Opinion of Advocate General Kokott delivered on 4 September 2025.

• Jurisdiction: European Union
• Celex Number: 62024CC0121
• ECLI: ECLI:EU:C:2025:675
• Date: 04 September 2025
• Court: Court of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 4 September 2025 (1)

Case C‑121/24

‘Vaniz’ EOOD

v

Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’ – Veliko Tarnovo

(Request for a preliminary ruling from the Administrativen sad Veliko Tarnovo (Administrative Court, Veliko Tarnovo, Bulgaria))

( Reference for a preliminary ruling – Taxation – Value added tax (VAT) – Directive 2006/112/EC – Article 205 – Article 273 – Failure to pay declared VAT – Joint and several liability of a third party – Insolvency and deletion of a taxable person from the commercial register – Principle of legal certainty – Principle of proportionality )

I. Introduction

1. The present request for a preliminary ruling concerns the joint and several liability of a third party for the VAT debts of a person liable for payment of that VAT (a company) where that person no longer exists, and where the liability of that third party was not prescribed until after that company’s liquidation (here, deletion). The link between the person liable for payment of VAT and the third party is a contract for the supply of goods or services which was duly performed in the past.

2. According to the referring court, the Bulgarian provision in question appears to treat as sufficient the fact that the third party considered liable knew or should have known that its trading partner would not discharge its tax debt. The referring court asks whether such a far-reaching provision governing liability for tax debts of a trading partner that has already been deleted is compatible with the provisions of the VAT Directive.

3. The request also presents the Court of Justice with the opportunity to remedy a possible contradiction in its case-law. (2) On the one hand, the Court has in the past required that, in order to be ‘penalised’, undertakings should have at least known about the fraudulent activities of a third party in a supply chain. (3) On the other hand, a more recent judgment treats it as sufficient that the third party should have known of a mere failure to pay the tax, (4) although failure to pay the tax per se is not sufficient to assume tax fraud – which is also attested by various judgments. (5) It is not clear why a situation where a person should have known of a non-fraudulent event (failure to discharge tax debt) can be equated to a situation where a person should have known of a fraudulent event (failure to declare tax) in terms of the legal consequences thereof (liability for a third-party tax debt or refusal of the right to deduct input tax).

4. It is true that the Court has come to consider many State measures to be proportionate in the context of ‘penalising’ those involved in VAT fraud. One could even gain the impression that – to adapt a common idiom – all’s fair in love, war and the fight against VAT fraud. Nevertheless, the obligations of due process binding State authority must be upheld for potential perpetrators of fraud as for anyone else.

II. Legal framework

A. European Union law

5. The framework in EU law is provided by Directive 2006/112/EC on the common system of value added tax (‘the VAT Directive’). (6) Recital 44 of that directive reads as follows:

‘Member States should be able to provide that someone other than the person liable for payment of VAT is to be held jointly and severally liable for its payment.’

6. Article 193 of the VAT Directive determines who is liable for payment of VAT:

‘VAT shall be payable by any taxable person carrying out a taxable supply of goods or services, except where it is payable by another person in the cases referred to in Articles 194 to 199b and Article 202.’

7. Article 205 of the VAT Directive offers the possibility of providing for a further person, in addition to the person liable for payment of VAT, to be held jointly and severally liable for the payment of that tax:

‘In the situations referred to in Articles 193 to 200 and Articles 202, 203 and 204, Member States may provide that a person other than the person liable for payment of VAT is to be held jointly and severally liable for payment of VAT.’

8. The first paragraph of Article 273 of the VAT Directive set outs options for the Member States to combat evasion, inter alia:

‘Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.’

B. Bulgarian law

– Danachno-osiguritelen protsesualen kodeks (Code of tax and social security procedure; ‘the DOPK’):

9. Article 21(2) and (3) of the DOPK governs the duration of third-party liability:

‘(2) The liability of third parties shall also be incurred where the facts specified in Article 168(5) to (7) are in place in respect of the debtor.

(3) The liability of third parties shall cease when the debt for which that liability was established by a final act is extinguished. …’

10. Article 112(1) of the DOPK concerns the beginning of the tax audit procedure:

‘(1) A tax audit procedure shall be initiated by the issuing of a decision ordering a tax audit.’

11. Article 168(6) and (7) of the DOPK determines when the claim governed by public law is extinguished:

‘6. following distribution of the proceeds from realising the assets of a legal person which has been declared insolvent, unless third parties are liable for the claim governed by public law;

7. upon deletion of a legal person following termination of winding-up proceedings, unless third parties are liable for the claim governed by public law;’

– Zakon za danak varhu dobavenata stoynost (Law on value added tax; ‘the ZDDS’):

12. Article 177 of the ZDDS is under the heading ‘Liability in the event of abuse’ and provides that the recipient of a supply who has claimed the right of deduction is to be held liable under certain circumstances:

‘(1) A registered person who is the recipient of a taxable supply shall be liable for unpaid tax due from another registered person in so far as that recipient has exercised the right to deduct input tax directly or indirectly connected with the tax due but not paid.

(2) Liability under paragraph 1 shall be incurred where the registered person knew or should have known that the tax would not be paid, and this is proved by the investigating authority in accordance with Articles 117 to 120 of [the DOPK].

(3) Knowledge shall be imputed to a person for the purposes of paragraph 2 where both of the following conditions are satisfied:

1. the tax due, within the meaning of paragraph 1, for a particular tax period has in fact not been paid by any upstream supplier in respect of a taxable supply of the same goods or services, whether or not in the same, a changed or a processed form;

2. the taxable supply is fictitious, circumvents the law or is made at a price that differs significantly from the market price.

(4) Liability under paragraph 1 shall not be dependent on obtaining a specific advantage on account of the failure to pay the tax due.

(5) In the circumstances envisaged in paragraphs 2 and 3, the upstream supplier of the taxable person who owes the unpaid tax shall also be liable.

(6) In the cases referred to in paragraphs 1 and 2, liability shall be imposed on the person who is the direct recipient of the supply in respect of which the tax due has not been paid, and, where recovery fails, liability may be imposed on any downstream recipient in the chain of supply.

(7) Paragraph 6 shall also apply mutatis mutandis to upstream suppliers.’

III. Facts and request for a preliminary ruling

13. Vaniz EOOD (‘Vaniz’) is a registered company. Its activity consists of road and freight transport. In its capacity as a taxable person, Vaniz received taxable supplies of goods (purchase of lorries and vehicles) and of services (rental of motor vehicles) from Stars International EOOD in 2017. It appears that Vaniz also paid the associated invoices. Vaniz exercised its right of deduction in respect of the invoices issued.

14. Following an audit, the tax authorities found that, for the specified tax periods, the supplier had declared but not paid the VAT chargeable on the supplies provided (which had been set out in the invoices issued to Vaniz). In 2019, insolvency proceedings were initiated in respect of Stars International EOOD; on 4 August 2020, they were concluded and the company’s deletion from the commercial register was ordered.

15. In 2022, a tax audit was initiated in respect of Vaniz to establish liability under Article 177 of the ZDDS for the VAT owed and not paid by Stars International EOOD, which related to the supplies of goods and services provided to Vaniz. In accordance with Article 177 of the ZDDS, a tax assessment imposed liability on Vaniz for the debts of Stars International EOOD for the tax periods of July, August and September 2017. The tax authorities gave as the ground for that liability Article 177(2) of the ZDDS, pursuant to which the elements specified in Article 177(1) of the ZDDS are satisfied where the recipient of a taxable supply knew or should have known that the tax on the invoices issued to that recipient would not be paid.

16. Vaniz contested the tax audit assessment in an administrative procedure without success. It then brought an action before the referring court. That court points out that the party found liable (Vaniz, in the present case) first became aware of the possibility of such liability being incurred after the tax audit was initiated. At that time, its contractual partner – the person liable for payment of the VAT – had already ceased to exist. The question therefore arises whether such an interpretation is consistent with the VAT Directive.

17. The...