ECJ C-605/23 (Ati-19” EOOD) – Judgment – Member State laws cannot limit judicial review of penalties

On July 3, 2025, the ECJ issued the judgment in the case C-605/23 (Ati-19” EOOD).

Context: Reference for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 273 – Charter of Fundamental Rights of the European Union – First paragraph of Article 47 – Right to an effective remedy – Administrative measure for sealing of premises – Application for a stay – Judicial review limited to an assessment of the damage which may result from execution of the measure

Summary

Facts of the Case: The case (C-605/23) involves “Ati-19” EOOD challenging the Bulgarian tax authority’s imposition of a financial penalty and a coercive administrative measure sealing its premises for failing to issue sales receipts. The Administrative Court of Blagoevgrad referred questions about the legality of these measures under EU law.
Questions to the Court: The referring court sought clarification on whether EU law allows for national legislation that limits judicial review of provisional enforcement measures to merely assessing serious damage and whether substantial penalties can be imposed without options for lesser penalties.
Court’s Decision on Judicial Review: The Court ruled that Article 47 of the Charter of Fundamental Rights prohibits national laws from restricting judicial review of coercive measures to only assessing potential damage, ensuring that individuals can challenge the legality of administrative actions effectively.
Justification for the Decision: The Court highlighted the necessity of effective judicial remedies, stating that limiting review to damage assessment undermines the right to contest the legality of administrative measures, which is essential for compliance with EU law.
Implications of the Ruling: This decision reinforces the principle that individuals must have access to comprehensive judicial review of administrative penalties, ensuring that punitive actions taken by authorities are justified and legally sound.

Article in the EU VAT Directive 2006/112/EC

Article 273
Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.
The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.

Facts

Tax Inspection and Penalty: On August 3, 2023, Bulgarian tax authorities inspected Ati-19 EOOD, where they made an unauthorized purchase without a receipt and discovered discrepancies in fiscal records, leading to a financial penalty of BGN 1,000 (approximately EUR 500) imposed on August 29.
Sealing of Business Premises: Following the penalty, the tax authorities ordered the sealing of Ati-19’s business premises for 14 days, with the sealing enforcement scheduled to start on September 21, 2023.
Legal Challenge and Court Ruling: Ati-19 contested the sealing order in the Administrative Court of Blagoevgrad but was ruled out of time due to not filing within the three-day limit. The court subsequently referred a question to the Court of Justice regarding the interpretation of Article 47(1) of the Charter in relation to national provisions on provisional enforcement measures.

Question

Must Article 47(1) of the Charter of Fundamental Rights of the European Union be interpreted as not precluding national rules on protection against the provisional enforcement of measures introduced by the national legislature to safeguard the interest referred to in Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in the context of which the scope of judicial review is limited to the existence of damage suffered?

AG Opinion

The first paragraph of Article 47 of the Charter of Fundamental Rights of the European Union, in conjunction with Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax,

must be interpreted as meaning that:

In principle, it does not preclude legislation of a Member State which, as a whole, permits a court to stay an order for provisional enforcement of an administrative measure involving the sealing of business premises, adopted before a finding of irregularities in relation to value added tax (VAT), where that provisional enforcement could cause to the applicant damage which is serious or reparable only with difficulty.

However, it does preclude the scope of a judicial review of the application of that national legislation, in proceedings seeking a stay of the provisional enforcement order, from being limited solely to the existence of damage which is serious or reparable only with difficulty, thereby excluding any possibility that the court might examine, for the purposes of reaching its conclusion, whether the application for a stay is substantiated, in law and in fact, by arguments that will probably be upheld and which testify prima facie to defects which render that measure incompatible with European Union law.

Decision

The first paragraph of Article 47 of the Charter of Fundamental Rights of the European Union

must be interpreted as precluding legislation of a Member State which, pursuant to the option provided for in the first paragraph of Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, limits the scope of the judicial review carried out in the context of an application for suspension of the provisional enforcement of a coercive administrative measure of a criminal nature solely to the existence of damage which is serious or reparable only with difficulty that such provisional enforcement may cause, by excluding 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.

Source