The ECJ has issued the preliminary ruling in the case C-277/24 (Adjak).
Context: Application from a former member of the Management Board of a limited liability company to participate in proceedings the purpose of which is to determine that company’s VAT liability.
Articles in the EU VAT Directive
Articles 205 and 273 of Council Directive 2006/112/EC
Article 205
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.
Article 273
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.
The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.
Facts & background
- The applicant M.B., by application dated 22 August 2022, requested the head of the tax office (‘the first-instance authority’) to be admitted as a party to the tax proceedings pending against B. sp. z o.o. (‘the company’) to verify the company’s value added tax (VAT) return for the period from June to October 2016 and to request access to the file of the proceedings in question, on the grounds that she was the Chairperson of the company’s Management Board between 2014 and 2018 and has the greatest knowledge of the company’s operation during the period covered by the proceedings.
- The first-instance authority refused to grant the applicant’s request, indicating thatit follows from the provisions of the Law establishing the Tax Code that only a liquidator may replace a party in the ‘conduct of its affairs’ in cases where it is incapable of performing legal actions because it lacks any organ to do so (which was the situation in the present case), and that only a party has the right to inspect the file.
- The applicant lodged a complaint against that decision, as a result of which the Director of the Tax Administration Chamber (the second-instance authority), annulled it in its entirety and discontinued the proceedings in the case. The second-instance authority pointed out that the attribution to a person or entity of the status of a party to tax proceedings is determined by the tax authority, which is entitled to make its own objective assessment of whether the person making the request does in fact have locus standi. In the opinion of the second-instance authority, the applicant does not fall into any of the categories of persons or entities listed in Article 133 of the Law establishing the Tax Code. Thus, the second-instance authority considered that there was no legal basis on which the first-instance authority could have made the decision challenged.
- The applicant brought an action before the Wojewódzki Sąd Administracyjny (Regional Administrative Court; the referring court) on the ground that she was the sole member of the Management Board of the company during the period for which the proceedings were pending. For that very reason, she has the greatest knowledge of the object of its activity, which is crucial in the proceedings conducted. The first-instance authority stated that it was sufficient that it heard the applicant as a witness. However, that hearing took place on a single occasion two to three years earlier, and the proceedings are still ongoing and evidence is being gathered, so that a single hearing is insufficient. Furthermore, under the Law establishing the Tax Code, any unsatisfied claims will impinge on the applicant as an individual, which indeed justifies her application.
Summary
- The applicant, who served as the Chairperson of the company’s Management Board, requested to be admitted as a party to tax proceedings against the company to verify its VAT return and access the proceedings’ file.
- The first-instance authority refused the applicant’s request, citing that only a liquidator can replace a party in cases where it lacks any organ to perform legal actions, and only a party has the right to inspect the file.
- The second-instance authority annulled the first-instance decision, stating that the tax authority can objectively assess the applicant’s locus standi, and since the applicant does not fall into any category listed in the Tax Code, the first-instance decision was not legally justified. The applicant argues that her knowledge as the sole member of the Management Board is crucial for the ongoing proceedings.
Questions
Are Articles 205 and 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, as amended) in conjunction with Article 2 of the Treaty on European Union (OJ 2016 C 202, p. 13; the rule of law, respect for human rights), as well as Article 17 of the Charter of Fundamental Rights of the European Union (OJ 2016 C 202, p. 389) (the right to property), Article 41 thereof (the right to good administration) and Article 47 thereof (the right to an effective remedy and the right to a fair trial), and (as guaranteed under EU law) the principle of proportionality, the right to a fair hearing and the rights of the defence, to be interpreted as precluding national legislation and the national practice based thereon which deny a natural person (a member of the Management Board of a legal person) – who may be jointly and severally liable for the VAT debt of the legal person with all his or her private assets – the right to participate actively in the procedure for determining that legal person’s tax debt in the form of a final decision of the tax authority, while at the same time that natural person, in separate proceedings seeking to determine his or her joint and several liability for the legal person’s VAT debt, is deprived of an adequate means of effectively challenging the findings and assessments which have been made previously concerning the existence or the amount of that legal person’s tax debt and which are set out in the final decision of the tax authority issued previously without the participation of that natural person, which decision therefore constitutes a precedent in those proceedings under a national provision confirmed by national practice?
Source
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