The commission of the basic type of offence is punishable by an alternative-cumulative penalty, i.e. a fine of up to 720 daily rates or imprisonment of between 5 days and 5 years. It is possible to impose these penalties jointly. The privileged type and the tax offence are sanctioned by imposing a fine. The court is also authorised to impose penal measures, such as the imposition of a ban on business activity or a ruling on the forfeiture of objects.

How do the authorities usually find out about tax evasion?

An important area of activity for the Polish National Revenue Administration (KAS) is conducting analytical forecasting, research activities, and risk analysis. The aim of this analysis is to prevent the risk of taxpayers failing to fulfil their tax and customs obligations, as well as to select entities for tax and customs and fiscal inspections.

A significant role in the activities carried out by KAS is played by the “System Teleinformatyczny Izby Rozliczeniowej” (Teleinformatic System of the Clearing House in English), otherwise known as the STIR system, which is used to detect suspicious VAT refunds, and to identify and interrupt carousel chains or freeze taxpayers' bank accounts. KAS also uses data analysis of tax returns, information provided by banks and financial institutions, and international information exchange.

Tax audits may be initiated on the basis of anonymous submissions, whistleblowers, as well as data from other taxpayers collected in the course of ongoing audits or law enforcement agencies.

Opportunities to amend tax declarations or declare additional income

In Polish fiscal penal law, priority is given to the purpose of enforcement before repression, manifested by regulations stipulating that timely correction of tax offences may result in a reduction of the penalty or even exemption from fiscal penal liability.

Taxpayers have the opportunity to make corrections to their tax return if errors are made or if full income is not reported. The correction may be submitted at any time before the expiry of the statute of limitations on tax liability. In addition, if taxpayers wish to disclose untaxed income, they may use the mechanism of voluntary disclosure, which allows taxpayers to avoid fiscal criminal liability, provided the correction is submitted before the commencement of audit or fiscal criminal proceedings.

Conditions for voluntary disclosure of tax evasion

Voluntary disclosure is a mechanism applied before criminal proceedings are initiated and guarantees impunity for the perpetrator of a fiscal offence. It is important that the notification is made before the tax authorities take control measures against the taxpayer, because once an audit has been initiated, voluntary disclosure does not provide protection against fiscal criminal liability. The taxpayer submits a notice to the authority disclosing the circumstances of the act, in particular, any complicit persons. Notice must be given in writing, electronically or orally, and on the record. The perpetrator is obliged to pay the whole of the outstanding public receivable depleted by the criminal act ,or to deposit the object subject to forfeiture or its monetary equivalent.

Consequences of voluntary disclosure of tax evasion

A taxpayer who voluntarily discloses untaxed income and corrects their declaration avoids fiscal criminal liability as long as the notification is made before proceedings are initiated. However, it should be borne in mind that mere disclosure does not release the taxpayer from the obligation to pay outstanding taxes and interest on arrears. In the case of larger arrears, the tax office may carry out an additional inspection to verify the correctness of the declaration.

When is voluntary disclosure of tax evasion no longer possible?

The voluntary disclosure process cannot be used if, in connection with the control procedure initiated, the tax authority already has information about the crime committed or if the offender's act consisted in directing, ordering, or inducing other persons to commit a crime, and if the offender organised a criminal group. In such cases, the possibility of avoiding responsibility by submitting a correction to the declaration (in an administrative procedure) is activated.

Main areas where voluntary disclosure of tax evasion plays an important role

Voluntary disclosure is most commonly used in cases of undeclared foreign income, incorrect VAT accounting, concealment of business income, or undeclared rental income from real estate. In addition, this mechanism is often used for the self-employed and small businesses that have previously failed to comply with their tax obligations. Those investing in cryptocurrencies and other digital assets are increasingly taking advantage of voluntary disclosure due to tightening regulations in this area.

What is often overlooked by foreigners but considered tax evasion in Poland?

One of the most common cases is the failure of foreigners to declare income earned in Poland, in particular with regard to the rental of real estate, income from digital platforms (e.g. Uber, Airbnb), and work performed under civil law contracts. Tax authorities often monitor these areas using information from banks and public registers. The authorities are increasingly on the lookout for foreign holding structures that can be used to avoid taxation in Poland. It is a common mistake for foreigners to incorrectly determine their tax residency, which can lead to evasion of tax obligations in Poland.

Recommendations for clients who have engaged in tax evasion and how to act as a professional in this case

As a tax adviser, I recommend that clients first analyse their tax situation and assess the risks. If undeclared income or errors in declarations are found, the best solution is to voluntarily report the deficiencies and pay the tax owing. It is also important to implement effective compliance procedures to avoid similar situations in the future. Cooperation with an experienced tax adviser will help avoid the risk of criminal and tax proceedings and limit possible financial consequences. In some cases it is worth considering negotiations with the tax authorities in order to obtain more favourable conditions for the repayment of tax liabilities.

Poland is an attractive place to establish and develop branches of foreign companies. However, the complexity of the Polish tax system and the procedure for action by the tax authorities can be a challenge. We recommend that the decision to establish a company in Poland should be preceded by a consultation with a tax law expert who will assist in setting up the entity, fulfilling all registration obligations, and ensuring the reliable provision of ongoing legal and tax services.

Norbert Tulak is a tax advisor and lawyer, continuing his studies as a doctoral student and student of the Executive MBA programme conducted by the Warsaw School of Economics. He is the author of various publications on civil and tax law in academic journals and specialist presses, including the tax section of Forbes magazine.

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Foreign employers in Poland as income tax payers

Tax evasion in Poland