The deposit-return system was supposed to be simple. Eco-friendly. Leak-proof. Tax-neutral. However, it took just a few months for serious doubts to emerge.
The first loopholes are no longer just theoretical, they are in plain sight. The mechanisms for abuse can be described quite precisely, and the scale of potential losses may be much greater than anticipated. Below, we examine where the system is losing control and how this can be addressed.
Export as a loophole. Where the system starts to falter
In accordance with the Packaging Management Act, if packaging leaves the country as part of an export or intra-Community supply and this is properly documented, the return deposit regulations do not apply. While this seems reasonable in theory, problems can arise as early as this stage in practice.
The shortcomings of the so-called export exemption are quite significant. The export does not have to be carried out by the entity that placed the goods on the market – it can be done by any participant in the supply chain. The Act does not specify which documents are required, who should provide them, when they should be provided, or how they should be linked to a specific supply. Nor does it specify what happens if the deposit has already been paid into the system and the export takes place at a later date. In such situations, the market has developed its own contractual mechanisms for retrospective adjustment.
Consequently, it is the exporter who provides the export confirmation documents. Only they know whether these are authentic. The other links in the chain operate based on what they receive from the exporter and are responsible for making any adjustments to the deposit.
As we know from the history of VAT, a system that relies solely on documents and declarations/returns that cannot be effectively verified is exceptionally vulnerable to abuse. We can envisage at least three scenarios, none of which is purely theoretical. The mechanics of fraud have already been identified, and the barrier to entry is alarmingly low.
Scenario 1 – false declaration
The entity declares that all goods will be exported. The producer does not charge a deposit. The goods remain in Poland. A deposit is collected from subsequent buyers, even though no money has entered the system.
This scenario is the most challenging to implement, as packaging not covered by the system lacks a deposit label, which raises suspicions and makes it practically impossible to discreetly collect the deposit from consumers. This is one of the few cases where the very structure of the regulations works as intended.
Scenario 2 – phantom deposit
The deposit is collected correctly at every stage of the process. The exporter declares the export and requests a refund. This request then passes through the relevant entities to the system operator. The deposit is returned. However, the goods do not leave the country, instead circulating domestically and generating further deposit revenue.
The money returns to the exporter while remaining within the system. Without being aware of the risks and without following a series of complicated procedures, no intermediate link in the chain has any real chance of detecting this practice.
Scenario 3 – deposit carousel
This is not just a loophole in the system, but a meticulously planned operation. The entire distribution chain is set up with the sole aim of defrauding the system. Each participant is assigned a role: buffer, front man or document provider. The latter entity draws up fictitious export documents, triggers the deposit refund throughout the chain, collects the funds, and then disappears.
Meanwhile, the first entity in the chain reduces the VAT taxable amount. This mechanism is similar to that used in VAT carousels, except in this case it is the deposit system that loses funds, not the tax system.
VAT and the KSeF: implications beyond the deposit-return system
These mechanisms directly affect tax settlements. The deposit is a non-fiscal element of receipts, and the regulations do not provide for either a document or a method for adjusting it throughout the supply chain. Any adjustments made based on agreements between entities operate outside the tax system and are not visible in the KSeF e-invoicing system, which does not support the adjustment of non-fiscal elements.
If the export is fictitious and the packaging remains in Poland, the importer should increase the VAT-taxable amount. However, they often rely on documents that they cannot verify.
This creates a structural asymmetry, as the tax risk falls on an entity that does not control the data based on which the liability arises. Incorrectly classifying a single transaction can result in a permanent understatement of VAT across the entire sales portfolio.
Problems don’t only arise from exports
Although export fraud is a serious threat, it is not the only one.
The system assumes that the deposit is paid by the person who bought the packaging, who should then receive it back when the packaging is returned. However, there is no mechanism linking the refund to the initial payment, and the machine does not verify whether the person inserting the bottle bought it or paid the deposit. It simply issues the refund.
This loophole opens the door to a type of fraud that requires no sophistication whatsoever. All that one needs to do is collect packaging from the street, bins or collection points, put it in the machine and claim a refund for deposits that one never paid. Taking it a step further, repasted barcodes and false markings allow packaging that does not belong in the system to be introduced into it. Fraud involving deposit vouchers works in a similar way. These are no longer mere hypotheses, but rather the first real-world consequences of a system that was designed based on the assumption that all of its participants would be honest.
In addition, there are operational issues such as incorrect location assignments for the machines, accumulated packaging and discrepancies between the contents of the bags and the system data. Each of these issues can easily be dismissed as an individual technical glitch, human error or something that needs fine-tuning. However, the problem is that there are too many of these issues to continue treating them as exceptions. Moreover, the money flowing through this system comes from consumers’ pockets, regardless of how much work still needs to be done.
What next for the deposit-return system
VAT has a similar history – it began with abuse and disputes over interpretation ultimately forcing a legislative amendment to plug loopholes in the system. To avoid going down that road again, action should be taken at an earlier stage.
We need precise, verifiable and unambiguous statutory standards for documentation relating to export exemptions. We also need a real-time verification mechanism where documents reflect the facts rather than replacing them. Clear rules are also needed for retrospective settlements in the supply chain because current contractual mechanisms are merely a temporary solution.
Tightening the system belatedly is always more expensive and less effective. The question is whether lessons will be learnt this time before the scale of the problem attracts widespread attention of its own accord.
Source: Business Insider
Date: 17 April 2026
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