Judgment;Summary — ECLI:EU:C:2025:299
Date: 2025-04-30
Language of the case: Polish
Court formation: Ninth Chamber
Subject matter: Taxation;Principles, objectives and tasks of the Treaties;Value added tax;Fundamental rights;Charter of Fundamental Rights
Procedure: Reference for a preliminary ruling
Origin: Poland

Summary C-278/24 – 1 
Case C-278/24 [Genzyński] i 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
22 April 2024 
Referring court: 
Wojewódzki Sąd Administracyjny we Wrocławiu (Poland) 
Date of the decision to refer: 
31 January 2024 
Applicant: 
P.K. 
Defendant: 
Dyrektor Izby Administracji Skarbowej we Wrocławiu 
  
Subject matter of the main proceedings 
Conditions for joint and several liability of a member of the board of directors of a 
legal person for the VAT debt of that legal person. 
Subject matter and legal basis of the request 
Provisions of national law establishing joint and several liability of a member of 
the board of directors of a legal person for VAT debts and national practices in 
that respect assessed in the light of Directive 2006/112/EC, the TFEU, the Charter 
of Fundamental Rights, and the principles of legal certainty, legitimate 
expectations, equality before the law, non-discrimination and the right to sound 
administration. 
Questions referred for a preliminary ruling 
 
i The name of the present case is a fictitious name. It does not correspond to the real name of any party to the proceedings. 
EN 
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‘1. Must the provisions of Council Directive 2006/112/EC of 28 November 2006 
on the common system of value added tax ([…] ‘the VAT Directive’), including 
Articles 193, 205 and 273 thereof, in conjunction with Article 325 of the Treaty 
on the Functioning of the European Union ([…] ‘TFEU’), and Article 17 of the 
Charter of Fundamental Rights of the European Union ([…] ‘the Charter’), and 
also the principle of proportionality, be interpreted as precluding national 
legislation which provides for a mechanism whereby a member of the board of 
directors of a legal person is jointly and severally liable for the VAT debts of that 
legal person without it having first been established whether that member of the 
board of directors acted in bad faith or whether his or her conduct could be found 
to constitute a culpable error or negligence? 
2. Must the provisions of the VAT Directive, including Articles 193, 205 and 273 
thereof, in conjunction with 325 TFEU, the principle of legal certainty, the 
principle of legitimate expectations, and the principle of the right to sound 
administration derived from Article 41 of the Charter, in conjunction with 
Article 2 of the Treaty on European Union ([…] the rule of law and respect for 
human rights) and Article 47 of the Charter (effective remedy, right to a court), be 
interpreted as precluding a national practice which, in order to escape joint and 
several liability for the VAT debts of a legal person with a single creditor, requires 
a member of the board of directors to submit an insolvency application, which is 
unenforceable under national insolvency law and practice and consequently 
infringes the essence of the right to property (Article 17 of the Charter)? 
3. Must the provisions of Articles 193, 205 and 273 of the VAT Directive, in 
conjunction with Article 325 TFEU, and the principle of equality before the law 
and the principle of non-discrimination (Articles 20 and 21 of the Charter), be 
interpreted as precluding national legislation [cited in point 1] which allows 
unequal treatment of members of the board of directors of legal persons, such that 
a member of the board of directors of a legal person with more than one creditor 
may escape liability for the company’s debts by submitting an insolvency 
application, whereas a member of the board of directors of a legal person with 
only one creditor does not have the possibility of effectively submitting such an 
application, with the result that he or she is deprived of the possibility of escaping 
joint and several liability for the legal person’s VAT debts and of the right to an 
effective remedy (Article 47 of the Charter)?’ 
Provisions of European Union law relied on 
Articles 2 and 4(3) TUE; 
Article 352(1) TFEU; 
Articles 17(1), 20, 21(1) and 47 of the Charter of Fundamental Rights; 
Articles 193, 205, and 273 of Council Directive 2006/112/EC of 28 November 
2006 on the common system of value added tax 
GENZYŃSKI 
 
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Provisions of national law relied on 
Article 103(1) of the Ustawa z dnia 11 marca 2004 r. o podatku od towarów i 
usług (Law of 11 March 2004 on the tax on goods and services; ‘Law on VAT’); 
Articles 26, 91, 107, 108 and 116 of the Ustawa z dnia 29 sierpnia 1997 r. 
Ordynacja podatkowa (Law of 29 August 1997 establishing the Tax code; ‘Tax 
Code); 
Articles 1, 2, 10, 11, 20, 21, 22 and 29 of the Ustawa z dnia 28 lutego 2003 r. 
Prawo upadłościowe (Law of 28 February 2003 on insolvency; ‘Law on 
insolvency’); 
Article 130 of Ustawa z dnia 17 listopada 1964 r. Kodeks postępowania 
cywilnego (Law of 17 November 1964 establishing the Code of Civil Procedure; 
‘Code of Civil Procedure’); 
Article 299 of the Ustawa z dnia 15 września 2000 r. Kodeks spółek handlowych 
(Law of 15 September 2000 establishing the Companies Code; ‘Companies’ 
Code’) 
Succinct presentation of the facts and procedure 
1 By decision of 15 June 2022, the first-tier tax authority held P.K. (‘the applicant’) 
jointly and severally liable for the value added tax (‘VAT’) arrears of E. Sp. z o.o. 
(‘the company’) for May, June, July and August 2017 and interest for late 
payment totalling PLN 1 306 639.70 under, inter alia, Articles 107(1) and (2)(2) 
and Article 108(1) of the Tax Code, in conjunction with Article 116 thereof. 
According to the grounds for the decision of the first-tier tax authority, in January 
2014 the applicant was appointed chair of the company’s board of directors. In 
September 2017, the applicant resigned from that post. It was stated that the 
company had, in respect of the above monthly periods, submitted VAT 
declarations showing the amounts of VAT payable. It subsequently submitted tax 
return adjustments for June, July and August 2017. Since the debts were not paid 
within the statutory payment period, the amounts due at issue were turned into 
arrears. The first-tier tax authority, after issuing reminders, issued enforcement 
orders. A number of enforcement activities were also carried out, however, the 
assets held by the company did not allow the entire tax arrears to be enforced. 
Therefore, the first-tier tax authority, acting as enforcement authority, 
discontinued the enforcement proceedings conducted against the company as they 
were ineffective. On the basis of all the evidence collected in the case, it was 
found that the conditions for establishing the liability of a member of the board of 
directors for the company’s tax arrears were met since the applicant was a 
member of the board of directors at the time the arrears arose and enforcement 
against the company’s assets was ineffective (positive conditions). It was also 
found that the company had permanently ceased to pay its debts to the tax 
authority since 25 June 2017 (the statutory deadline for payment of the VAT debt 
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for May 2017). The applicant failed to demonstrate that he had submitted an 
insolvency application in due time or that restructuring proceedings had been 
initiated or an arrangement had been approved in proceedings for the approval of 
an arrangement, or that the failure to submit an insolvency application has 
occurred without there being any fault on his part. He also failed to state the 
company’s assets, the recourse to which would enable the company’s tax arrears 
to be paid to a significant extent. According to the grounds for that decision, by 
letter of 11 April 2022 the applicant requested, inter alia, that the evidence be 
supplemented by taking evidence from the case files of all proceedings conducted 
against the company by the first-tier tax authority, in the period from 2016 to the 
end of 2017, in order to establish the proceedings in which, the time at which, and 
the extent to which, judgments were given on security over the company’s assets 
or any other procedural activity resulting in the seizure, or withholding, of the 
company’s assets (including credit balances on bank accounts and amounts owed 
by way of refund of VAT overpayments); that the applicant be questioned as to 
the above circumstances; and that the banks maintaining the company’s bank 
accounts be asked to provide certificates as to the dates and extent to which 
seizures on the company’s bank accounts were carried out in years 2016-2017. 
According to the applicant, the abovementioned evidence was intended to show 
that the tax authorities’ action had prevented action by the board of directors, 
which, in the circumstances referred to above, had not had an opportunity to 
submit an insolvency application. By order of 13 May 2022, the request for the 
taking of evidence, which in the view of the first-tier tax authority was unrelated 
to the present tax proceedings, was refused. 
2 Following the lodging of an appeal by the applicant, the Dyrektor Izby 
Administracji Skarbowej we Wrocławiu (Director of the Tax Chamber, Wrocław) 
(‘the appellate authority’) upheld the decision of the first-tier tax authority by 
decision of 18 October 2022. 
3 Consequently, the applicant brought an action before the referring court. 
The essential arguments of the parties in the main proceedings 
4 The applicant claimed that the contested decision infringed, inter alia, Article 11 
of the Law on insolvency, in conjunction with Articles 20(1) and 21(1) thereof, 
through misinterpretation thereof and the assumption that insolvency may be 
declared against a debtor-trader who has only one creditor, despite the fact that it 
follows from the abovementioned provisions, the established position of the case-
law and academic legal writings, and also the uniform practice of insolvency 
courts, that a condition for declaring a debtor insolvent and instituting insolvency 
proceedings against him or her is failure to meet monetary obligations vis-à-vis at 
least two creditors because the aim of insolvency proceedings is to satisfy the 
debts owed to all creditors equally from the overall assets of the debtor; and 
Article 116(1)(1)(b) of the Tax Code, through non-application thereof, because the 
applicant, during the period in which he was member of the company’s board of 
GENZYŃSKI 
 
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directors, had neither the legal nor factual bases for submitting an insolvency 
application, with the result that the first-tier tax authority incorrectly found that 
the applicant was liable for the company’s tax debts. 
5 The defendant argued that the applicant was able to submit an insolvency 
application where there was only one creditor since the condition for set out in 
Article 116(1)(1) of the Tax Code relates to the fact of submitting an application 
and not the effect of that application, which is the declaration of insolvency. 
Reference was made to the case-law of administrative courts, which shows that 
acceptance of the applicant’s view would place those members of the board of 
directors whose companies had only one creditor – the Public Exchequer – in a 
position of advantage vis-à-vis those whose companies had at least two creditors. 
There would therefore be manifestly unequal treatment of members of the board 
of directors (third parties) depending on how many creditors the companies 
managed by them had and a weakening of the guarantee function of third party 
liability. 
Succinct reasoning for the request 
Reasoning for the first question referred 
6 Outside the limits laid down therein, Article 273 of the VAT Directive does not 
specify either the conditions or the obligations which the Member States may 
impose. It therefore confers on the Member States a margin of discretion with 
regard to the means of ensuring collection of all the VAT due on their territory 
and for combating fraud. The Member States are required to exercise that power 
in accordance with European Union law and its general principles, and 
consequently in accordance with the principle of proportionality. National 
measures which bring about, de facto, a system of joint and several liability based 
on strict liability go beyond what is necessary to preserve the public exchequer’s 
rights. Imposing responsibility for paying VAT on a person other than the person 
liable to pay that tax, without allowing him or her to escape liability by providing 
proof that he or she had nothing whatsoever to do with the acts of the person liable 
to pay the tax, must be considered contrary to the principle of proportionality. It 
would be clearly disproportionate to hold that person unconditionally liable for the 
shortfall in tax caused by acts of a third party over which he or she has no 
influence whatsoever. Accordingly, the exercise by Member States of the power 
to designate a joint and several debtor other than the person liable to pay the tax in 
order to ensure its effective collection must – in the light of the principles of legal 
certainty and proportionality – be justified by the factual or legal relationship 
between those persons. The fact that the person other than the person liable to pay 
the tax acted in good faith, exhibiting all the due diligence of a circumspect trader, 
that he took every reasonable measure in his power and that his participation in 
fraud is excluded are important points in deciding whether that person can be 
obliged to account for the VAT owed (judgments of the Court of Justice of 
21 December 2011, Vlaamse Oliemaatschappij, C-499/10, EU:C:2011:871, 
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paragraph 26 and of 20 May 2021, ALTI, C-4/20, EU:C:2021:397, paragraphs 37 
and 76). 
7 In the case-law of Polish ordinary courts, the tendency to treat the joint and 
several liability of a director of a commercial company under Article 116 of the 
Tax Code as a guarantee based on strict liability has become established. That 
creates an imbalance between the fiscal interest and the interest of the individual. 
8 The case-law notes that the liability of a director is to be as follows: subsidiary 
(enforcement of a tax debt against a particular third party depends on the 
ineffectiveness of actions aimed at recovering a tax debt from the taxable person 
for the purposes of VAT itself – liability for another person’s debt); joint and 
several (at some point a tax creditor may assert a claim against both the taxable 
person and the third party); it does not arise by force of law, but requires the 
adoption of decision giving rise to rights (the tax authority is required to adopt 
such a decision); a guarantee (securing public-law liabilities against avoidance of 
liability by taxable persons, payers, and collectors). It further points out that third 
party liability has no relation to the tax burden on the taxable person or the 
instrumental obligation of the payer and collector. 
9 A director is jointly and severally liable, without any individualised limitation, 
where the tax authority demonstrates that the positive conditions have been met 
and the director him or herself does effectively argue that the conditions for 
exemption are met. The list of conditions is exhaustive. 
The positive conditions include: 
(1) the emergence of tax arrears of a commercial company – a taxable person 
for VAT purposes (that is to say non-payment of a tax debt); 
(2) for the period during which the director performed a management function – 
what is important is the holding of formal powers by a director during a particular 
period, regardless of whether the liable director actually dealt with the entity’s 
interests; 
(3) ineffectiveness of enforcement under way against the taxable person for 
VAT purposes. 
The conditions for exemption include (only): 
(1) demonstration by a director that he or she has submitted an insolvency 
application in due time or that restructuring proceedings have been initiated or an 
arrangement has been approved in proceedings for the approval of an 
arrangement. The condition relates only to the submission of an application and 
not to the effect of the application, which is the declaration of insolvency; 
(2) demonstration by a director that the failure to submit an insolvency 
application occurred without there being any fault on his or her part – it relates to 
GENZYŃSKI 
 
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intentional and unintentional fault where the director of a company, while 
exhibiting all due diligence in conducting his or her affairs, failed to submit such 
an application for reasons beyond his or her control; 
(3) a director has stated the company’s assets, recourse to which will enable the 
company’s tax arrears to be paid – to a significant extent – that enforcement must 
be feasible and lead to the debts owed to the creditor being satisfied. 
10 It follows from the foregoing that the provision governing joint and several 
liability in no way relates to the assessment of a director’s conduct, such as bad 
faith or lack of due diligence (culpable error or negligence) in the course of his or 
her conduct of the company’s affairs. Nor does it relate to a time connected with 
exercise of his or her functions at the point when a condition relating to the non-
payment of VAT was met. The element of fault is only considered in the context 
of failure to submit an insolvency application. Thus, a director who has been 
found to be jointly and severally liable cannot successfully rely on evidence of the 
circumstances set out in the case-law of the Court of Justice on the broader aspect 
of fault. This leads to a situation where a director could prove that he or she acted 
with due diligence, but even pointing to such circumstances, or even proving 
them, does not release him or her from liability where such a condition for 
exemption is not met. The foregoing indicates that in the Polish legal system, the 
joint and several liability of a director is based on strict liability and is 
unconditional in nature. Therefore, in the light of the provisions of the VAT 
Directive can such liability go beyond the scope of the requirement of due 
diligence and the principle of fault? 
11 In the present case, the applicant argues that the situation of non-payment of VAT 
from tax returns was the effect of a series of actions by the tax administration, and 
in particular the securities taken, which de facto prevented him from disposing of 
the company’s assets while he was a director. Thus, they prevented him from 
paying the VAT arising from the tax returns in subsequent accounting periods 
and, consequently, led to the initiation of proceedings concerning his liability. The 
tax authorities refused to take the evidence requested by the applicant, despite the 
fact that they held it (they themselves had carried out those acts), because, in their 
view, such evidence was irrelevant to the case at issue. 
12 In conclusion, the referring court has well-founded doubts as to whether the joint 
and several liability of a director arising from provisions of national law is 
compatible with the aim of Article 273 of the VAT Directive, in conjunction with 
Article 325 TFEU, and infringes the principle of proportionality since it is a 
mechanism based on strict liability. That is particularly so since that strict liability 
may encompass the effects of the actions of the tax authorities themselves, as is so 
in the present case. 
13 The rule is that, under Article 193 of the VAT Directive, VAT is to be payable by 
any taxable person, except where it is payable by another person in the cases 
referred to in Articles 194 to 199 and Article 202 thereof. In addition, under 
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Article 205 of the VAT Directive, another person, already jointly and severally 
liable, will be liable for payment of VAT in the cases referred to therein, if the 
Member State so decides. Whilst acknowledging that Article 273 of the VAT 
Directive, in conjunction with Article 325 TFEU, makes it possible to introduce a 
procedure for joint and several liability of directors and the taxable person for 
VAT, it should take account of the element of fault more broadly than that 
contained in the provision of Polish national law, which will have the effect of 
broadening the scope of the proceedings conducted in that regard and raises 
doubts as to whether the current joint and several liability of directors infringes 
the principle of proportionality. 
14 That liability cannot be regarded as equivalent to that of a taxable person for the 
purpose of VAT since it constitutes an exception. A director must, in the course of 
proceedings deciding on his or her personal liability, be given the opportunity to 
prove that, in representing the taxable person for the purposes of VAT, he or she 
did not act in bad faith and that his or her conduct cannot be attributed to culpable 
error or negligence. The impossibility of escaping such liability infringes the 
property rights of such a director (Article 17 of the Charter) since he or she is 
deprived of all or part of his or her assets as a consequence of the decision on joint 
and several liability. 
15 Shaping the rules on the joint and several liability of a director in the manner set 
out above constitutes arbitrariness on the part of the tax authorities and gives rise 
to justified doubts on the part of the referring court as to whether the provisions of 
the VAT Directive, the principle of proportionality, and Article 17 of the Charter 
are infringed. 
Reasoning for the second question referred 
16 Article 273 of the VAT Directive is not a provision that authorises the Member 
States to derogate freely from the rules of the directive on the VAT system and 
permits other obligations only where necessary to ensure the correct collection of 
VAT and to prevent evasion. The case-law of the Court of Justice indicates that 
the Member States must respect the general principles of law which form part of 
the legal order of the European Union, among which are the principle of legal 
certainty and the fundamental rights of the European Union. 
17 The doubts that the referring court has in the circumstances of the case at issue 
relate to the national practice applicable to the conditions for exemption which 
relieve a director of liability. That is the condition according to which a director 
may escape joint and several liability either if he or she demonstrates that he or 
she submitted an insolvency application in due time or if his or her failure to 
submit an insolvency application occurred without there being any fault on his or 
her part. The structure of that provision is clear in so far as where insolvency 
proceedings are initiated against a legal person, the debts owed to the tax creditor 
are satisfied on the same basis as those owed to other creditors. 
GENZYŃSKI 
 
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18 Analysing the provisions of the Law on insolvency and the academic writings on 
insolvency law, it is not possible to conduct insolvency proceedings against only 
one creditor. The declaration of insolvency may take place only if there are at 
least two creditors of the trader to whom the application relates, and must do so in 
view of the fundamental purpose which the instrument of insolvency serves, 
namely to satisfy the debt owed to all the debtor’s creditors equally. 
19 However, the tax authorities take the position (supported by the case-law of the 
administrative courts) that, in order to escape of the abovementioned liability, a 
director must submit an insolvency application even when there is a single 
creditor, which is inconsistent with (1) the essence and principles of insolvency 
law; (2) the provisions of the Law on insolvency; (3) the case-law of the ordinary 
courts; and (4) the academic writings on this area of law. It is pointed out that the 
application should be submitted when the conditions for the debtor’s insolvency, 
as set out in Articles 10 and 11 of the Law on insolvency, are met, even 
disregarding Article 1(1)(1) of the Law on insolvency. Therefore, if the debtor 
does not fulfil his or her monetary obligations, he or she must always submit such 
an application. The obligation to submit an insolvency application does not mean 
that that application and the declaration of that insolvency by the insolvency court 
are effective. The debtor is only required to assess whether he or she is fulfilling 
his or her monetary obligations, whilst the insolvency court alone is entitled to 
assess whether the conditions for declaring insolvency have actually been met. 
Therefore, failure to fulfil obligations payable to one creditor does not exempt a 
director from submitting an insolvency application. It is pointed out that this arises 
from the guarantee and subsidiary nature of third party liability. 
20 The presentation of the above view is intended to give an idea of the situation in 
which a director finds him or herself. Due diligence in the conduct of affairs, 
including knowledge of generally applicable law and refraining from actions 
which, for example, result in unnecessary expenses, is required from a director, as 
a person representing a commercial company. This follows directly from 
Article 209(1)(1) of the Companies Code, under which a director is, in the 
performance of his or her duties, to exercise due diligence resulting from the 
professional nature of his or her activities and to maintain loyalty to the company. 
In the context of VAT, acting in good faith by a taxable person for the purposes of 
VAT is a principle of the common VAT system, that is to say director 
representing a taxable person for the purposes of VAT must (or at least should) be 
aware of such standards of conduct. 
21 The submission of an insolvency application in a situation where there is a single 
creditor – the Public Exchequer – is by the very nature of these proceedings an 
ineffective action (one creditor is not several creditors and insolvency proceedings 
are universal and not singular, as in the case of administrative enforcement). It is a 
well-known that insolvency courts return such an application with the effect of 
rendering the action ineffective retroactively (Article 130(2) of the Code of Civil 
Procedure). That leads to the conclusion that the submission of such an 
application, ex lege, is ineffective under the law (‘shall have no effects which the 
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Law attaches to it’). It should be noted in passing that the preparation of such an 
application requires a financial analysis, the drafting of a financial statement, 
often the engagement of a lawyer, and the bearing of substantial costs in the form 
of court fees and advance payments for the costs of court proceedings. 
22 A director is entitled to expect from the State authorities that the provisions of the 
Law on insolvency and also the case-law of the insolvency courts will be taken 
into account in their entirety in analysing the condition for exemption since it 
relates directly to the system of national insolvency law. 
23 Requiring that an application be submitted solely on the basis of Article 116 of the 
Tax Code is contrary to the well-known VAT principle of substance over form. 
The essence of the application is not the submission thereof per se, but the 
initiation of an effectively appropriate procedure (in this case an insolvency 
procedure). It should be noted again that, under Article 130(2) of the Code of 
Civil Procedure, such an application is subject to return, and the consequence of 
that return is that the application itself has no effect. A director should submit an 
insolvency application only when the actual conditions for doing so are met. 
Otherwise, the action is ineffective, pointless and generates unnecessary costs. It 
should be added that those costs will place a burden on the company’s assets, 
reducing the degree to which the debt owed to the any creditor is satisfied. 
Moreover, they constitute grounds for a claim that a director is acting to the 
detriment of the company. It should be added in passing that the initiation of any 
insolvency procedure limits the rights of creditors and makes recourse to the 
debtor’s assets more difficult. 
24 Since the national legislature has introduced such joint and several liability, which 
by nature is not parallel but subsidiary to the liability of the taxable person for the 
purposes of VAT, and created conditions under which a director may escape such 
liability, that condition must be possible to fulfil. This is required not only by the 
principle of legal certainty, but also by the principle of legitimate expectations and 
the values of the rule of law and respect for human rights. 
25 In conclusion, the referring court has well-founded doubts as to whether a national 
practice, as set out above, goes beyond the margin of discretion, exceeding the 
aim of Article 273 of the VAT Directive, in conjunction with Article 325 TFEU 
and Articles 193 and 205 of the VAT Directive, thereby breaching the principles 
of legal certainty and legitimate expectations, and also the principle of sound 
administration, and consequently Articles 17 and 4 of the Charter, in conjunction 
with Article 2 TEU. 
Reasoning for the third question referred 
26 The scope of discretion and the abovementioned structuring of one of the 
conditions for exemption from joint and several liability of the members of the 
board of directors raises doubts on the part of the referring court as regards 
compliance with the principle of equality before the law (including the principle 
GENZYŃSKI 
 
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of non-discrimination – Articles 20 and 21 of the Charter) and consequently the 
right to an effective remedy – Article 47 of the Charter. 
27 On the basis of the guidance provided by the case-law of the ECtHR and the Court 
of Justice, it is first necessary to assess the comparability of the situations. The 
purpose of the national measure under consideration is to introduce joint and 
several liability for an entity other than a taxable person for the purposes of VAT 
(Article 193 of the VAT Directive) or a person other than a taxable person for the 
purposes of VAT (Article 205 of the VAT Directive), namely a member of the 
board of directors. Being a director of legal person is the common characteristic 
which justifies treating those persons equally. 
28 One of the conditions for exemption includes a differentiating criterion – the 
number of creditors. A director of a legal person with more than one creditor may 
escape liability for the company’s debts by submitting an insolvency application, 
whereas a director of a legal person with only one creditor does not have the 
possibility of effectively submitting an application. In other words, the first group 
of directors may seek protection from creditors in insolvency proceedings, but the 
second group cannot have such protection due to the nature of insolvency 
proceedings. Thus, there is a situation where the national legislature has 
differentiated between members of the board of directors, that is to say a 
derogation from equality before the law. 
29 This is confirmed by the case-law showing that there is manifestly unequal 
treatment of directors (third parties) depending on how many creditors the 
companies managed by them had. It is also pointed out that the inequality leads to 
a weakening of the guarantee function of third party liability. That thinking 
involves accepting such liability as strict liability. 
30 In addition, the case-law attempts to remedy the inequality found by creating a 
new condition under Article 116 of the Tax Code (since it does not arise from that 
provision) requiring the submission of an insolvency application by a director of a 
company with a single creditor, despite the fact that such an application is 
manifestly unfounded and such an action constitutes a contra legem interpretation. 
31 A director of a legal person with several creditors may protect him or herself from 
joint and several liability by submitting an insolvency application at the time of 
insolvency. Thus, by performing acts of diligence and initiating a procedure 
protecting him or her from creditors, he or she may escape such joint and several 
liability since the creditor – the State Exchequer – is not a preferential creditor. A 
director of a legal person with a single creditor, who, despite performing acts of 
diligence, cannot escape such liability – there are no legal grounds under 
insolvency law – is in a much worse situation. His or her legal situation will not 
be changed by the case-law, which, in accordance with Article 116 of the Tax 
Code, introduces an obligation for him or her to submit an application for such 
insolvency. This rather highlights the resulting inequality created by the 
legislature, and also demonstrates the thinking about that condition for exemption 
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as having a nugatory dimension, despite the fact that the essence thereof is closely 
correlated with the system of insolvency law. 
32 In conclusion, the referring court has well-founded doubts as to whether the 
structure of the national measure providing for the liability of a director for the 
debts of a taxable person for the purposes of VAT by creating the above 
conditions for exemption goes beyond the margin of discretion, exceeding the aim 
of Article 273 of the VAT Directive, in conjunction with Article 325 TFEU and 
Articles 193 and 205 of the VAT Directive, and breaching the principle of 
equality before the law (Articles 20 and 21 of the Charter) and the right to an 
effective remedy (Article 47 of the Charter) where the applicant has no effective 
means of protecting his right to property.