On July 3, 2025, the ECJ issued the judgment in the case C-733/23 (Beach and bar management).
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 – Article 50 – Principle ne bis in idem – Failure to fulfil the obligation to issue a cash register receipt – Sealing of premises – Cumulation of penalties for the same offence – Principle of proportionality
Summary
- Case Background: The case (C-733/23) involves “Beach and Bar Management” Ltd. challenging the Bulgarian tax authority’s actions, which included imposing a financial penalty for not issuing sales receipts and sealing the commercial premises where the violations occurred. The Administrative Court of Burgas referred questions regarding the compatibility of these actions with EU law.
- Questions to the Court: The referring court sought clarity on whether EU law precludes national legislation that allows for both administrative penalties and sealing measures for the same infringement, and whether substantial financial penalties can be imposed without allowing courts the discretion to impose lesser penalties.
- Court’s Decision on First Question: The Court ruled that Articles 325 TFEU and 273 of the VAT Directive, along with Article 50 of the Charter of Fundamental Rights, prevent national legislation from imposing a financial penalty when a coercive administrative measure (sealing) has already been applied for the same infringement.
- Court’s Decision on Second Question: The Court also determined that Article 273 of the VAT Directive and Article 49(3) of the Charter prohibit national laws that impose substantial financial penalties without allowing the court the option to reduce the penalty below the statutory minimum or apply a lesser penalty.
- Justification of Decisions: The Court emphasized the principle of proportionality, stating that penalties must not exceed what is necessary to achieve legitimate objectives. The cumulative application of penalties without judicial discretion was deemed contrary to EU principles, ensuring fair treatment and avoiding disproportionate sanctions for the same offense.
Article in the EU VAT Directive
Charter of Fundamental Rights of the European Union (Charter): Articles 47, 49(3) and 50;
Treaty on the Functioning of the European Union: Article 325;
Article 273 of 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
The applicant in the main proceedings is ‘Beach and bar management’ EOOD (hereinafter: management), which operates a business premises of a bar with restaurant. Tax inspectors examined the area, after which they drew up a report stating that no tax receipts were issued with the tax devices present in the restaurant for eighty-five payment transactions. The administrative authority has imposed two administrative coercive measures, the sealing of a business premises and an entry ban. The authority has also imposed eighty-five fines. An objection has been raised against this.
Consideration:
The referring court has doubts as to whether the adoption of the administrative coercive measures and the imposition of eighty-five fines are contrary to Article 325 TFEU and Article 273 of the VAT Directive. The measure was ordered for a total of eighty-five violations without the scope of the measure imposed for each violation being individualized. As a result, the proportionality of the measures and the ‘deterrent effect’ within the meaning of Article 325 TFEU cannot be examined. According to the referring court, the administrative coercive measure is not repressive, but restrictive. The referring court also doubts whether the right to an effective remedy is violated, because there is no defense mechanism for each individual violation.
Questions
1) Should Article 325 of the Treaty on the Functioning of the European Union, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 50 of the Charter of the fundamental rights of the European Union be interpreted as authorizing national legislation under which a general measure (‘sealing of business premises and ban on access’) may be ordered for multiple infringements of tax obligations, if the sole purpose of that measure is to reduce the adverse effects, including the extent of damage to the financial interests of the European Union, but not to punish the offender, without this measure restricting the possibility of initiating independent proceedings of a repressive nature against the latter for each of these violations of tax obligations to impose a measure in the form of a fine on the taxable person, requiring the national court to examine in each individual case and determine which of the two objectives is pursued by the previously ordered general administrative coercive measure ‘sealing of a business premises and ban on access’ – a preventive-restrictive or a repressive objective?
2) Should Article 325 of the Treaty on the Functioning of the European Union, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 49(3) of the Charter of Fundamental Rights of the European Union be interpreted as precluding a sanctions regime such as that at issue in the main proceedings which, regardless of the nature and gravity of the infringements, sets a high minimum limit for the sanction in the form of a fine, without providing for the possibility that a sanction below the legal minimum will be imposed or that it will be replaced by a lighter sanction?
3) Should Article 325 of the Treaty on the Functioning of the European Union, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, Article 47, first paragraph, Article 48(1) and Article 49(3) of the Charter of Fundamental Rights of the European Union be interpreted as precluding national legislation under which a general measure (‘sealing of a business premises and access ban”) can be ordered and, before it becomes final, can be provisionally enforced, without the judge or the offender himself having the opportunity to assess its proportionality to the seriousness of each individual administrative violation?
AG Opinion
Article 325 TFEU, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 50 of the Charter of Fundamental Rights of the European Union
must be interpreted as meaning that the considerations in the light of which the Court of Justice delivered the judgment of 24 May 2023, MV – 98 (C‑97/21, EU:C:2023:371), may be extended to a situation in which the national tax authority imposes 85 financial penalties on a taxpayer for successive failures to fulfil his or her obligations in respect of value added tax, while at the same time ordering a measure involving the sealing of, and the prohibition of access to, business premises for 14 days on account of the entirety of the tax offences committed.
Decision
(1) Article 325 TFEU, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 50 of the Charter of Fundamental Rights of the European Union
must be interpreted as meaning that
preclude national legislation which provides that a taxable person is to be fined a financial penalty where he has not issued receipts for sales, where that infringement has already been the subject of a coercive administrative measure to seal the premises in which that infringement was committed and to prohibit access to it.
(2) Article 273 of Directive 2006/112 and Article 49(3) of the Charter of Fundamental Rights
must be interpreted as meaning that
preclude national legislation which provides for the imposition of a substantial financial penalty as an administrative penalty without the court hearing the challenge to that measure having a procedural possibility of imposing a penalty in an amount lower than that provided for by that legislation or any other less severe penalty.
Similar ECJ Cases
- C-97/21(MV-98) – Judgment – Sealing of business premises together with administrative penalty is not proportionate for failing to issue fiscal receipts
- C-489/10
- C-617/10 (Åkerberg Fransson) – A Member State can impose a tax penalty and a criminal penalty
Source
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