ECJ: AG Opinion Case No. C-1/21 (MC)-Liability of a company acting in bad faith results in its being deprived of assets and could not pay its interest tax debts
AG Kokott’s opinion on ECJ Case No. C-1/21, delivered by the European Court of Justice, which clarifies Bulgarian VAT laws regarding overdue tax debts.
A Bulgarian taxpayer (MC) got a tax assessment notice for unsettled tax liabilities for a VAT return ending in December 2014. The taxpayer was found accountable for third-party tax obligations.
Background
The tax authorities determined that the taxpayer behaved in bad faith by inflating their revenue multiple times to avoid paying VAT and failed to provide appropriate documentation of the increased income. Liable for the debt up to the amount of the payments made or, accordingly, the loss in assets.
Article 89 (Tax Must be Paid)
If there is a result for the period in the form of tax payable, the registered individual is required to pay the tax to the state budget by depositing it into the account of the tax authorities within the time limit for submitting the VAT return for that tax period.
Article 273 (VAT Directives)
EU Members may implement further responsibilities that they think essential to guarantee the accurate payment of VAT and to avoid fraud, pursuant to a need for equal treatment between domestic transactions and operations conducted between the Member States by a taxable person, provided that such responsibilities would not give rise to formalities associated with border checkpoints in commerce between the Member States.
AG Opinion
The EU common VAT system lacks regulations on taxpayer behavior, which leads to nonpayment of tax bills owed by a firm under the joint and multiple liability regimes.
Source: eur-lex.europa.eu
