EU Court Ruling Limits Automatic VAT Deregistration by Tax Authorities in Member States

• The European Court of Justice ruled on the Cityland vs Bulgarian Tax Administration case on April 3, 2025.
• The case challenges the practice of automatically removing VAT numbers by tax administrations in EU member states.
• The dispute involved the Bulgarian authorities’ decision to remove Cityland from the VAT register for not meeting tax obligations.
• Cityland argued that the non-payments were due to legitimate business difficulties, not fraudulent behavior.
• The company sought clarification on the compatibility of Bulgarian law with EU law.
• The court stated that EU VAT directives and principles do not allow automatic VAT deregistration for persistent non-compliance.
• National laws must assess the nature and severity of taxpayer behavior rather than allowing general deregistration without individual analysis.
• The decision emphasizes that VAT deregistration must be proportionate and case-specific, enhancing procedural protections for taxpayers.
• Member states have some discretion in tax measures but must adhere to fundamental EU law principles, including proportionality.

Source: easytax.co

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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