ECJ C-121/24 (Vaniz) – Judgment – Joint VAT liability valid post-debtor dissolution if third-party knowledge exists

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On December 11, 2025, the ECJ issued the Judgment in the case C-121/24 (Vaniz).

Context: Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Article 205 – Article 273 – Failure to pay declared VAT – Joint and several liability of a third party – Insolvency and deletion of a taxable person from the commercial register – Principle of legal certainty – Principle of proportionality

Summary

Facts of the Case: The case involves “Vaniz” Ltd., which was assessed as jointly and severally liable for VAT payments that were declared by its supplier, Stars International EOOD, which subsequently went bankrupt and was removed from the commercial register. The tax authorities claim Vaniz should pay the VAT because it knew or should have known that Stars International would not pay.
Questions to the Court: The referring court posed three critical questions regarding whether the VAT Directive allows for joint and several liability to be pursued against a party after the principal debtor has ceased to exist. It also inquired about the obligations of the liable party after such deletion and the compliance of administrative practices with the principle of legal certainty.
Decision of the Court: The Court ruled that Article 205 of the VAT Directive does not prevent national legislation from holding a third party jointly and severally liable for VAT even after the principal debtor has ceased to exist as a legal entity. The ruling emphasized that the joint and several liability can be enforced if it is established that the third party exercised their right to deduct VAT while knowing or should have known that the principal would not fulfill their tax obligation.
Justification for the Decision: The Court justified its decision by referencing the need for effective VAT collection and the flexibility given to Member States under the VAT Directive. It highlighted that allowing liability to persist ensures that VAT can be effectively recovered, particularly in cases of bankruptcy or the dissolution of the primary debtor.
Principles Involved: The decision underscores the principles of proportionality and legal certainty, indicating that while Member States have the discretion to impose liability, such measures must align with EU legal standards and ensure that the rights and obligations of the parties are clearly defined, avoiding indefinite liability reviews.

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Articles in the EU VAT Directive

Articles 193, 205 and 207 of the EU VAT Directive 2006/112/EC

Article 193
VAT shall be payable by any taxable person carrying out a taxable supply of goods or services, except where it is payable by another person in the cases referred to in Articles 194 to 199b and Article 202.

Article 205
In the situations referred to in Articles 193 to 200 and Articles 202, 203 and 204, Member States may provide that a person other than the person liable for payment of VAT is to be held jointly and severally liable for payment of VAT.

Article 207
Member States shall take the measures necessary to ensure that persons who are regarded as liable for payment of VAT in the stead of a taxable person not established in their respective territory, in accordance with Articles 194 to 197 and Articles 199 and 204, comply with the payment obligations set out in this Section.
Member States shall also take the measures necessary to ensure that those persons who, in accordance with Article 205, are held to be jointly and severally liable for payment of the VAT comply with these payment obligations.

Facts

The requesting party is the trading company ‘Vaniz’. The defendant is the ‘Disputes and daily management of taxes and social security’ directorate. Vaniz is active in the field of road and freight transport. The defendant carried out an audit at Vaniz, which showed that a supplier ‘Stars International’ had not paid its tax debts, even though these tax debts were stated in the tax return. As a result, the defendant has assessed an additional assessment for Vaniz, against which Vaniz has appealed.

Consideration:

The question is whether the additional tax assessment was lawful, because it appears that ‘Stars International’ had already been declared bankrupt before the tax audit and had been removed from the Trade Register. Because the legal entity has ceased to exist, the question is whether Vaniz can still be held jointly and severally liable for those debts.

Questions

Do the provisions of recital 44 and Article 205 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as well as the principles of transparency and proportionality of liability, allow a procedure to be initiated to determine the status of joint and several debtor of VAT debts and the extent of joint and several liability after the principal debtor has ceased to exist as a legal subject?

Do these provisions – after the debtor has been struck off [from the commercial register], without a legal successor having taken over the rights and obligations – prevent a claim from being registered against that person for which a third party is subsequently held liable?

Is the administrative practice of national tax authorities described above consistent with the realization of the principle of legal certainty?

Source ecer.minbuza.nl

AG Opinion

(1) Article 205 of Directive 2006/112/EC on the common system of value added tax (the VAT Directive) must be interpreted as permitting no transfer of the tax debt to a third party but only ancillary liability for the tax debts of a person liable for payment of VAT where that tax debt has not been extinguished yet and that person still exists. Imposition of secondary liability following the conclusion of insolvency proceedings and the deletion of the taxable person from the commercial register is thus not covered by Article 205 of the VAT Directive.

(2) Article 205 of the VAT Directive, read in conjunction with Article 273 thereof, permits also the imposition of liability on the recipient of a supply where that recipient knew or should have known that the transaction would lead to that recipient being involved in the commission of fraud on the part of his or her or its contractual partner, or where the recipient’s conduct itself amounts to abuse. However, mere failure to pay the declared tax does not constitute VAT fraud. Provided that the recipient of the supply cannot be accused of abusive conduct, the mere fact that that recipient knew or should have known that his or her or its contractual party would not pay the declared tax is not sufficient to warrant that recipient being held liable.

Decision

Article 205 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in the light of the principles of proportionality and legal certainty, must be interpreted as not precluding national legislation under which the person held jointly and severally liable for payment of value added tax, within the meaning of that Article 205, may incur liability after the person liable for payment of that tax has ceased to exist as a legal person, where it is established that that person, while exercising his or her right of deduction himself or herself, knew or should have known that that person liable for payment would not pay that tax.

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