ECJ VAT C-544/25 (Nekilnojamojo turto valdymas) – Questions – VAT penalties and interest challenged as disproportionate and duplicative under EU law principles

The ECJ issued the facts and questions in the case C-544/25 (Nekilnojamojo turto valdymas).

Facts and Background

Case C-544/24 concerns a Lithuanian company disputing the imposition of VAT late payment interest and fines, raising questions about the compatibility of national tax enforcement with EU principles on proportionality and double jeopardy.

Here’s a structured summary of the facts and background:

Case Overview

Reference: Case C-544/24 (BUAB Nekilnojamojo turto valdymas v. Lithuanian Tax Authority)
Date lodged: 12 August 2024
Referring body: Lithuanian Tax Disputes Commission
Applicant: BUAB Nekilnojamojo turto valdymas (real estate management company)
Respondent: Lithuanian State Tax Inspectorate

Tax Dispute Summary

The company was found to have improperly deducted VAT based on invalid invoices and engaged in VAT fraud between 2012–2016.
Following a tax audit, it was ordered to pay:
- €6.5 million in VAT
- €3.15 million in late payment interest
- €1.84 million in fines
The company requested exemption from the interest and fines, which was denied.

⚖️ Legal Conflict

The company is also subject to criminal proceedings for the same VAT-related conduct.
It argues that the penalty component of late payment interest violates:
- Article 50 of the Charter (ne bis in idem)
- Article 49(3) of the Charter (proportionality of penalties)
- Article 325 TFEU and Article 273 of the VAT Directive

Key Legal Questions

Can national law impose penalty-like interest for VAT infringements already subject to criminal prosecution, without coordination or safeguards?
Is a fixed penalty rate of late payment interest compatible with EU law if it cannot be reduced or waived?

Broader Implications

The case tests whether automatic, punitive interest mechanisms in tax law can coexist with criminal sanctions without breaching EU rights.
It may clarify how compensatory vs. punitive elements in tax enforcement should be distinguished and coordinated.

Questions

Are Article 325 TFEU, Article 273 of the VAT Directive ¹ and Article 50 of the Charter to be interpreted as precluding national legislation which makes it possible to impose interest on late payment of tax, a part of which has the effect of a penalty in respect of the same tax infringements which are the subject of a criminal prosecution, without laying down any rules ensuring coordination which limits to what is strictly necessary the additional disadvantage which results, for the persons concerned, from a duplication of proceedings or making it possible to ensure that the severity of all of the penalties imposed is limited to what is strictly necessary in relation to the seriousness of the offence concerned?

Are Article 325 TFEU, Article 273 of the VAT Directive and Article 49(3) of the Charter to be interpreted as precluding a procedure for applying interest on late payment of taxes which, irrespective of the nature and severity of the infringements, sets a fixed penalty part of interest on late payment of taxes, without making it possible to reduce that penalty part, that is to say, to impose a rate of late payment interest which is lower than the rate provided for by the law or to waive the penalty part of late payment interest?

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