- The General Court confirmed that a fiscal representative may be designated as the VAT debtor under Article 204 of the VAT Directive, even where that representative has no involvement in the underlying commercial transactions. The Court recognized that Member States may impose VAT obligations on fiscal representatives acting on behalf of non-established businesses, provided the legal conditions for such designation are met.
- However, the Court drew a clear distinction between being a VAT debtor and being jointly and severally liable for another person’s VAT debt. It ruled that a fiscal representative who merely performs formal compliance functions—such as filing VAT returns and making payments—cannot automatically be held jointly liable under Article 205 of the VAT Directive without an assessment of their conduct, knowledge, good faith, and the steps taken to prevent non-compliance.
- The judgment reinforces the principle of proportionality in VAT enforcement. Tax authorities must be able to examine whether the representative knew, or should have known, of the VAT irregularities and whether reasonable measures were taken to avoid participation in non-compliant activities. Automatic or objective joint liability is incompatible with EU law, making the decision particularly relevant for non-established businesses and professional firms acting as fiscal representatives across the EU.
Source Fernando Matesanz
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Tax Representative’s Direct VAT Liability Confirmed; Joint Liability Subject to Proportionality
- Tax representatives can be designated as the person liable for VAT under Article 204 of the VAT Directive, even when they only perform administrative functions and are not directly involved in the underlying taxable transactions. The General Court confirmed that Member States have discretion to appoint fiscal representatives as primary VAT debtors.
- Automatic and unconditional joint liability under Article 205 is incompatible with the principle of proportionality. Before imposing liability on a tax representative, tax authorities must consider whether the representative acted in good faith, exercised due diligence, and had any actual involvement or knowledge of the VAT fraud.
- Articles 204 and 205 cannot apply simultaneously to the same person. A fiscal representative who is already designated as the primary VAT debtor under Article 204 cannot additionally be held jointly and severally liable under Article 205, as the two legal mechanisms are mutually exclusive.
Why This Case Matters
The Rapera (T-356/25) judgment provides important protection for fiscal representatives operating across the EU. While confirming that Member States may make fiscal representatives directly responsible for VAT debts of non-resident businesses, the Court drew a clear line against disproportionate enforcement measures. Tax authorities cannot simply impose unlimited liability on representatives without examining their conduct, level of knowledge, and involvement in any fraudulent activity.
The ruling reinforces established CJEU case law, notably Vlaamse Oliemaatschappij (C‑499/10), by reaffirming that VAT collection measures must respect the principles of proportionality, legal certainty, and good-faith protection. Equally significant is the Court’s clarification that a person cannot simultaneously be treated as both the primary VAT debtor and a jointly liable party under the VAT Directive. This interpretation limits the scope for tax authorities to broaden recovery actions beyond what EU law permits.
For businesses relying on fiscal representatives and for service providers acting in that capacity, the judgment provides valuable guidance on the boundaries of VAT liability and the safeguards available where representatives have acted diligently and without knowledge of underlying VAT fraud.
Source BTW Jurisprudentie
General Court clarifies rules on VAT liability of tax representative
- Tax representative can be liable for VAT payment
The General Court confirmed that EU law does not prevent Greece from treating AY, acting as tax representative of the Italian company O, as a person liable for payment of VAT under Article 204 of the VAT Directive. The decisive factor is the formal appointment as tax representative, not the representative’s operational involvement in the underlying taxable transactions. - Practical role in transactions is irrelevant
AY argued that it merely submitted VAT returns and made VAT payments on behalf of O, without maintaining accounts, concluding contracts, or participating in business activities. The Court held that such limitations in practical responsibilities do not preclude VAT liability where the person has been appointed as a tax representative within the meaning of the VAT Directive. - Limits on joint and several liability remain
While a tax representative may be regarded as liable for VAT under Article 204, the General Court emphasized that EU law places limits on the imposition of joint and several liability. A tax representative who has not been expressly designated as the person liable for VAT cannot automatically be held jointly and severally liable for unpaid VAT unless the relevant legal conditions and proportionality requirements are satisfied.
Source Taxlive
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