Tax fraud is one of the most dangerous violations of tax law. Their most common cause is the taxpayer's desire to conceal the source or amount of money received. The use of another person's name, surname or business name in a business activity, with that person's knowledge and consent, in order to hide or conceal the true scope of the activity in question, is known as firmancy. It is illegal and qualified as tax fraud. It is most often carried out in order to defraud a VAT refund or reduce the fiscal burden. Persons committing firmancy are subject to fiscal and tax criminal liability. In the practice of the tax authorities, it is not easy to collect evidence confirming the firmancy, Helpful in combating the practice is the implementation into Polish law of the EU Directive DAC7. The directive imposed an obligation on digital platform operators from EU countries to report to the tax authorities data on sales transactions of goods and certain services made through their Internet.
Keywords: Tax fraud, tax firmancy, tax control, fraud in internet trading
Definition of firmancy
Tax fraud is one of the most dangerous tax law infringements. Their most common cause is the taxpayer's desire to conceal the source or amount of money received. The use of another person's name, surname or business name in business activities, with that person's knowledge and consent, in order to conceal or disguise the true extent of the activity in question, is known as firmancy[1]. Thus defined, it is against the law and is classified as tax fraud. It is most often carried out with the aim of obtaining a VAT refund or reducing the tax burden. Persons who engage in firmancy are liable for tax and fiscal penalties.
Scale of the phenomenon
In the EU, overall tax losses (direct and indirect) due to all fiscal fraud are estimated to have reached €200-250 billion per year in 2008, representing 2- 2.25% of EU GDP[2]. In 2017, the VAT gap in EU Member States was equivalent to €137 billion, More than 40% of this amount was due to cross-border VAT fraud[3]. A lot of VAT fraud is related to the phenomenon of 'firmancy', the setting up of companies in the name of persons who are substituted, who do not correctly account for the VAT due and who do not have any enforceable assets.
The European Public Prosecutor's Office (EPPO) in 2022 focused on fraud affecting public revenue, in particular cross-border VAT fraud. The EPPO conducted 1117 investigations with a total estimated damage value of €14.1 billion, of which almost half (47%) resulted from VAT fraud[4].
Legal basis of liability for firmancy
In Polish law, perpetrators of firmancy are liable under two different legal bases: the Act of 29 August 1997 - Tax Ordinance (Polish Statue Book of 2005, no. 8, item 60, as amended), hereinafter: Tax Ordinance and the Act of 10 September 1999. Fiscal Penal Code (Polish Statue Book of 2024, item 879, as amended), hereinafter: the Fiscal Penal Code.
The former law regulates the liability of a firmant (a person who pretends to be someone else's company name) for tax arrears incurred as a result of operating under someone else's "signboard," and the liability of a firmant (a person whose business is used to conceal the activities of another business entity) for lending a name, surname or business name.
The Fiscal Penal Code, meanwhile, specifies the fiscal criminal liability of an entrepreneur for using the name, surname, or name of another entity, and the liability of an entrepreneur for aiding and abetting in the commission of a crime (Article 55 of the Fiscal Penal Code).
It follows from Article 113 of the Tax Code that if a taxpayer, with the consent of another p