Tax audit and criminal proceedings: when the police can use what you told the inspectors

A tax audit is not a criminal case. Its results can, however, reach the police and become the basis for a criminal complaint. The accounting and documents a company submits to the audit can, as a rule, be used by the police. For the explanations a managing director gives during the audit, though, the case law draws limits. We explain how information from an audit reaches the police, what you must give the inspectors, where the privilege against self-incrimination protects you, and how to behave during the audit so as not to harm yourself.

Two proceedings with opposite logic

In tax proceedings the burden of proof lies with the taxpayer. The company proves the facts it stated in its tax return and the credibility, accuracy and completeness of the records it is required to keep (§ 24(1) of the Tax Code). It must make its records and documents available to the inspectors, answer their questions and explain the documents submitted, orally or in writing (§ 45(2)(c) and (d)).

The Supreme Court of the SR, still under the earlier Act on the administration of taxes and fees, stressed that the taxpayer's duty during an audit is above all to cooperate with the tax administrator. A businessman whose documents had burned could not, according to the court, be relieved of this duty by a police certificate of the fire, and should have been all the more cooperative. The court upheld the tax administrator's procedure of assessing the tax by estimate (judgment of 21 November 2013, ref. no. 8Sžf/75/2012, by which the Supreme Court of the SR amended the judgment of the Regional Court in Prešov, file no. 2S/4/2011-63, and dismissed the action).

In criminal proceedings it is the other way round. Evidence is obtained by the law-enforcement authorities ex officio (§ 2(10) of the Criminal Procedure Code) and the accused need not testify (§ 34(1)). The Constitution grants everyone the right to refuse to testify if they would thereby expose themselves or a close person to the risk of prosecution (Art. 47(1)). The tension between the duty to cooperate and the right to remain silent arises when the tax audit becomes the basis for the police.

How information from a tax audit reaches the police

Data from the tax file is protected by tax secrecy. It may be used only to perform tasks under the Tax Code, special regulations or an international treaty (§ 11(2) of the Tax Code). For criminal proceedings, however, the law opens several routes.

Criminal complaint and the prosecutor's request

The duty of state authorities to report suspicion of a criminal offence and the prosecutor's right to request data protected by tax secrecy (§ 3(2), (4) and (5) of the Criminal Procedure Code) we described in the article VAT debt and the director's criminal offence. Here, what matters is what the company learns about it.

The tax administrator does record in the file the fact that it disclosed tax secrecy (§ 11(6) of the Tax Code). The company, however, may not inspect the information that it disclosed data to the police or law-enforcement authorities, unless the tax administrator uses it as evidence in the tax proceedings (§ 23(1)). From the tax file, therefore, the company need not learn of the criminal complaint at all.

Audit at the request of the police

The Tax Code envisages that the audit may be triggered by the law-enforcement authorities or the Police Force themselves. At their request the tax administrator may audit even the same tax for a period it has already audited once (§ 44(4)(d)). If the law-enforcement authorities request the audit, it may begin without prior notice, by drawing up a record on the day it starts (§ 46(3)).

If an audit begins unexpectedly with a record, this may be exactly such a case. The law, however, also allows it for other reasons, for example on reasonable suspicion that documents will be altered, damaged or destroyed.

Documents may travel further

Documents taken on loan must, as a rule, be returned by the tax administrator no later than 30 days after the end of the audit. The second-instance authority may extend this period, repeatedly as well, for instance in particularly complex cases, but also where the documents must be provided for the purposes of criminal proceedings, or where they have already been received by the Criminal Office of the Financial Administration, the Police Force or the law-enforcement authorities. The tax administrator must notify the company of the extension in writing (§ 46(6)). Such a notice may therefore be a signal not to be overlooked.

The police, moreover, need not rely on the tax administrator. Anyone holding an item that may serve the purposes of proving the case must, on the call of a police officer, prosecutor or court, produce it and, if it must be secured, surrender it (§ 89a(1) of the Criminal Procedure Code). If they do not, the item may be taken from them (§ 90). The Constitutional Court of the SR stressed, however, that before the call the officer must instruct the person that they need not surrender the item if they would thereby expose themselves to the risk of prosecution, and that the call may concern only a specific item, not everything that might originate from criminal activity (ruling of 12 November 2021, ref. no. III. ÚS 522/2021, point 12).

What the police do with the audit report

The audit report may be evidence in criminal proceedings, because evidence may also be what was obtained from means of proof under a special act (§ 119(3) of the Criminal Procedure Code). It is not, however, a judgment on guilt. The tax administrator may not form a view, as on a preliminary question, of whether and by whom a criminal offence was committed (§ 22(2) of the Tax Code). The police and the court, in turn, are not bound by the decision of another authority where the guilt of the accused is being assessed (§ 7(1) of the Criminal Procedure Code). They evaluate the tax administrator's findings according to their own inner conviction, like any other evidence (§ 2(12)).

For the defence this is important. The Regional Court in Žilina stressed that merely taking over the conclusions of a tax audit is inadmissible for establishing criminal liability. Even though the company was passive during the audit, in the criminal proceedings the director retained the right to prove that the VAT deduction was justified (ruling of 15 November 2017, ref. no. 2To/61/2017, by which it dismissed the prosecutor's appeal against the acquitting judgment of the District Court in Dolný Kubín, file no. 9T/19/2016). A disallowed deduction, or tax assessed by estimate, therefore does not yet prove that the director acted intentionally, or that the tax was evaded in exactly that amount.

What the police can use from a tax audit

What matters is the type of evidence. The European Court of Human Rights (ECtHR) distinguishes between what exists independently of a person's will and what the state obtains by compelling the person to produce it.

Accounting and documents: generally yes

The privilege against self-incrimination is, according to the ECtHR, primarily concerned with respecting the will of the accused to remain silent. It does not extend to the use of material that exists independently of their will, for example documents secured under a warrant (judgment of the Grand Chamber of 17 December 1996 in Saunders v. the United Kingdom, application no. 19187/91, point 69).

The Constitutional Court of the SR adopted this approach. From the accused it is possible to require that they tolerate the seizure of a document, even one that incriminates them. It considers inadmissible, however, requiring their active contribution to obtaining such evidence, which, according to the Constitutional Court, the ECtHR derived above all in relation to the handing over of documents in the judgments Funke v. France and J.B. v. Switzerland (plenary ruling of 27 November 2024, ref. no. PL. ÚS 17/2023, point 57, published under no. 18/2025 Coll.). The ruling concerned a refusal of a breath test and a blood test, not a tax audit.

For documents in tax matters the ECtHR refined the line in its judgment of 4 October 2022 in De Legé v. the Netherlands (application no. 58342/15). On the basis of a court order and under threat of a penalty, the taxpayer had to produce statements of an account at a foreign bank, and the court did not find a breach of Art. 6 of the Convention. If the authorities compel specific, pre-existing documents whose existence they know of, their use does not, according to the court, fall under the protection of the privilege against self-incrimination (points 76 and 85 to 88). The Constitutional Court of the SR did not comment on this judgment in its ruling.

It is different with a so-called „fishing expedition“. If the authorities use penalties to force a person to hand over documents that they only assume exist, and the person cannot rule out that suspicion of a tax offence would follow from them, this is a breach of the right to a fair trial. So the ECtHR ruled in its judgments of 25 February 1993 in Funke v. France (application no. 10828/84, point 44), of 3 May 2001 in J.B. v. Switzerland (application no. 31827/96, points 66 to 71) and of 5 April 2012 in Chambaz v. Switzerland (application no. 11663/04, points 53 to 55).

This approach is applied in Slovak case law too. The Supreme Administrative Court of the SR adopted the criteria from the De Legé judgment and stated that a duty to produce specifically identified, objectively existing documents is not the same as a duty to answer questions by which the person would have to admit a breach (judgment of 25 March 2026, ref. no. 3Stk/8/2025, points 32 to 36 and 46). It concerned supervision of gambling, but the principle is the same. The Regional Court in Prešov, in a tax-fraud case, held usable as evidence a document the director had submitted to the tax administrator and which the tax administrator attached to a report of suspicion of a tax offence (ruling of 28 May 2024, ref. no. 2To/36/2023). The District Court in Dolný Kubín read out documents the defendant had produced, at the tax administrator's call, as a third party in an audit of another entity, because he had not been compelled to produce them under threat of a sanction, and the nemo tenetur principle was, according to the court, not thereby affected (judgment of 29 June 2017, ref. no. 9T/19/2016). For the company this means that the accounting, the VAT records and the invoices it is required by law to keep will, as a rule, reach the criminal file. It has a stronger objection where the tax administrator, under threat of penalties, demands an undefined range of documents at a time when criminal proceedings are already running or looming.

Explanations and answers to questions: the limits are stricter

It is different with what the director says or writes to the inspectors. The company must give explanations of the documents (§ 45(2)(d) of the Tax Code). If it fails to meet this duty, it commits an administrative offence for which it faces a penalty of €100 to €10,000 (§ 154(1)(j) and § 155(1)(e)).

In Saunders the British Companies Act imposed a duty to answer inspectors of the Department of Trade, and a refusal carried a fine or imprisonment of up to two years (point 70). The prosecution then read out parts of the transcripts of the answers before the jury. The ECtHR found a breach of Art. 6 of the Convention. The public interest cannot, in its view, justify using answers compelled in a non-judicial investigation to convict the accused in criminal proceedings, even where the answers were given before charges were brought (point 74).

The protection, moreover, does not concern only confessions. The ECtHR protects also answers that at first sight help, because even those the prosecution may use to challenge the credibility of the accused or to point to contradictions in their statements (point 71). Every sentence said to the inspectors may thus later stand against what the director says in the criminal proceedings.

The ECtHR also assesses the nature and degree of compulsion. In Allen v. the United Kingdom it pointed out that the taxpayer faced a fine of at most 300 pounds, whereas in Saunders up to two years' imprisonment. In J.B. and Chambaz, however, even repeated fines sufficed for a breach, because they aimed at obtaining incriminating information at a time when proceedings for tax evasion were running or looming. With a limited liability company the penalty under the Tax Code is, moreover, imposed on the company, not on the director personally. Whether this is sufficient pressure on the director will therefore be assessed according to the circumstances of the specific case.

The director has the clearest support where, in the criminal proceedings, they exercise the right not to testify. The District Court in Dolný Kubín, in a tax-criminal case, refused to read out documents containing the statements and submissions the defendant had made as a witness in the tax proceedings, even though the prosecutor proposed it in the indictment. It acquitted the defendant, and the Regional Court in Žilina dismissed the prosecutor's appeal (judgment of 29 June 2017, ref. no. 9T/19/2016, and ruling of 15 November 2017, ref. no. 2To/61/2017). The Czech Constitutional Court took the same approach in its ruling of 9 October 2007, ref. no. I. ÚS 677/03. It assessed the case of a VAT payer prosecuted for an unjustified claim for an excess deduction, who refused to testify in the criminal proceedings, and the court instead read out, as documentary evidence, an explanation he had earlier given to the tax office. The Constitutional Court saw in this a circumvention of the rules on the testimony of the accused and a breach of the right to a fair trial, and quashed the decisions. It also stated that such an intervention could be disregarded only where other evidence sufficiently proved guilt.

The Czech ruling does not bind a Slovak court. The Czech Charter of Fundamental Rights and Freedoms, however, contains an identically worded right to refuse to testify as Art. 47(1) of the Constitution of the SR, so we cite it as an argument by analogy. The Slovak Criminal Procedure Code has no express rule on explanations from a tax audit, and expressly excludes only evidence obtained by unlawful compulsion or the threat of such compulsion (§ 119(5)). The defence therefore relies on Art. 47(1) of the Constitution, on the Saunders judgment and on the Slovak and Czech practice referred to.

Statements of employees and other witnesses

The inspectors often speak also with employees and the accountant. The company must allow the meeting with employees (§ 45(2)(f) of the Tax Code) and has the right to be present at it (§ 45(1)(b)). If the tax administrator examines someone as a witness, that person must testify truthfully and conceal nothing. They may, however, refuse to testify if they would thereby expose themselves or close persons to the risk of prosecution, and the tax administrator must instruct them of this before the examination (§ 25(1) and (2)). The tax administrator must notify the company in good time and in writing of the witness examination, and the company or its representative may put questions to the witness (§ 25(4)).

A statement by an employee about the director is not self-incrimination by the director. If the accountant states during the audit that the director brought her the supplier's invoices without contracts and delivery notes, this knowledge may reach the police. If the police examine her as a witness, the Criminal Procedure Code likewise gives her the right to refuse to testify where there is a risk of prosecution (§ 130(2)).

A lie is protected by nothing

In its decision of 10 September 2002 in Allen v. the United Kingdom (application no. 76574/01), the ECtHR rejected the complaint of a taxpayer convicted for a false declaration of assets to the tax office. This was not, in its view, compelled self-incrimination for an earlier act, but the offence itself. The privilege against self-incrimination does not, according to the court, provide general immunity to conduct by which someone seeks to evade investigation by the tax authorities.

The Slovak Criminal Code knows the offence of obstruction of tax administration. It is committed by anyone who obstructs the administration of taxes by stating false or grossly misleading information in documents submitted in the administration of taxes, by altering, damaging or destroying documents decisive for the correct assessment of the tax, or by failing to meet a duty imposed on them by law during a tax audit, having already been sanctioned for a similar act in the preceding twelve months. It carries imprisonment of up to four years (§ 278a(1)). If, by the same act, the perpetrator committed tax evasion, non-payment of tax or tax fraud, the provisions on obstruction of tax administration do not apply (§ 278a(4)). If the director will not or cannot answer a question, they must not replace the answer with a false statement.

Is it enough that the company got the penalty?

What matters is who had to be sanctioned. The penalty for failing to meet duties during the audit is imposed by the tax administrator on the taxpayer (§ 154(1) and § 155(1) of the Tax Code), that is, with a limited liability company on the company. A person sanctioned for a similar act means, under the Criminal Code, the one on whom a sanction or other measure was imposed for a misdemeanour or another similar offence (§ 128(5)).

In our view, a penalty imposed on the company is not enough for the director to commit obstruction of tax administration. We base this conclusion on three grounds. The first is the statutory definition, which ties the sanction to the one on whom it was imposed. The second is the rule on acting for a legal entity. That transfers to the director only the special quality, capacity or status that the law requires of the perpetrator, for example the status of a taxpayer (§ 128(8)). A prior sanction is not, however, the status of the perpetrator, but an event that the law links to a specific person, and the perpetrator of obstruction of tax administration can be anyone. The third ground is a comparison with other provisions of the Criminal Code, that is, a systematic interpretation. Where the legislature wanted a sanction on another person to be decisive, it said so expressly. For the offence of unfair commercial practices against a consumer it suffices that the seller who instructed the perpetrator was sanctioned for similar conduct (§ 269a(2)). There is no such rule in § 278a, and criminal liability cannot be extended by interpretation to the perpetrator's detriment, because only the law lays down which conduct is a criminal offence (Art. 49 of the Constitution). The same conclusion is taken by JUDr. Peter Šamko in an article on the application problems of tax offences, published by Právne listy on 11 May 2013.

For the reader this has four consequences. A director who was not themselves sanctioned does not commit obstruction of tax administration merely because the company has already received a penalty. A sole trader is in a different position, because the tax administrator imposes the penalty directly on them. Šamko does take the view that even then it is not a sanction under § 278a; we would not rely on that, because a sole trader is the very person on whom the sanction was imposed. A sanction on the company may have criminal-law significance for the company itself, since the Act on the criminal liability of legal entities applies to obstruction of tax administration (§ 3 of Act no. 91/2016 Coll.) and the company's criminal liability is not conditional on the director's (§ 4(4)). Finally, knowingly false information in materials serving to audit the accounting may be the offence of falsifying data in economic and commercial records, which does not require a prior sanction (§ 259(1)(c) of the Criminal Code). If the director, by false documents, evaded tax or obtained an excess deduction, they face prosecution for tax evasion or tax fraud.

This defence must be raised actively. The District Court in Poprad, in a penal order of 16 September 2014, ref. no. 6T/115/2014, found a director guilty of obstruction of tax administration, even though the statement of facts does not mention a prior sanction at all. A penal order contains no reasoning (§ 354(1) of the Criminal Procedure Code), and this accused did not challenge it. A penal order may be opposed within eight days of its delivery, after which the single judge orders a main trial (§ 355(1) and (3)).

What you state without compulsion is not protected

The privilege against self-incrimination protects against compulsion (Saunders, point 68). What the company states on its own initiative, for example in a submission no one asked for, may become evidence like any other document.

It is more complicated with a supplementary tax return. The company must file one if it finds the tax should be higher (§ 16(2) of the Tax Code). In Allen the ECtHR stated that the mere duty to declare income and assets for the purposes of assessing tax is an ordinary part of tax systems and raises no problem. Whether a truthful return may be used against the director as evidence of an earlier tax evasion it did not, however, expressly resolve in that case. One must therefore reckon with the supplementary return reaching the criminal file too.

What you must and need not do during a tax audit

Can the director refuse to answer?

The Tax Code grants the right to refuse to testify on account of the risk of prosecution expressly only to a witness (§ 25(2)). The audited taxpayer has no such exception. Art. 47(1) of the Constitution grants everyone the right to refuse to testify, but the Supreme Administrative Court of the SR distinguishes between a duty to produce existing documents and answers to questions by which the person would have to admit a breach (judgment ref. no. 3Stk/8/2025, point 46).

Nor does the ECtHR case law give a clear answer. In J.B. and Chambaz it recognised that fining someone for refusing to hand over documents may breach the privilege against self-incrimination if proceedings for tax evasion were running or looming against the person. In J.B., however, it expressly stated that it was not deciding whether the state may oblige a taxpayer to provide information solely for the purposes of correctly assessing the tax (point 63). In Allen it added that the mere duty to provide the tax authorities with information about assets and income raises no problem. Refusing to answer therefore cannot be relied on as a safe defence.

A refusal, moreover, has its price in the tax proceedings. What the company does not prove, the tax administrator will not accept. If, for a failure to meet duties, the tax cannot be correctly established, it is assessed by estimate (§ 48(1)(b) of the Tax Code). For this there is a penalty of three times the European Central Bank's base interest rate per year on the amount of tax assessed by estimate (§ 154(1)(h) and § 155(1)(f)).

Refusing to answer everything is therefore a poor strategy. It is wiser to produce the documents in full and give explanations thoughtfully, with a lawyer and, where possible, in writing, since the law allows both oral and written explanations (§ 45(2)(d)). For questions aimed at the director's personal knowledge and intent, we recommend carefully considering the answer in advance with a lawyer, if criminal proceedings are looming.

How to behave during a tax audit when criminal proceedings are looming

• Bring in a lawyer right at the start. The company may have itself represented by a chosen representative (§ 9(2) of the Tax Code), and the Constitution guarantees the right to legal assistance from the start of proceedings, including before public-administration authorities (Art. 47(2)). Representation does not, however, prevent the tax administrator from dealing with the company directly in necessary cases (§ 9(8)).
• If you cannot on the appointed day, respond within eight days. If an audit announced by notice cannot begin on the stated day for a reason on the company's side, the company must report this within eight days of delivery of the notice and arrange a new date. The audit must, however, begin no later than 40 days from delivery of the notice (§ 46(1)). Use the time to prepare documents and consult a lawyer.
• Produce the documents in full and alter nothing. Write down what you submitted or lent, and keep copies. The tax administrator confirms receipt of documents taken on loan (§ 46(6)). Altering or destroying documents may be a criminal offence, for example falsifying data in economic and commercial records (§ 259(2)(b) of the Criminal Code) or, under the conditions of § 278a, obstruction of tax administration.
• Give explanations thoughtfully. Ask for the questions in writing and answer to the point. Describe what happened and support it. Do not speculate about what you knew or could have known about the conduct of others.
• Insist that your submissions be recorded. The company has the right to comment on the facts found and on how they were found, and to propose that its comments be included in the audit report (§ 45(1)(f)). It may submit evidence no later than the day the audit ends (§ 45(1)(c)).
• Watch the deadline for a supplementary return. Within 15 days of the record of the start of the audit, or of delivery of the audit notice, the company may still file a supplementary tax return for the audited period. After that it cannot, until the decision in the assessment proceedings becomes final (§ 16(9)). The return may reach the criminal file. Together with payment of the tax, however, it may lead to the extinction of criminal liability, as we describe in the article on VAT debt. Consider this step with a lawyer in advance.
• Do not miss the deadline to comment on the audit report. The tax administrator sets it in the call, and it may not be shorter than 30 working days from delivery of the report. Missing it cannot be waived (§ 46(8)). Write the comments in the knowledge that the police may read them too.
• Watch for signals. An audit begun without notice, a repeated audit of an already audited period, or a notice extending the deadline to return documents may indicate that the matter interests the police. The time limit for carrying out the audit is at most one year from its start, but it does not run during a suspension (§ 46(10) and § 61(5)).

When the tax administrator files a criminal complaint

If the criminal complaint needs to be supplemented, the prosecutor or police officer is to decide on it within 30 days of receiving it. They may hand the matter to another authority, set it aside, reject it or begin a prosecution (§ 196(2), § 197 and § 199(1) of the Criminal Procedure Code).

Summons for examination before the prosecution begins

To supplement the criminal complaint, a police officer or prosecutor may also examine the person who is alleged to have committed the offence (§ 196(2) of the Criminal Procedure Code). At this stage the director is not yet charged. The law, however, grants them the right to refuse to testify if they would thereby expose themselves or close persons to the risk of prosecution, and the right to the legal assistance of a lawyer. Before such an examination, consult a lawyer and together consider whether and to what to testify. A statement the director makes voluntarily after being instructed is no longer a compelled explanation.

Bringing of charges

If there is a sufficiently substantiated conclusion that a specific person committed the offence, the police officer issues, without delay, a decision to bring charges (§ 206(1) of the Criminal Procedure Code). A complaint may be lodged against it within three working days of its notification (§ 185(2) and § 187(1)). Before the examination, the accused must be instructed that they have the right to testify or to refuse to testify and to ask that defence counsel take part in their examination (§ 121(2)).

If, in the criminal proceedings, the director exercises the right to remain silent, the defence should prevent what they earlier told the inspectors from being used in place of their testimony. The support is the Saunders judgment, the approach of the District Court in Dolný Kubín in 9T/19/2016 and, by analogy, the Czech ruling I. ÚS 677/03 described above.

Tax and criminal proceedings need one strategy

The tax proceedings continue even during the prosecution. What the company writes in its comments on the audit report or in an appeal, the police may obtain. Evidence in the tax proceedings may, in turn, be anything not obtained contrary to generally binding legal regulations (§ 24(4) of the Tax Code), so materials from the criminal proceedings may become evidence too. It is therefore sensible to conduct the company's tax defence and the director's criminal defence in a coordinated way.

Three situations from practice