Judgment summary
The General Court (Fifth Chamber, sitting with five Judges) gave a preliminary ruling on questions referred by the Dioikitiko Protodikeio Thessalonikis (Administrative Court of First Instance, Thessaloniki, Greece) by decision of 6 May 2025 [1], [22]. The reference concerned the interpretation of Articles 204 and 205 of Council Directive 2006/112/EC on the common system of value added tax, as amended by Directive (EU) 2019/1995, and the principle of proportionality [1].
The Court answered four questions. It held that Article 204 does not preclude a tax representative of a taxable person established in another Member State from being regarded as liable for payment of the VAT, even where that representative is not involved in the taxable transactions, provided the representative has been appointed as such by the taxable person [45].
It held that Article 205, read in the light of proportionality, precludes an unconditionally worded joint and several liability of a tax representative who is not appointed as the person liable for payment, in circumstances where neither the tax administration nor the court can examine the representative's involvement, knowledge or good faith [56].
It held that the individual VAT identification number under which a transaction was carried out is not decisive for the answers to the first and second questions [68]. It held that a person appointed as liable for payment of VAT under Article 204 cannot also be held jointly and severally liable under Article 205 [73].
Background
AY operates as a customs agent and is registered in Greece as the tax representative of O, a company whose registered office is in Italy [11]. On the basis of a special power of attorney of 2022 lodged at the registry of the competent tax authority, AY was appointed as the 'tax agent' of O in Greece and made responsible for the tax representation of the company before the customs and tax authorities, the filing of periodic VAT declarations, the payment by and on behalf of the company of amounts fixed by the customs and tax authorities, and the completion of customs formalities connected with the customs clearance of cargoes [11].
O holds both an Italian VAT identification number and a Greek VAT identification number [12]. Its main business is the marketing of cellulose, a raw material used to produce toilet paper, and it stores goods from Finland in various storage facilities located in Greece [12].
In 2023, the Anexartiti Archi Dimosion Esodon (AADE) carried out an inspection covering the tax years 2020 to 2022 [13]. The inspection concerned intra-Community supplies made by O under its Greek VAT identification number to customers in Bulgaria and Italy, and intra-Community supplies made under its Italian VAT identification number to customers in Greece [13].
Following the inspection, the AADE found that O's Greek business had failed to pay VAT totalling EUR 3 344 061.47 [14]. The AADE adopted a decision against O and against AY, as tax representative, imposing immediate and urgent protective measures to safeguard the public interest, including the freezing of part of the deposits held by them in credit institutions in Greece [15].
AY brought an action for annulment of that decision before the referring court [16].
Core dispute
AY disputed her registration as tax representative of O and the imposition of joint and several liability for that company's tax debts [17]. She claimed that she merely submitted the VAT returns relating to transactions carried out by O under its Greek VAT identification number and paid the corresponding tax, but that she did not keep accounting records or conclude contracts for O, was not aware of the transactions carried out by O, and was not responsible for the transportation of the goods or the payment of the suppliers [17].
The AADE submitted that AY, as tax representative of O, was jointly and severally liable for the fulfilment of O's VAT obligations, both under Article 35(1)(c) of the VAT Code, relating to tax representatives of taxable persons established outside Greece as persons liable for payment, and Article 55 of that code, relating to persons jointly and severally liable together with the person liable, and that the protective measures were therefore correctly imposed [18].
The referring court was uncertain whether Article 205 permits joint and several liability against a person who merely submits VAT returns and pays the tax due without keeping accounts, the conditions under which a tax representative may be regarded as liable under Article 204, and whether a person may be held liable simultaneously under both Article 204(1) and Article 205 [19], [20], [21].
Court findings
The Court noted that the questions were based on different premisses, the first assuming AY was not liable for payment under Article 204(1) and the second and fourth assuming she was so classified [24]. It observed that AY claims to be neither the tax representative of O nor jointly and severally liable for O's debts [25]. It stated that it is in principle for the national court to determine whether the factual conditions triggering an EU rule are fulfilled, and it left that assessment to the referring court [26], [30].
On the second question, the Court found that Article 204 does not make the appointment of the tax representative as the person liable conditional on actual participation in the taxable transactions, and confers on Member States a margin of discretion to determine the conditions and procedures [33]. It held that an additional condition such as a requirement to participate in the transactions would restrict the option's scope and compromise the objective of efficient collection of VAT, while observing proportionality [42], [43], [44]. It therefore held that Article 204 does not preclude such a representative being regarded as liable, provided he or she has been appointed by the taxable person [45].
On the first question, the Court noted that the joint and several liability under Article 55 of the VAT Code is worded unconditionally, applying to a tax representative even where he or she acts in good faith and no fault can be imputed, and irrespective of involvement in the transactions [48]. It recalled that measures under Article 205 cannot go beyond what is necessary to preserve the public exchequer's rights, and that a system of strict joint and several liability is excessive where a person cannot release himself or herself by showing he or she had nothing to do with the acts of the person liable [52]. It held it would be disproportionate to attribute the loss of tax revenue to such a representative without the administration or court being able to determine involvement, knowledge, or good faith [55], [56].
On the third question, the Court observed that each Member State allocates its own individual VAT identification numbers and that a taxable person operating in several Member States must in principle be registered in each [61]. It held that the use of one or other identification number does not confer more or less influence on the representative over the taxable person's acts, and that it is the existence of one of the situations in Articles 193 to 197 and 199 and 200, not the use of an identification number, that determines liability under Article 204 [65], [67], [68].
On the fourth question, the Court noted that Article 204(1) renders the taxable person's VAT debt payable by the appointed person, while Article 205 provides for a joint and several obligation relating to a third party's debt [70]. Since Article 205 provides that the person jointly and severally liable cannot be the person liable for payment, the Court held that a representative appointed as liable under Article 204 cannot also be jointly and severally liable under Article 205 [72], [73].
Outcome
The Court ruled that Article 204 of Directive 2006/112, as amended, does not preclude a tax representative of a taxable person established in another Member State from being regarded as liable for payment of the VAT, even though not involved in the taxable transactions, provided the representative has been appointed as such by the taxable person [45].
It ruled that Article 205, read in the light of the principle of proportionality, precludes a tax representative not appointed as the person liable, but responsible for carrying out VAT filing obligations without keeping accounts or issuing accounting documents, from being held jointly and severally liable where neither the tax administration nor the competent court is empowered to determine involvement, knowledge, or good faith [56].
It ruled that the individual VAT identification number under which the transaction was carried out cannot be decisive for the answers to the first and second questions [68].
It ruled that a person appointed as the person liable for payment under Article 204 cannot also be held jointly and severally liable under Article 205 [73].
The decision on costs is a matter for the referring court [74].
Major issues / areas of contention
- Whether Article 204 of the VAT Directive precludes a tax representative of a taxable person established in another Member State from being regarded as liable for payment of VAT where the representative is not involved in the taxable transactions.
- Whether Article 205, read with the principle of proportionality, precludes unconditional joint and several liability of a tax representative who merely submits VAT returns and does not keep accounts, where the administration or court cannot examine involvement, knowledge or good faith.
- Whether the answer differs depending on whether the transaction was carried out under the taxable person's identification number in the Member State of establishment or in the Member State where the VAT is due.
- Whether a person may be held liable simultaneously as the person liable for payment under Article 204(1) and as jointly and severally liable under Article 205.
- The scope of the concept of 'tax representative appointed as the person liable for payment of the VAT' under Article 204.