VAT fraud: Employee using her employer’s details to issue fake invoices is liable for the amount of the taxes entered on them (ECJ)
According to the Judgment (30.1.2024) of the Court of Justice in Case C-442/22 [1] , an employee using her employer’s details to issue fake invoices is liable for the amount of the taxes entered on them.
Between January 2010 and April 2014, the
employee of a company established in Poland operating a petrol station issued
1,679 invoices that did not reflect actual sales of goods, for a total amount
(expressed in Polish zlotys) of approximately €320,000. To that end, she used
the details of her employer, a taxable person for value added tax (VAT)
purposes, without its knowledge or consent.
The fake invoices were not recorded in that
company’s tax returns. They were used by those who received them to obtain an
undue refund of VAT, without the corresponding tax having been paid into the
State budget. Following an audit, the competent authorities issued a decision
determining the amount of VAT payable by the company.
According to the tax authorities, the
fraudulent conduct was made possible by the lack of adequate supervision and
organisation within the company that hired the employee. The company is
challenging that decision before the national court which, in turn, has referred
the matter to the Court of Justice.
The national court wishes to establish who, out
of the company whose details were unlawfully used on the invoice and the
employee who made use of those details in order to issue fake invoices, is the
person who enters VAT on the invoice within the meaning of the VAT Directive (Article 203 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax) and who is therefore liable to pay that VAT.
The Court holds that VAT cannot be payable by
the apparent issuer of a fake invoice where it is acting in good faith and the
tax authority is aware of the identity of the person who actually issued the
invoice. In such a situation, it is that person who is liable for payment of
the VAT. A different interpretation would be contrary to the objective of the
VAT Directive, which is to prevent fraud and to stop individuals from
fraudulently relying on the rules of EU law.
In order to be regarded as having acted in good
faith, the employer is required to prove that it has exercised the due
diligence reasonably required to monitor the conduct of its employee and, in so
doing, to prevent its details from being used to issue fake invoices. In the
absence of such proof, the employer must be regarded as having the obligation
to pay the VAT indicated on the fake invoices. It is for the tax authority or
the national court to assess, in the light of all the relevant factors, whether
the employer has exercised such due diligence. (curia.europa.eu/
photo:freepik.com)
Full text of the judgment is available here
[1] Dyrektor Izby Administracji Skarbowej w Lublinie
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