Known locally as “czynności sprawdzające”, verification / checking activities constitute the dominant method of assessing correctness of taxpayers’ settlement and are typically initiated to clarify inconsistencies or gather additional information on monthly VAT filings.

Unlike full tax audits, verification activities are quicker, aiming to resolve minor discrepancies in submitted tax returns without extensive procedures. However, they can lead to audits if issues remain unresolved and data analyzed indicates a high risk of irregularities that may lead to significant losses for the state budget.

During verification activities, communication with the tax office is typically efficient, with interactions handled both by email and phone, allowing for quick clarification of key issues.

What do verification activities focus on?

Verification activities are a primary tool used by Polish tax authorities to ensure compliance, especially for VAT. Unlike full audits, these reviews are more streamlined and aim to clarify specific details e.g. in monthly VAT returns.

Issues detected?

What can be the consequences of non-compliance observed by the tax authorities?

  • Tax refund suspension: If the tax authority identifies concerns during verification activities, it may suspend a VAT refund application to allow for deeper investigation. This temporary suspension extends the VAT refund period until further confirmation of correct documentation.
  • Corrections to tax return: In cases of detected discrepancies, tax authorities may require correction submissions or make independent adjustments to tax declarations. The consequence of such a correction may be the necessity to pay overdue tax or refund improperly collected tax, which may involve interest. Underpaid tax must be settled along with late payment interest, calculated from the day following the tax payment deadline to the day of actual payment. Overpayment or improper tax refund, which has already been received, is considered a tax arrears, which also requires repayment along with interest. Late payment interest is calculated from the day the tax office returns the overpayment or tax refund until the day the improperly received amount is settled. If the overpayment or tax refund has already been credited towards other tax liabilities, late payment interest is calculated from the day of crediting to the day of actual payment of the amount incorrectly booked as tax payment.
  • Tax audit: Should doubts remain after verification activities, a formal tax audit may be initiated. Then, tax authorities will be focused on comprehensive examination of the processes organized by the taxpayer and confirmation of overall compliance with tax obligations being subject to the audit.

Best practices for handling checking activities

The responsibility for the accuracy and completeness of tax filings lies entirely with the taxpayer. Given the relatively prompt and document-focused nature of verification activities, responding thoughtfully is crucial. Engaging with the tax authority, providing clear, accurate, and well-documented responses, consistent with explanations presented in the past, and consulting tax professionals can help streamline this process. A clear understanding of Polish tax expectations, coupled with accurate record-keeping, can make these interactions smoother and reduce the likelihood of escalation to audits.

If verification activities uncover inaccuracies, missing information, or inconsistencies, taxpayers bear the obligation to correct these and provide any clarifications required by the tax office.

Data protection and GDPR compliance

When handling verification activities in Poland, foreign businesses should also consider compliance with data protection laws, especially the GDPR. Many documents requested by tax authorities may contain personal data, such as contracts involving employee or customer information. Still, tax authorities may request to see such documents. When gathering documents, it worth however to ensure sensitive data is handled according to GDPR guidelines.

How will a taxpayer know that checking activities have been finished?

Checking activities do not end with any formal letter or notification. The completion of the verification activities is indicated by the receipt of the VAT refund amount, or – in other cases – by the absence of further inquiries / information about the initiation of tax audit.