On 16 July 2026, the Court of Justice ruled in Case C-158/25 that a director held liable for a company's VAT keeps a real right of defence.
The case
On 17 March 2018, the Luxembourg tax authority issued VAT assessments against a company for the years 2014 to 2016. The company's appeal was out of time and the VAT was not paid. On 16 May 2019, the authority called on the former day-to-day director to pay it. The Luxembourg courts held that the assessments had become final and could no longer be challenged by him.
The ruling
The right to an effective remedy in Article 47 of the Charter applies here, because national law uses this liability to collect VAT due under the VAT Directive. National law cannot stop the director from challenging the assessment incidentally, in his appeal against the demand for payment.
He must be able to dispute the facts and legal classifications on which his liability rests, including the VAT assessment and the unpaid amount, as far as useful for his defence. He can also rely on infringements of his fundamental rights in the taxation procedure.
The right has limits:
- It does not affect the binding effect of the assessment on the company itself.
- It covers only what is necessary to challenge the director's own liability.
- Access to the file can be balanced against confidentiality. The court may take into account what the director could know from his role in the company.
What to check
- Directors who receive such a demand should raise the merits of the assessment in that appeal, and ask for the file.
- Watch the appeal deadline on the demand itself. The ruling gives a right to challenge in that procedure.
- Member States with similar liability rules should check whether a final assessment can still be contested by the person called on to pay.
mr. J. el Khalfioui LL.M.