Digital Tax Audits - How the Tax Authorities Analyse Your Data

Tax audits in the digital era - a new reality

Only a few years ago, a tax audit mainly meant an official visiting the company's premises, going through invoices by hand and laboriously analysing binders of accounting documentation. That era is passing. Today the tax administration has advanced digital tools that allow it to analyse huge data sets, compare information from different taxpayers and identify potential irregularities - before an official even asks to see any documents.

In practice, this means a fundamental change of perspective. It is no longer the taxpayer who brings documents to the tax office - the office already holds a significant part of the data and can verify its consistency on its own. For business owners and private individuals, this change has concrete consequences: tax compliance now depends not only on filling in returns correctly, but also on the consistency of data held in different systems.

Let us look at the most important tools shaping the new face of tax audits, and consider what this means for day-to-day tax compliance.

JPK and KSeF - two pillars of digital verification

Standard Audit File (JPK)

One of the key tools in the digitalisation of the tax administration is the Standard Audit File (JPK). Data submitted in prescribed electronic structures enables the tax authorities to analyse information on tax settlements, invoices and accounting records automatically. IT systems can compare data from different taxpayers and identify discrepancies that need to be explained.

For example - if one company reports a purchase of goods and the counterparty's data does not match, that situation may attract the tax administration's attention. The same applies to unusual changes in VAT settlements or recurring inconsistencies in documentation.

It is worth stressing, however, that not every discrepancy indicates a breach of the law. An accounting error, an invoice correction or a delay in submitting information may have a reasonable explanation. Technology makes it easier to detect warning signals, but assessing them properly requires taking into account the circumstances of the particular case.

National e-Invoicing System (KSeF)

Another significant change is the rollout of the National e-Invoicing System (KSeF), which changes the way invoices are issued and received. It is gradually extending the obligation to use this solution to further groups of businesses. Structured invoices make data easier to process and analyse automatically, which gives the tax administration a better way to compare information on transactions.

For business owners, this means paying greater attention to the consistency of documentation. What matters is not only the amounts and VAT rates, but also:

• correct classification of transactions,
• consistency of counterparty data,
• appropriate documentation of services actually performed,
• timeliness and completeness of the data submitted.

Digitalisation does not relieve the taxpayer of responsibility for correct tax settlements. Even a smoothly functioning system will not replace careful verification of documents and an assessment of the tax consequences of a particular transaction. That is precisely why working with an experienced accounting firm that monitors, on an ongoing basis, whether your records comply with JPK and KSeF requirements is particularly important today - for example as part of Global Accounting's full accounting service.

Online sales and DAC7 - platforms report to the tax authorities

Many people assume that selling through online platforms is outside the tax authorities' interest, especially if it is done on a small scale. This is a misconception. The tax authorities can obtain information about transactions from digital platform operators.

The DAC7 Directive, implemented into Polish law on 1 July 2024, plays an important role here. It sets out reporting obligations for certain sellers using online platforms. Reporting may cover, among other things:

1. sale of goods (once certain thresholds for the number of transactions or the amount of consideration are exceeded),
2. personal services,
3. rental of immovable property,
4. rental of means of transport.

It must, however, be stated clearly - DAC7 did not introduce a new tax on online sales. Nor did it change the general rules on taxation of private sales of used items. If someone sells an item they have owned for a long time, the mere fact that the platform has passed on information does not determine whether a tax liability arises.

The situation may be different for someone who regularly buys goods in order to resell them at a profit. What matters most is the distinction between the mere fact that a transaction took place and its actual nature and tax consequences. The data passed to the tax authorities makes it possible to identify situations that need checking, but it does not replace an individual assessment.

STIR and analysis of financial flows

Digital tax audits are not limited to invoices and online sales. In certain cases, information on financial flows may also be relevant. One of the instruments used to combat abuse is the Clearing House ICT System (STIR), which is used, among other things, to analyse the risk of the banking sector being used for tax fraud.

STIR does not mean that the tax office automatically analyses every private transfer. The system has a defined legal basis, scope of application and mechanisms related to preventing abuse. From a business owner's perspective, however, it is important that financial flows may be analysed in a broader context - in connection with invoices, the actual course of transactions and the company's business profile.

An unusual transaction does not have to mean an irregularity, but it may require an explanation. That is why it is so important that financial documentation is consistent with the accounting records and tax returns.

An algorithm does not replace the law - taxpayer rights

The development of analytical tools raises the question of whether an algorithm can decide that an audit is opened. In practice, IT systems help analyse large data sets and point to cases that need further verification. However, detecting an anomaly should not be equated with proving a breach of the law.

The final assessment must take into account the legislation, the evidence and the circumstances of the particular case. The tax authorities act within the powers granted to them, and the taxpayer retains procedural rights, including the ability to provide explanations and challenge findings in accordance with the appropriate procedure.

It is also worth remembering that a tax audit, a customs and tax audit and verification activities are different modes of action by the authorities - they do not have identical rules or scope. The mere fact that certain data is available in an IT system does not mean that the tax office has unlimited access to all information about the taxpayer.

How to prepare - practical tips and a free consultation

Ongoing digitalisation means that transparency requires systematic preparation. Here are the most important steps worth putting into your day-to-day tax compliance:

• Reconcile your records regularly - compare data in JPK, KSeF and internal documentation.
• Keep contracts and payment confirmations - they will help you demonstrate the actual course of business events.
• Document corrections as you go - if there is a discrepancy, establish its cause straight away rather than waiting for a letter from the tax office.
• Keep counterparty data consistent - verify tax identification numbers (NIP), addresses and transaction classifications.
• Use professional accounting services - especially while new digital obligations are being introduced.

In a digital tax system, what matters is not only what the taxpayer declares, but also whether the declarations are backed up by documents and data on actual transactions. Good organisation of your tax affairs, knowledge of your obligations and the ability to explain any discrepancies are becoming as important as filing returns on time.

If you want to be sure that your documentation is consistent with the requirements of digital audits and that your records are properly reconciled - book a free consultation with the Global Accounting team. Specialists with more than 10 years of experience will help you verify your tax settlements and ensure compliance with JPK, KSeF and other obligations. Call: +48 505 684 412 or write to [email protected].