Comments on ECJ Case C-121/24: Joint VAT Liability Applies Even After Supplier Insolvency, Clarifies Article 205 Scope

The ECJ ruled that joint and several VAT liability under Article 205 of the VAT Directive can be established even after the principal VAT debtor is insolvent and no longer exists.
Tax authorities may pursue VAT from a third party if national law allows joint liability and the third party knew or should have known the VAT would not be paid.
The disappearance of the original debtor does not extinguish the liability of a third party.
Pursuing third-party liability after the supplier’s disappearance is compatible with EU principles of proportionality and legal certainty, provided national rules are clear and limitation periods are respected.

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Joint and several liability of the purchaser possible after the liquidation of the supplier (judgment of the CJEU of 11 December 2025, C-121/24 Vaniz)

Joint and Several Liability After Supplier Liquidation: The CJEU ruled that the cessation of a supplier’s legal existence does not prevent tax authorities from claiming VAT from a purchaser under joint and several liability. This principle allows creditors to demand payment from any debtor, ensuring effective VAT collection even after the supplier has gone bankrupt.
Knowledge Requirement for Liability: The Court emphasized that tax authorities must demonstrate that the purchaser knew or should have known that the supplier would not fulfill their tax obligations. This requirement is critical to establishing joint and several liability for VAT debts.
Practical Implications for Taxpayers: The judgment highlights the need for taxpayers to exercise due diligence when verifying suppliers to mitigate the risk of joint and several liability. It is essential to document the verification process and ensure that adequate measures are in place to assess the tax compliance status of contractors, especially in light of potential legislative changes that may broaden the scope of joint and several liability in Poland.

Source Deloitte