ECJ C-121/24 (Vaniz) – Questions – Legal Considerations of Joint and Several Liability for VAT Debts After the Principal Debtor Ceases to Exist

The ECJ released the facts & questions in the case C-121/24 (Vaniz).

Subject matter: Action against tax audit assessment No R–04000422000256–091–001/18.12.2022 of the Teritorialna direktsia na Natsionalnata agentsia za prihodite (Regional Directorate of the National Revenue Agency; ‘TD na NAP’) of Veliko Tarnovo, in which ‘Vaniz’ EOOD [established] in Veliko Tarnovo was found liable for value added tax (VAT) totalling 217 277.82 leva (BGN) and accrued interest of BGN 114 365.21 for the tax periods July, August and September 2017 in accordance with Article 177 of the Zakon za danak varhu dobavenata stoynost (Law on value added tax; ‘the ZDDS’)

Articles in the EU VAT Directive

Articles 193, 205 and 207 of the EU VAT Directive 2006/112/EC

Article 193
VAT shall be payable by any taxable person carrying out a taxable supply of goods or services, except where it is payable by another person in the cases referred to in Articles 194 to 199b and Article 202.

Article 205
In the situations referred to in Articles 193 to 200 and Articles 202, 203 and 204, Member States may provide that a person other than the person liable for payment of VAT is to be held jointly and severally liable for payment of VAT.

Article 207
Member States shall take the measures necessary to ensure that persons who are regarded as liable for payment of VAT in the stead of a taxable person not established in their respective territory, in accordance with Articles 194 to 197 and Articles 199 and 204, comply with the payment obligations set out in this Section.
Member States shall also take the measures necessary to ensure that those persons who, in accordance with Article 205, are held to be jointly and severally liable for payment of the VAT comply with these payment obligations.

Facts

The requesting party is the trading company ‘Vaniz’. The defendant is the ‘Disputes and daily management of taxes and social security’ directorate. Vaniz is active in the field of road and freight transport. The defendant carried out an audit at Vaniz, which showed that a supplier ‘Stars International’ had not paid its tax debts, even though these tax debts were stated in the tax return. As a result, the defendant has assessed an additional assessment for Vaniz, against which Vaniz has appealed.

Consideration:

The question is whether the additional tax assessment was lawful, because it appears that ‘Stars International’ had already been declared bankrupt before the tax audit and had been removed from the Trade Register. Because the legal entity has ceased to exist, the question is whether Vaniz can still be held jointly and severally liable for those debts.

Questions

Do the provisions of recital 44 and Article 205 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as well as the principles of transparency and proportionality of liability, allow a procedure to be initiated to determine the status of joint and several debtor of VAT debts and the extent of joint and several liability after the principal debtor has ceased to exist as a legal subject?

Do these provisions – after the debtor has been struck off [from the commercial register], without a legal successor having taken over the rights and obligations – prevent a claim from being registered against that person for which a third party is subsequently held liable?

Is the administrative practice of national tax authorities described above consistent with the realization of the principle of legal certainty?

Source

Reference to other ECJ Cases