The legality of VAT penalties and their compatibility with EU law is a frequent topic in litigation. In the recent case of CEZAM, the Court did not declare penalties imposed under Belgian law as per se disproportionate, but it was acknowledged that in some cases, such penalties could breach EU law. The assessment of penalties must be made on a case-by-case basis. Taxpayers should challenge authorities if the penalty seems excessive, especially if no tax revenue was lost.
Source Fabian Barth
See also
- C-712/17 (EN.SA Srl) – Judgment – Refusal of deduction of input tax and VAT zero-rate in case of fictitious actions
- Summary of ECJ C-418/22: National legislation can penalize failure to declare and pay VAT with a flat-rate fine of 20% of the VAT amount due, after deducting deductible VAT, as long as the fine is proportionate
- ECJ C-418/22 (Cezam) – Judgment -Authorities are allowed to impose penalties on underpaid VAT without considering input VAT
