Polish automotive sector plagued by VAT scams
Carousel VAT scams are increasingly common.
The District Prosecutor’s Office in Przemysl and the Internal Security Agency are investigating a series of irregularities involving Polish automobile sales and the VAT scams on a large scale, the Polish daily Dziennik Gazeta Prawna reported in May 2014.
“We can only confirm that we are conducting an investigation on the trade of passenger cars,” Marta Petkowska, spokesperson of the prosecutor’s office in Przemysl, told Dziennik Gazeta Prawna on May 28.
Irregularities often occur in re-exporting of cars from Poland to Germany. It is common knowledge in the industry that a profit can be made when buying a new car at a Polish dealership and selling it in Germany as a used car. But until recently this process was seen in the context of legal profit made on currency fluctuations and discounts from German resellers, which are considerably higher than in Poland.
Yet, profits made by car resellers appears to be larger than previously thought, and they are being generated through VAT carousel scams.
Typically, a company is set up in Poland that can legally operate and buy and sell cars in Poland and Germany. The company acquires a new car from a Polish dealer and registers the vehicle in Poland. Then, the car is moved to Germany and sells it to a German company as a used car. The German company registers the vehicle in Germany and reports that the VAT tax for the transaction had been paid in Poland. Meanwhile, the Polish company claims the VAT back from the Polish fiscal authorities.
This boosts the value of the car by 23% (VAT tax rate in Poland), which makes the scheme time worthy for the scammers as the average value of cars sold in Poland has reached EUR 21,000.
Instytut Samar, an analytics company that specializes in the automobile industry, estimates that this process applies to one out of 10 cars sold on the Polish market. Figures show 40,000 such cars were sold in 2013, and 11,000 in the first months of 2014. These are official estimates, which may be under-reported.
Photo courtesy of Cezary Piwowarski
