Principles of VAT Deduction and Due Diligence in Tax Matters

• Tax authorities will refuse a taxpayer the right to deduct VAT if the taxpayer committed fraud or abuse, or if they knew or should have known that the purchase was related to VAT fraud
• Active VAT taxpayers have the right to deduct VAT if the purchased goods or services are used for taxable activities, provided certain conditions are met
• Reduction or refund of VAT does not apply to non-active VAT taxpayers, except in specific cases
• To qualify for VAT deduction, the seller must be a VAT taxpayer, the goods or services must be used for taxable activities, and they must be supplied by another taxpayer in the supply chain
• The Ministry of Finance provides guidelines for assessing whether a taxpayer has exercised due diligence in transactions involving VAT fraud
• It is crucial to assess whether the taxpayer should have known they were participating in a fraudulent transaction to determine their right to deduct VAT

Source: pit.pl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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