Comments on ECJ Case C-278/24: Joint and several liability – Member of board of directors following resignation

Joint and Several Liability for VAT Arrears: The taxpayer P.K. was held jointly and severally liable for VAT debts of E. Sp. z o.o., despite having resigned from the company. Polish law requires a timely insolvency application to avoid such liability, raising questions about the treatment of directors in cases with a sole creditor, specifically the public exchequer.
Court’s Interpretation of Liability Conditions: The European Court ruled that the requirement for a former director to file an insolvency application is permissible under EU law, stating that it does not conflict with the VAT Directive or principles of equal treatment and proportionality. The court emphasized that liability could be rebutted by demonstrating due diligence in managing the company’s affairs.
Key Legal Findings: The Court concluded that national law can hold a director jointly liable for a company’s VAT debts during their term, provided they can prove timely insolvency application or lack of fault in failing to file. The ruling clarified that simply claiming the company had no creditors other than the public exchequer does not exempt directors from liability, reinforcing the need for directors to demonstrate diligence.

Source KPMG

EU Court Rules on Directors’ Liability for Company VAT Debts Under Polish Law

The European Court of Justice examined Polish legislation regarding VAT debts of companies.
The court reviewed Article 273 of Directive 2006/112/EU.
National legislation can hold a board member responsible for VAT debts incurred during their term.
This responsibility applies if the company’s debt enforcement is unsuccessful.
Directors can avoid liability by proving due diligence in managing company affairs.
It is not enough to show the tax authority was the only creditor at the time of insolvency.