Background
On 4 September 2025, Advocate General Kokott (AG Kokott) delivered her Opinion in the case C-121/24, Vaniz EOOD, on the conditions under which a third party may be held jointly and severally liable for unpaid VAT under national law, based on EU VAT legislation.
The case at hand concerned Vaniz EOOD, a taxable person established in Bulgaria, who had carried out transactions with a supplier who had declared but never paid the VAT due. The supplier was subsequently declared insolvent, dissolved and removed from the Bulgarian commercial register. The Bulgarian tax authorities tried to recover the unpaid VAT directly from Vaniz, relying on national rules imposing joint and several liability, arguing that Vaniz "knew or should have known" that the VAT collected by its supplier would not be paid.
Preliminary question & legal framework
In the context of a request for a preliminary ruling, the competent Bulgarian administrative court, asked whether national rules making a third party jointly liable for VAT were compatible with Directive 2006/112/EC (VAT Directive), in particular Articles 205 and 273 thereof, and the general principles of legal certainty and proportionality.
AG Kokott was invited to assess the compatibility of such national provisions with the VAT Directive, in particular Article 205, which allows Member States to provide for joint and several liability, and Article 273, which allows Member States to establish rules to ensure the accurate recovery of VAT and to prevent fraud.
Opinion of AG Kokott
First, AG Kokott noted that the EU framework allows joint and several liability only as an accessory mechanism, in accordance with the principles of proportionality and legal certainty. In her opinion, the national legislation exceeded the scope of the VAT Directive, in that it allowed the tax authorities to transfer primary liability for VAT to a third party after the dissolution of the actual debtor and the extinction of the tax debt.
AG Kokott further clarified that such liability cannot be based solely on the fact that the taxable person "should have known" of the risk of non-payment. As ruled by the ECJ Grand Chamber in the Scialdone case (C-574/15), the simple fact that VAT has not been paid, even if it has been declared, does not in itself constitute VAT fraud. Thus, the person who knew or should have known that its contractual partner would not pay the declared VAT cannot be accused of participating in fraud but can at most be accused of participating in that party’s failure to pay. The ‘participation in the failure to pay’ of a taxable person does not present the same degree of seriousness as participation in VAT fraud and, according to AG Kokott, does not warrant a finding to the effect that the person committed VAT fraud personally, nor a refusal of the right to deduct input tax, nor the imposition of liability for third-party tax debts.
It is important to note that AG Kokott underlined that, in the present case, the debtor had already ceased to exist before the imposition of secondary liability: in her view, if a tax debt has ceased to exist under national law, liability for that debt cannot be transferred to a third party under EU law without violating the accessory nature of Article 205. This would create a new principal obligation, which is not provided for in the VAT Directive.
Conclusion of AG Kokott’s Opinion
AG Kokott’s therefore concludes that national measures imposing joint and several liability in such circumstances — if the original debtor has become insolvent, was deregistered and the debt extinguished — are incompatible with EU law. However, she left open the possibility of imposing liability where the third party actively participated in the fraud or engaged in abusive practices, which has not been established in the case at hand.
Next step
To conclude, AG Kokott’s Opinion reflects a restrictive approach on the scope of joint and several liability for VAT, particularly in cases where tax authorities pursue third parties in response to an unrecovered tax liability. The ECJ’s decision is expected in the coming months and should offer an opportunity to clarify the limits of national liability mechanisms under the VAT Directive.
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