sham raised without proof of the parties’ concurrent intention.

What to check when fictitiousness is alleged

• Which form of unreliability the authority alleges: non-existence, unreliability as to the parties, an amount inconsistent with reality, or sham; this determines what must be proven and which provision applies.
• Whether the file contains evidence about this specific transaction or only findings about the counterparty; evidence of performance (warehouse documents, correspondence, photographs, testimony, work product) should be filed with an evidentiary motion under Article 188 Tax Ordinance.
• Whether, on a charge of sham or invalidity, the authority showed the absence of an actual act or fraud or abuse within the meaning of EU law, or stopped at the civil-law classification (C-114/22).
• Whether the authority assessed the purchaser’s knowledge and diligence as at the time of the transaction rather than with hindsight, and whether it proved that the purchaser knew or should have known of the fraud; counterparty verification documentation (registers, the VAT white list, contract, contact) in line with the 2018 methodology.
• Whether interview records from criminal proceedings against the issuers concern these invoices and whether the party could comment on them (Article 192 Tax Ordinance).
• Whether the charge concerns VAT, income taxes or both; in income taxes a cost may be defended for a transaction unreliable as to the parties despite the loss of deduction.
• Criminal exposure: whether proceedings under Article 62 Fiscal Penal Code or Article 271a Criminal Code have been opened, whether correction with active remorse or under Article 16a Fiscal Penal Code remains available, and, where a prosecutor or the authority has frozen assets, what the legal basis, scope and proportionality of the measure are and which remedies apply; see our articles on prejudgment security over taxpayer assets and on what happens when the state freezes your money.

Counterparts in other jurisdictions

The rule that the issuer of an invoice showing VAT must pay it derives from Article 203 of Directive 2006/112/EC and applies throughout the European Union; section 14c of the German Umsatzsteuergesetz and Article 108 of the Polish VAT Act are its counterparts. Section 41 of the German Abgabenordnung provides that a sham act is irrelevant for taxation and that the concealed act is taxed, which corresponds to Article 199a(2) Tax Ordinance. In the United States the sham transaction doctrine allows courts to disregard transactions lacking economic substance, but it is applied mainly to artificial structures that in Poland would fall under the anti-avoidance rule of Article 119a. The Polish particularity is the overlap of three sanction regimes, tax, fiscal penal and criminal, on the same set of invoices.

Frequently asked questions

What is a fictitious transaction in Polish tax law?

An event documented by an invoice or contract that did not take place or took place differently from what the document records: between other parties, with a different subject matter or amount. An invoice documenting an act not performed gives no right to deduct VAT (Article 88(3a)(4) VAT Act) and its issuer pays the tax shown (Article 108(1) VAT Act).

Does the purchaser lose the VAT deduction if the goods were actually received?

Not merely because the invoice came from an entity other than the real supplier, provided that supplier was a taxable person and the purchaser did not know and, exercising due diligence, should not have known of the fraud (CJEU judgments Kittel, Mahagében, PPUH Stehcemp, Kemwater ProChemie). Deduction may be lost where the authority proves actual or constructive knowledge of the fraud, or where the actual supplier cannot be identified and nothing shows that it was a taxable person.

Is a fictitious transaction a crime in Poland?

It may constitute a fiscal offence or misdemeanour, or a common offence, where the statutory elements of the relevant act are met. Issuing an unreliable invoice or using one is a fiscal offence under Article 62(2) Fiscal Penal Code, and intentionally certifying untruth in an invoice whose total amount receivable exceeds PLN 200,000 is an offence under Article 271a Criminal Code; above PLN 5,000,000 the penalty is 3 to 20 years, and above PLN 10,000,000 from 5 to 25 years (Articles 271a(2) and 277a(1) Criminal Code).

How does a fictitious transaction differ from a sham and an artificial one?

A fictitious one does not exist. A sham exists as a declaration made for appearance and is void; if it conceals another act, the tax consequences follow the hidden one (Article 83 Civil Code, Article 199a(2) Tax Ordinance), and in VAT sham status alone does not justify refusal of deduction (C-114/22). An artificial one is real, but a tax benefit contrary to the purpose of the statute was its main purpose or one of its main purposes and the manner of acting was artificial; it falls under the anti-avoidance rule of Article 119a Tax Ordinance and, in VAT, under the abuse of law provision of Article 5(4) and (5) VAT Act.

Who must prove that a transaction was fictitious?

The tax authority (Articles 122 and 187(1) Tax Ordinance), in respect of the specific transaction; irresolvable factual doubts in proceedings initiated ex officio are resolved in the party’s favour (Article 122(2)). The taxpayer should nevertheless produce evidence of performance, since it holds that evidence.

Can an expense on a fictitious invoice be a deductible cost?

Not for an invoice covering a non-existent service. For a transaction that took place but with a supplier other than the one named on the invoice, part of the case law allows the cost if the taxpayer shows that the expense was actually incurred on the goods acquired; the case law on this point is not uniform.

Related entries

• Empty invoices
• VAT deduction
• Evidence in Polish tax proceedings
• Cross-checks at counterparties
• Unreliable books
• Active remorse
• The GAAR clause in Poland
• Board member liability

Skarbiec Law Firm defends businesses against charges of fictitious transactions in tax proceedings and in criminal cases concerning the purchase of fictitious invoices, running both tracks in parallel.

Legal status as of 1 November 2026.

Robert Nogacki

Robert Nogacki is a Polish attorney at law (radca prawny), the founder and managing partner of Kancelaria Prawna Skarbiec (Skarbiec Law Firm), which has operated continuously since 2006.

The law is equal for everyone, but the parties rarely are: on one side stands an organization with time, money, and lawyers, on the other a person with one business, one nest egg, and one life.

Clients rarely come to him with a legal problem. They come with a problem that also has a legal side: an audit that began with a single invoice, money entrusted to someone who has disappeared, a company that has to be passed on before it is too late. Most such matters are decided long before the first letter is written, in decisions made without asking and in deadlines nobody remembered. So he begins by asking how the client got here, not what the client should have done.

He advises entrepreneurs and families from more than a dozen countries, including those whose accounts the tax office has just seized and who do not know what to do tomorrow morning. He defends them in tax audits, customs and fiscal inspections, disputes with the tax authorities, and criminal tax proceedings. He represents victims of investment fraud and Ponzi schemes. He helps families set up family foundations and plan succession, so that a life’s work outlasts a single generation.

Not every case can be won. Every case can be run so that the client knows where they stand. Since 2006 he has represented the victims in the WGI case (Warszawska Grupa Inwestycyjna, the Warsaw Investment Group), one of the longest criminal cases in the history of the Polish financial market, because some things must not be left half finished, even when they take two decades. In the case of the collapsed cryptocurrency exchange Zonda (Zondacrypto, operated by BB Trade Estonia OÜ), he represents several hundred victims in the criminal investigation conducted by Poland’s National Prosecutor’s Office and in the Estonian bankruptcy proceedings.

Kancelaria Prawna Skarbiec is listed in the rankings of Poland’s largest tax advisory firms published by Dziennik Gazeta Prawna and Rzeczpospolita, and it is a four-time recipient (2015 to 2018) of the European Medal awarded by the Business Centre Club and the European Economic and Social Committee. Robert Nogacki publishes regularly, in the press and on the firm’s website, for people who have a problem rather than a law degree, because a legal opinion the client cannot understand protects only the lawyer.

He believes that the best legal advice is the kind that means the client never has to appear in court.