Comments on C-158/25: Director Can Challenge Final Tax Assessment in Liability Proceedings

ECJ C-158/25 (Luxembourg): a company director’s right to challenge the underlying VAT assessment

Summary

On 16 July 2026 the ECJ (First Chamber) delivered judgment in Case C-158/25, on a reference from the Luxembourg Cour de cassation. A former director (QJ) was made jointly and severally liable via a “guarantee call” for a company’s VAT that had crystallised in assessments the company never challenged in time.
The Court held that Article 47 of the Charter (right to an effective remedy) applies, because national director-liability rules implementing full VAT collection engage EU law (Article 273 of Directive 2006/112 and Article 325(1) TFEU, given the link to the EU budget). Director liability therefore falls squarely within the Charter’s scope.
Article 47 precludes national legislation preventing a director, subject to a guarantee call, from incidentally challenging the final tax assessment issued to the company. The assessment’s irrevocable status for the company cannot bar the director from contesting its factual and legal basis where that is decisive for their own liability.

Extended article

The CJEU delivered an important judgment on directors’ liability for corporate VAT debts on 16 July 2026 in Case C-158/25 (QJ v Administration de l’enregistrement, des domaines et de la TVA and État du Grand-duché de Luxembourg). A former director (QJ) received a “guarantee call” making him personally liable for a company’s outstanding VAT, which arose from ex officio assessments that became final because the company did not object in time.

The first question was whether Article 47 of the Charter applies. The Court held it does: the guarantee-call mechanism, securing collection of unpaid VAT, is an implementation of EU law within Article 51(1) of the Charter, because Member States must ensure full VAT collection under Article 273 of Directive 2006/112 (with Article 4(3) TEU and Article 325(1) TFEU), and there is a direct link to the EU budget. The “civil liability” label under national law is irrelevant where the amount corresponds to unpaid VAT.

On the substance, Article 47 precludes national legislation preventing a director subject to a guarantee call from incidentally challenging the final assessment notified to the company. Effective defence rights require the director to contest the factual findings and legal classifications underpinning the assessment where decisive for their liability — and the assessment’s irrevocability for the company cannot shut that door. The judgment (ECLI:EU:C:2026:591) tracks AG Medina’s Opinion of 5 March 2026 and has consequences beyond Luxembourg: any Member State with joint-and-several director-liability regimes must ensure a person facing a derivative demand can genuinely challenge the underlying assessment.

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Right to Appeal VAT Assessments for Liable Directors

The European Court of Justice (ECJ) has ruled that it violates EU law (Article 47 of the EU Charter) to prevent a director, held personally liable for a company’s unpaid VAT debt, from appealing the underlying VAT assessments in their own name.
This ruling stems from a case where a director (QJ) of a Luxembourg company (VN) was held liable for unpaid VAT but was unable to challenge the initial VAT assessments issued to the company directly.
The ECJ determined that a liable director must have the right to contest the factual and legal basis of the VAT assessments if these are crucial to the outcome of the liability proceedings against them.

Source Taxlive

Applicability of EU Charter: National measures for VAT collection, including director liability, fall under EU law, meaning the Charter of Fundamental Rights of the European Union fully applies.
Effective Defence Rights: The right to an effective remedy under Article 47 of the Charter requires that a director held liable for a company’s tax debt must be able to effectively challenge the underlying tax assessment, even if it has already become final for the company.
Irrevocability No Bar: The final (irrevocable) status of the original tax assessment cannot be used to prevent the director from defending themselves, irrespective of whether they could have challenged it on behalf of the company previously.

Source BTW Jurisprudentie

ECJ C-158/25 (AEDT and État du Grand-Duché de Luxembourg) – Judgment – Directors’ Joint & Several VAT Liability & the Right to an Effective Remedy – VATupdate