On February 13, 2025, the ECJ issued the AG Opinion in the case C-733/23 (Beach and bar management).
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 – Article 50 – Principle ne bis in idem – Failure to fulfil the obligation to issue a cash register receipt – Sealing of premises – Cumulation of penalties for the same offence – Principle of proportionality
Article in the EU VAT Directive
Charter of Fundamental Rights of the European Union (Charter): Articles 47, 49(3) and 50;
Treaty on the Functioning of the European Union: Article 325;
Article 273 of 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.
Summary
- Case Overview: The Bulgarian tax authorities imposed 85 financial penalties on “Beach and bar management” EOOD for failing to issue VAT receipts, along with a sealing measure of the business premises for 14 days.
- Legal Framework: The case examines the compatibility of national legislation with EU law regarding penalties for tax offenses, particularly the principle of ne bis in idem (no double jeopardy) and proportionality in punishment.
- Court’s Inquiry: The referring court questioned whether the sealing of premises, aimed at limiting damage from tax offenses, allows for additional financial penalties without violating EU law protections.
- Criminal Nature of Measures: The Advocate General’s opinion suggests that both the sealing measure and financial penalties are punitive in nature, emphasizing that the sealing of premises serves both preventive and deterrent purposes.
- Conclusion: The Advocate General proposes that EU law permits the imposition of multiple penalties for the same tax offenses, maintaining that the sealing measure retains its punitive character regardless of the number of offenses committed.
Facts
The applicant in the main proceedings is ‘Beach and bar management’ EOOD (hereinafter: management), which operates a business premises of a bar with restaurant. Tax inspectors examined the area, after which they drew up a report stating that no tax receipts were issued with the tax devices present in the restaurant for eighty-five payment transactions. The administrative authority has imposed two administrative coercive measures, the sealing of a business premises and an entry ban. The authority has also imposed eighty-five fines. An objection has been raised against this.
Consideration:
The referring court has doubts as to whether the adoption of the administrative coercive measures and the imposition of eighty-five fines are contrary to Article 325 TFEU and Article 273 of the VAT Directive. The measure was ordered for a total of eighty-five violations without the scope of the measure imposed for each violation being individualized. As a result, the proportionality of the measures and the ‘deterrent effect’ within the meaning of Article 325 TFEU cannot be examined. According to the referring court, the administrative coercive measure is not repressive, but restrictive. The referring court also doubts whether the right to an effective remedy is violated, because there is no defense mechanism for each individual violation.
Questions
1) Should Article 325 of the Treaty on the Functioning of the European Union, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 50 of the Charter of the fundamental rights of the European Union be interpreted as authorizing national legislation under which a general measure (‘sealing of business premises and ban on access’) may be ordered for multiple infringements of tax obligations, if the sole purpose of that measure is to reduce the adverse effects, including the extent of damage to the financial interests of the European Union, but not to punish the offender, without this measure restricting the possibility of initiating independent proceedings of a repressive nature against the latter for each of these violations of tax obligations to impose a measure in the form of a fine on the taxable person, requiring the national court to examine in each individual case and determine which of the two objectives is pursued by the previously ordered general administrative coercive measure ‘sealing of a business premises and ban on access’ – a preventive-restrictive or a repressive objective?
2) Should Article 325 of the Treaty on the Functioning of the European Union, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 49(3) of the Charter of Fundamental Rights of the European Union be interpreted as precluding a sanctions regime such as that at issue in the main proceedings which, regardless of the nature and gravity of the infringements, sets a high minimum limit for the sanction in the form of a fine, without providing for the possibility that a sanction below the legal minimum will be imposed or that it will be replaced by a lighter sanction?
3) Should Article 325 of the Treaty on the Functioning of the European Union, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, Article 47, first paragraph, Article 48(1) and Article 49(3) of the Charter of Fundamental Rights of the European Union be interpreted as precluding national legislation under which a general measure (‘sealing of a business premises and access ban”) can be ordered and, before it becomes final, can be provisionally enforced, without the judge or the offender himself having the opportunity to assess its proportionality to the seriousness of each individual administrative violation?
AG Opinion
Article 325 TFEU, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 50 of the Charter of Fundamental Rights of the European Union
must be interpreted as meaning that the considerations in the light of which the Court of Justice delivered the judgment of 24 May 2023, MV – 98 (C‑97/21, EU:C:2023:371), may be extended to a situation in which the national tax authority imposes 85 financial penalties on a taxpayer for successive failures to fulfil his or her obligations in respect of value added tax, while at the same time ordering a measure involving the sealing of, and the prohibition of access to, business premises for 14 days on account of the entirety of the tax offences committed.
Similar ECJ Cases
- C-97/21(MV-98) – Judgment – Sealing of business premises together with administrative penalty is not proportionate for failing to issue fiscal receipts
- C-489/10
- C-617/10 (Åkerberg Fransson) – A Member State can impose a tax penalty and a criminal penalty
Source
- Join the Linkedin Group on ECJ VAT Cases, click HERE
- VATupdate.com – Your FREE source of information on ECJ VAT Cases
