Comments on ECJ C-121/24: Joint and several liability for a non-existent entity

CJEU Ruling on Joint and Several Liability: In its December 2025 judgment in Case C-121/24 Vaniz, the Court of Justice of the European Union (CJEU) ruled that the cessation of a VAT debtor’s legal existence does not prevent tax authorities from pursuing a third party for joint and several liability regarding unpaid VAT, emphasizing the need for the state to recover tax due in cases of insolvency or legal dissolution.
Application to Polish VAT Regulations: The judgment aligns with Polish VAT laws, which also impose joint and several liability on purchasers aware that their supplier may not pay VAT. This reinforces the necessity for Polish entrepreneurs to conduct thorough contractor verifications to defend their VAT deduction rights, particularly as new regulations may extend this liability to additional services in the future.
Potential for Release from Liability: While the CJEU confirmed the principle of joint and several liability, it highlighted that Polish regulations differ in not explicitly addressing liability when a supplier is removed from the National Court Register after liquidation. This could allow for an argument against liability in such circumstances, particularly if no national provisions support it.

Source MDDP

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Background: Vaniz EOOD, a supplier of road freight transport, faced joint and several liability for VAT due to the supplier, Stars International EOOD, failing to pay VAT before insolvency.
Court’s Ruling: The Court upheld that national legislation allowing for joint and several liability is compatible with the VAT Directive, particularly Article 205. This provision allows Member States to hold third parties liable for VAT if they knew or should have known that the original supplier would not pay the tax.
Conclusion: The Court concluded that the cessation of the original supplier’s legal existence does not exempt the recipient from liability if they were aware of the tax non-payment, affirming the tax authority’s right to recover due VAT efficiently.

Source KPMG

The Court of Justice of the European Union ruled that Bulgaria did not violate EU law by holding Vaniz EOOD liable for the unpaid VAT of Stars International EOOD, despite Stars no longer existing.
The ruling confirmed that Vaniz’s awareness or reasonable suspicion that Stars would not pay the declared VAT was sufficient grounds for liability, as this knowledge impacted Vaniz’s right to deduct VAT.
The court emphasized that the dissolution of Stars does not alter Vaniz’s responsibility for the VAT, reinforcing the principle that taxpayers must ensure compliance when exercising their VAT deduction rights.