On February 13, 2025, the ECJ issued the AG Opinion in the case C-605/23 (Ati-19” EOOD).
Context: Reference for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 273 – Charter of Fundamental Rights of the European Union – First paragraph of Article 47 – Right to an effective remedy – Administrative measure for sealing of premises – Application for a stay – Judicial review limited to an assessment of the damage which may result from execution of the measure
Summary
- Case Overview: The Advocate General’s opinion addresses a preliminary ruling regarding the Bulgarian tax authorities’ order to seal the business premises of Ati-19 EOOD due to VAT irregularities, raising questions about the compatibility of national law with EU law, specifically the right to an effective remedy.
- Sealing Measure Justification: The sealing of premises aims to ensure proper VAT collection and prevent evasion, as permitted by the VAT Directive. However, the opinion emphasizes the need for judicial review of such administrative measures.
- Judicial Review Limitations: The Bulgarian legislation allows limited judicial review focusing only on potential damage caused by enforcement, which the Advocate General argues may infringe on the right to an effective remedy as guaranteed by Article 47 of the Charter of Fundamental Rights of the EU.
- Effective Remedy Requirement: The opinion asserts that while national law can permit provisional enforcement of administrative measures, it must allow courts to examine the legal validity of the actions taken by authorities, beyond just assessing damage.
- Conclusion and Recommendation: The Advocate General concludes that national legislation must not restrict judicial review to merely assessing damage but must allow for a broader examination of the circumstances surrounding the enforcement of VAT-related measures to align with EU law protections.
Article in the EU VAT Directive 2006/112/EC
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
- Tax Inspection and Penalty: On August 3, 2023, Bulgarian tax authorities inspected Ati-19 EOOD, where they made an unauthorized purchase without a receipt and discovered discrepancies in fiscal records, leading to a financial penalty of BGN 1,000 (approximately EUR 500) imposed on August 29.
- Sealing of Business Premises: Following the penalty, the tax authorities ordered the sealing of Ati-19’s business premises for 14 days, with the sealing enforcement scheduled to start on September 21, 2023.
- Legal Challenge and Court Ruling: Ati-19 contested the sealing order in the Administrative Court of Blagoevgrad but was ruled out of time due to not filing within the three-day limit. The court subsequently referred a question to the Court of Justice regarding the interpretation of Article 47(1) of the Charter in relation to national provisions on provisional enforcement measures.
Question
Must Article 47(1) of the Charter of Fundamental Rights of the European Union be interpreted as not precluding national rules on protection against the provisional enforcement of measures introduced by the national legislature to safeguard the interest referred to in Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, in the context of which the scope of judicial review is limited to the existence of damage suffered?
AG Opinion
The first paragraph of Article 47 of the Charter of Fundamental Rights of the European Union, in conjunction with Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax,
must be interpreted as meaning that:
In principle, it does not preclude legislation of a Member State which, as a whole, permits a court to stay an order for provisional enforcement of an administrative measure involving the sealing of business premises, adopted before a finding of irregularities in relation to value added tax (VAT), where that provisional enforcement could cause to the applicant damage which is serious or reparable only with difficulty.
However, it does preclude the scope of a judicial review of the application of that national legislation, in proceedings seeking a stay of the provisional enforcement order, from being limited solely to the existence of damage which is serious or reparable only with difficulty, thereby excluding any possibility that the court might examine, for the purposes of reaching its conclusion, whether the application for a stay is substantiated, in law and in fact, by arguments that will probably be upheld and which testify prima facie to defects which render that measure incompatible with European Union law.
Source
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Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
