Employee’s liability for issuing a false invoice

In business transactions, we can often observe a situation where invoices are issued which do not reflect reality. For the purposes of everyday language, such invoices are called “empty invoices”. Issuing a false accounting document is most often intended to help taxpayers in VAT fraud.

Legislative measures against fake invoices

In order to counteract these illegal practices, the legislator included in the Goods and Services Tax Act Art. 108 section 1. This provision reads: if a legal person, an organizational unit without legal personality or a natural person issues an invoice indicating the amount of tax, it is obliged to pay it. The same regulation is provided for in Art. 203 of the VAT Directive in the scope of EU regulations. .

Liability for VAT on the invoice

The literal wording of a given provision of the VAT Act shows that the responsibility for paying VAT on an invoice rests with the entity indicated as the issuer of the invoice, usually a legal person, i.e. a company. It appears that VAT regulations impose the same obligation on a company or organization, regardless of whether an invoice is issued on behalf of the company by an individual.

The case of control and liability for “empty invoices”

Tax authorities and administrative courts had doubts about this issue when it turned out that, as a result of an inspection of one entity, it was revealed that it had issued over 1,600 invoices over a period of 5 years, which should have been considered “empty”. The entity’s receipts allowed it to be established that the company’s employee was issuing false documents and, in consultation with the gas station employees, issued invoices giving the right to deduct input VAT based on the fiscal receipts they provided.

Despite the initiation of penal fiscal proceedings against the woman, the tax authority still requested the entity to pay VAT resulting from the issued invoices.

The Supreme Administrative Court submitted a question regarding this issue to the Court of Justice of the European Union to obtain clarification and interpretation. The doubt concerned whether the obligation to settle VAT rests with the company that formally issued the invoices, or with the employee who illegally used the employer’s data to issue them.

Court of Justice of the European Union (CJEU)

According to the CJEU, if the employer (company) is not at fault in the supervision, if good faith in this respect can be attributed to him, i.e. he was not aware of the employee’s actions and therefore had no opportunity to intervene in this respect – then he cannot be charged with companies liable for VAT shown in unreliable invoices

The role of Member States in combating tax crimes

Therefore, it should be stated that if the employee did not act in connection with his employment, there are no grounds for exercising special supervision over him. The position of the CJEU also emphasizes that they do not indicate the need to intensify supervision in a situation where no irregularities in accounting systems have been disclosed so far. In the situation in question, the company cannot be held responsible. It is not the body responsible for combating crime, and this obligation rests with the Member States.

Summary of the opinion of the Court of Justice of the EU

To sum up, the opinion of the Court of Justice of the European Union shows that if a dishonest employee uses the employer’s data without his knowledge and consent to issue false invoices, he may be liable for the VAT reported.

The impact of the CJEU opinion on the jurisprudence of administrative courts

Although the opinions of the CJEU spokesmen are not binding on the benches of administrative courts, they provide important guidelines that the courts willingly take into account when issuing judgments. It can be expected that the jurisprudence of administrative courts will follow the direction set by the CJEU spokesman.

Opinion of the Advocate General of the Court of Justice of the European Union of 21 September 2023, ref. no. file C-442/22


Joanna Krajewska

Tax Advisor, ACCA


Contact a specialist