The judgment of the Court of Justice of the European Union (CJEU) in Case C-442/22 offers an important lesson for all VAT payers: even if a company itself does not commit fraud, it may still bear the consequences if it fails to ensure sufficient supervision of its employees.

In this case, an employee of the Polish company P. sp. z o.o., which operated a petrol station, issued more than 1,600 fake invoices including VAT worth PLN 1.5 million (over EUR 319,000) without the management’s knowledge. The employee was authorized to issue invoices and could even create them outside the company’s invoicing software without requiring additional approval. The tax authorities held the company liable and ordered it to pay the VAT, as the invoices contained its identification details.

However, the CJEU ruled that the obligation to pay VAT lies with the person who actually stated it on the invoice – in this case, the employee. At the same time, the Court emphasized that if a company fails to demonstrate the due diligence required to monitor the actions of its employee, it becomes responsible for the VAT stated on those fake invoices. In other words, a VAT payer can be defended only when adequate internal controls and oversight mechanisms are proven to have been in place for employees involved in invoicing.

What does this mean for businesses?

The judgment sends a clear message: prevention is the best defense. Every VAT payer should establish internal processes that prevent the misuse of company data and allow early detection of irregularities. We recommend, in particular:

• defining clear competencies for staff authorized to issue invoices,
• implementing ongoing controls and audit mechanisms,
• using automated systems to verify accounting documents, and
• regularly reviewing internal processes with qualified professionals.

Only by doing so can a company prove that it has acted with due care and minimize the risk of being held liable for fraudulent invoices.

Our recommended approach

As part of our accounting and tax services, we help clients set up processes that meet not only legal requirements but also modern standards of risk management.

We use an online accounting portal that enables:

• automation of accounting workflows,
• full digitalization of accounting,
• online reporting and approval of documents,
• definition of internal processes and controls, and
• secure cloud-based archiving.

This approach ensures transparency, reliable oversight, and early detection of discrepancies – exactly the kind of due diligence the CJEU considers essential.

Barbora Juhásová

Tax Manager | Accace Slovakia

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