On 10 July 2025, the Court of Justice of the European Union entered judgment in case C-276/24, holding that a customer may be jointly and severally liable for its supplier’s arrears of VAT while at the same time being denied the right to recover the tax.
The case originated in Czechia where a tax authority requested a customer to pay, based on joint and several liability, the VAT which its supplier of goods did not pay to the treasury. The reason was that a VAT fraud was alleged to have occurred in the chain of trade involving a transaction made by that company. Subsequently, the authority denied the company a deduction of the VAT paid in respect of the transactions.
This caused a question to be referred to CJEU about whether the principle of proportionality allows the application of joint and several liability for the payment of unpaid VAT coupled with a refusal (concurrent and with respect to the same commercial transactions) of the right of deduction of VAT due to involvement in a tax fraud.
CJEU held that in such a situation of tax evasion, the system provided for by the VAT Directive allows the tax authorities to apply independently the refusal of the right to deduct VAT and joint and several liability under Article 205 of the VAT Directive, without them being required to make a choice between those two measures. According to the European court, “the refusal of the right to deduct VAT and joint and several liability (…) pursue two distinct and complementary objectives, consisting, respectively, of combating tax evasion and ensuring for the public exchequer the efficient collection of VAT from the most appropriate persons, in particular in a situation of evasion.”
The case confirms that member states may apply stringent measures against taxable persons who are involved in VAT fraud or evasion, whether knowingly or due to a lack of care in verifying their counterparties or transaction circumstances.
According to Polish courts, a possibility of avoiding joint and several liability does not automatically mean the availability of VAT deduction (see WSA Lublin, case no. I SA/Lu 142/21, judgment of 15 Oct 2021, and WSA Poznań, case no. I SA/Po 39/23, judgment of 25 Apr 2023), a conclusion that ties in with CJEU’s take on the two measures being applied independently of each other.
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