Possible Relaxation of Directors’ Liability for VAT Debts in the Netherlands

• The Dutch Supreme Court has asked the Court of Justice of the EU to assess whether the legal provisions in the Collection Act regarding the obligation to report payment incapacity are compatible with EU law, specifically in relation to the liability of directors for VAT debts.
• Under Dutch law, directors of legal entities are generally not liable for the debts of the entity, except for certain tax debts, including VAT.
• If a legal entity is unable to pay certain tax debts on time, a report of payment incapacity must be made within 14 days. Failure to do so makes the director personally liable for the tax debt.
• The director can only avoid liability if they can prove that it was not their fault that the report was not made on time, and that their management did not contribute to the non-payment of the tax debt.
• A director of a BV argues that the sanction for failing to report payment incapacity is disproportionate to the purpose of the reporting obligation, and invokes the principle of proportionality.
• The Dutch Supreme Court has ruled that the heavy sanction is intended by the legislator and cannot be set aside based on the national principle of proportionality.
• The Court has also assessed whether the provision is in line with EU law regarding VAT debts, and has raised questions to the Court of Justice of the EU on this matter.
• The Dutch Supreme Court will await the answers from the Court of Justice of the EU before making a final decision.

Source: fiscaalvanmorgen.nl

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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