Rz: A manager is liable for tax on empty invoices
A member of the management board of a capital company is liable for its arrears resulting from issuing invoices that do not document actual events, according to a ruling by the Supreme Administrative Court, as described in Rzeczpospolita daily.
Michał Nielepkowicz, tax advisor and partner in Thedy & Partners, commenting on the verdict in the newspaper, stresses that we do not know more details regarding the tax proceedings against the company itself, but taking into consideration the wording of the regulations as well as the previous NSA case law, the court reasonably concluded that the mere issuance of a decision on liability of a third party is sufficient and its delivery within the 5-year deadline is not necessary. On the other hand, the scope of liability of a member of the management board of a limited liability company also includes the obligation to pay the VAT indicated on the invoice pursuant to Article 108 of the VAT Act (applicable primarily to the so-called “empty invoices”).
What is crucial, this case shows – which was rightly referred to by the Supreme Administrative Court at the end of the written justification of the judgment – that proceedings concerning third party liability is, in a sense, the final stage of management board members’ liability for tax settlements of the limited liability company. And what is important – one should be aware of different types of this responsibility. Determination by tax authorities of a higher amount of tax due from a limited liability company may result not only in financial liability of the company itself in the form of a necessity to pay overdue tax with interest, but also in liability of natural persons on the grounds of the Code of Criminal Procedure, including potentially also members of the management board, then the so-called liability of the company as a collective entity. And finally, as in this case, joint and several liability of members of the management board for tax arrears of the limited liability company, in the case of ineffective enforcement against the company. Therefore, it is crucial to properly and actively participate in actions and proceedings at the earliest possible stage of control of the company’s settlements as a taxpayer and not only – third party liability.
The entire article was published in Rzeczpospolita of 14 February 2022, p. D6