Briefing Document & Podcast C-605/23 (‘Ati-19’ EOOD): EU Law and Effective Remedies in VAT Enforcement

This briefing document reviews the main themes and most important ideas arising from the judgment of the Court of Justice of the European Union (CJEU) in Case C-605/23, ‘Ati-19’ EOOD, concerning the interplay between national coercive administrative measures for VAT enforcement and the fundamental right to an effective remedy under EU law.

I. Case Summary: ‘Ati-19’ EOOD v. Bulgarian Tax Authority

The case originated from a preliminary ruling request by the Administrativen sad Blagoevgrad (Administrative Court, Blagoevgrad, Bulgaria). The Bulgarian company ‘Ati-19’ EOOD, operating a fast-food establishment, was subjected to a coercive administrative measure by the Bulgarian tax authority. During an inspection, ‘Ati-19’ failed to issue a fiscal cash register receipt for a sale, in violation of Article 118(1) of the Bulgarian Law on VAT. This led to a financial penalty of BGN 1,000 (approx. EUR 500) and an injunction to seal the business premises for 14 days, with provisional enforcement.

‘Ati-19’ appealed both the sealing injunction and the provisional enforcement order. The national court initially dismissed the action against the provisional enforcement order as inadmissible due to a missed 3-day deadline. ‘Ati-19’ then sought suspension of the provisional enforcement under Article 166(2) of the Code of Administrative Procedure (CAP).

The referring court questioned whether the remedy under Article 166(2) and (3) CAP was “effective” under Article 47 of the Charter of Fundamental Rights of the European Union, given its limited scope. This national procedure only allowed for review of “damage which is serious or reparable only with difficulty” caused by the provisional enforcement, explicitly excluding any assessment of the lawfulness or proportionality of the sealing measure itself.

II. Key Legal Frameworks

The judgment hinges on the interaction of national law with two core pieces of EU legislation:

Council Directive 2006/112/EC on the common system of VAT (the VAT Directive):Article 2(1)(a): Establishes that the supply of goods for consideration within a Member State by a taxable person is subject to VAT.
Article 273: Grants Member States the discretion to “impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion,” provided these obligations respect equal treatment and do not create disproportionate burdens or border formalities.
Charter of Fundamental Rights of the European Union (the Charter):Article 47 (Right to an effective remedy and to a fair trial): This is the central provision. It stipulates: “Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article.” It further guarantees a fair and public hearing by an independent and impartial tribunal.
Article 51(1): Clarifies that the Charter applies to Member States only “when they are implementing Union law.”

Bulgarian national law, specifically the Law on VAT and the Code of Administrative Procedure, outlined the administrative offences (failure to issue receipts – Article 118(1) Law on VAT), penalties (Article 185 Law on VAT), coercive measures (sealing business premises – Article 186(1) Law on VAT), and the procedural avenues for appeal and suspension (Articles 60 and 166 CAP). Critically, Article 188(1) of the Law on VAT allowed for the “provisional enforceability” of the sealing measure.

III. Main Themes and Most Important Ideas/Facts

Implementation of EU Law and Applicability of the Charter:

A crucial point confirmed by the CJEU is that national coercive administrative measures, such as sealing business premises for VAT infringements, “constitute an implementation of Articles 2 and 273 of the VAT Directive and, therefore, of EU law, for the purposes of Article 51(1) of the Charter.” This means that when Member States employ such measures, they are bound to respect the fundamental rights enshrined in the Charter, particularly Article 47.

The Right to an Effective Remedy (Article 47 Charter) in Interim Proceedings:

The core of the judgment revolves around the interpretation of Article 47. The CJEU reiterated that a national court, when seised of a dispute governed by EU law, “must be in a position to grant interim relief in order to ensure the full effectiveness of the judgment to be given on the existence and scope of the rights claimed under EU law.”
While acknowledging that effective enforcement of EU law might require “immediate, albeit provisional, enforcement of that obligation,” the Court stressed that “interim measures to suspend an allegedly unlawful obligation must be granted where they are necessary to guarantee the protection conferred by EU law.”

Necessity of Assessing Lawfulness in Interim Relief:

The most significant finding is that for interim judicial relief to be “effective,” the national court must be able to assess, “at least in summary form, the lawfulness of the measure at issue.”
The CJEU explicitly stated: “in the absence of any possibility for the court hearing the case to assess the lawfulness of the coercive administrative measure to be enforced, the interim judicial relief provided for in Article 47 of the Charter would not be effective, since the application for suspension could be rejected even if it sought the suspension of a manifestly unlawful measure.” The Bulgarian procedure, by limiting judicial review solely to “damage which is serious or reparable only with difficulty,” was deemed insufficient because it “exclud[ed] any possibility for the court hearing that application to assess whether it is justified, in law and in fact, by arguments capable, prima facie, of demonstrating that the measure at issue is unlawful.”

Balancing VAT Enforcement and Fundamental Rights:

The Court recognised the Member States’ prerogative under Article 273 VAT Directive to enforce VAT collection and prevent evasion. However, it underlined that “measures adopted under Article 273 of the VAT Directive must not go further than is necessary to attain the objectives referred to in that article, and must not undermine the neutrality of VAT or interfere with the fundamental rights recognised by the Charter, including, in particular, the freedom to conduct a business.” This highlights the need for proportionality and respect for fundamental rights, even in the context of combating tax evasion.

Obligations of National Courts: Interpretation in Conformity and Primacy of EU Law:

The judgment strongly reaffirms two foundational principles of EU law for national courts:
Principle of Interpretation in Conformity with EU Law (Indirect Effect): National courts are required to “do whatever lies within their jurisdiction, taking the whole body of domestic law into consideration and applying the interpretative methods recognised by domestic law, with a view to ensuring that the provision of EU law in question is fully effective and achieving an outcome consistent with the objective pursued by it.” This includes an obligation to “change established case-law, where necessary, if it is based on an interpretation of national law that is incompatible with the objectives of EU law.”
Primacy of EU Law: If interpreting national law in conformity with EU law proves “impossible,” the national court “has an obligation, as an organ of a Member State, to give full effect to those provisions, if necessary refusing of its own motion to apply any provision of national law that is contrary to a provision of EU law with direct effect in the case pending before it.” The CJEU explicitly stated that “the provisions of Article 47 of the Charter must be considered to have direct effect.”

IV. Conclusion and Implications

The ‘Ati-19’ EOOD judgment is a significant reaffirmation of the robust nature of the right to an effective remedy under Article 47 of the Charter, particularly concerning interim relief against administrative measures taken in implementation of EU law. The ruling unequivocally states that national procedures for suspending the provisional enforcement of coercive administrative measures (like sealing business premises for VAT non-compliance) must allow for more than just an assessment of potential financial damage. They must enable the national court to conduct at least a summary review of the measure’s actual lawfulness.

This decision places a clear obligation on national courts to proactively ensure the effectiveness of EU fundamental rights. It empowers them, first, to interpret national law to align with EU requirements, even if it means departing from established national case-law. Second, if such an interpretation is not possible, national courts are obligated to disapply national provisions that contradict directly effective EU law, such as Article 47 of the Charter. The implications are broad, demanding that Member States review their national procedural laws to ensure that judicial remedies, especially interim ones, provide genuine and effective protection against potentially unlawful administrative actions taken in the sphere of EU law.