Supreme Court Rules Tax Authorities Must Prove Knowing Participation in Carousel Fraud

• The Supreme Administrative Court overturned a first instance judgment in a tax carousel fraud case, establishing important precedents for burden of proof requirements
• The court ruled that tax authorities must prove their claims when alleging a taxpayer knowingly participated in tax fraud, and that fraud by one entity does not automatically contaminate the entire transaction chain
• Each participant in a transaction chain must be assessed individually, with conclusions applying only to the specific taxpayer under scrutiny rather than all parties involved
• Tax authorities cannot arbitrarily switch between accusations of knowing participation in fraud versus failure to exercise due diligence without proper analysis and evidence
• This ruling significantly limits the previous practice where tax authorities would alternate between different accusations to avoid having to prove taxpayer awareness of fraudulent activity

Source: mddp.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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