Tax Offences · Legal briefing
Fictitious VAT Invoices: Civil & Criminal Risks
By Adv. Yechiel Rachamim Menahemov & Adv. Assaf ShpigelPublished:
The practical dilemma
A supplier’s invoice is challenged as fictitious after you deduct input VAT. What should be reviewed before explaining the transaction?
The legal position
Section 117 of the VAT Law 1975 distinguishes subsection (a) offences from subsection (b) offences involving intent to evade tax. False transactions, invoices issued by someone other than the service provider and unlawful deductions require factual and mental-element analysis. Civil disallowance alone does not establish criminal intent; a good-faith assertion is not an automatic defence. Separate the assessment, verification obligations and criminal suspicion. Official source 1 Official source 2
Your next step
Preserve invoices, contracts, payments and evidence of service and supplier checks. Do not retrospectively alter documents. Review the allegation and disclosure obligations with counsel and an accounting professional before responding.