Judgment;Summary — ECLI:EU:C:2025:241
Date: 2025-04-03
Language of the case: Bulgarian
Court formation: Tenth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

summary statements, that this identification number of the taxable person or the recipient of the goods or services be referred to in those documents (judgment of 14 March 2013, Ablessio, C‑527/11, EU:C:2013:168, paragraph 20). 30 The Court has held that, first, it follows from Articles 213 and 214 of the VAT Directive that Member States have a certain discretion when they adopt measures to ensure the identification of taxable persons for the purposes of VAT and, second, that discretion cannot be unrestricted. Although it is possible for a Member State to refuse to assign an individual number to a taxable person, it cannot do so without legitimate grounds (see, to that effect, judgments of 14 March 2013, Ablessio, C‑527/11, EU:C:2013:168, paragraphs 22 and 23, and of 18 November 2021, Promexor Trade, C‑358/20, EU:C:2021:936, paragraph 41). 31 As regards, on the other hand, the adoption of measures to remove VAT identification numbers previously allocated, it must be specified that the VAT Directive does not contain any provisions generally authorising Member States to provide, in their national legislation, for removal from the VAT register. 32 It is true that Articles 363 and 369r of the VAT Directive provide for cases in which the Member State is to remove a taxable person from the identification register provided for under the special scheme for services supplied by taxable persons not established within the European Union, or under the special scheme for distance sales of goods imported from third territories or third countries. That removal is to take place, in particular, where the taxable person persistently fails to comply with the rules relating to the special scheme at issue. However, such a removal from the VAT register does not relate to the VAT identification number allocated pursuant to Article 214 of that directive, but only to the identification number allocated to the taxable person for the purposes of those special schemes, as is clear from Article 362 and Article 369q of that directive. 33 That said, first, Article 17(1)(c) and Article 23 of Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax (OJ 2010 L 268, p. 1) refer to VAT identification numbers issued which have become invalid, and in particular to numbers being removed from the register where the persons have declared false data in order to obtain VAT identification or have failed to communicate changes to their data. 34 Second, in accordance with the settled case-law of the Court, it follows from Articles 2 and 273 of the VAT Directive, read in conjunction with Article 4(3) TEU, that Member States are required to take all legislative and administrative measures appropriate for ensuring collection of all the VAT due on their territory and for preventing fraud (judgments of 2 May 2018, Scialdone, C‑574/15, EU:C:2018:295, paragraph 26, and of 17 May 2023, Cezam, C‑418/22, EU:C:2023:418, paragraph 26). 35 In addition, according to similarly settled case-law of the Court, Member States have a legitimate interest in taking appropriate steps to protect their financial interests, and the prevention of tax evasion, avoidance and abuse is an objective recognised and encouraged by the VAT Directive (judgment of 14 March 2013, Ablessio, C‑527/11, EU:C:2013:168, paragraph 28 and the case-law cited). 36 In the light of the provisions and case-law referred to in paragraphs 30 to 35 above, it must be considered that, in the exercise of their discretion concerning the adoption of measures which seek to ensure the correct collection of the tax and to prevent fraud, Member States may, where appropriate, provide for the removal of a taxable person from the VAT register. 37 In so far as it is apparent from the documents before the Court that the national legislation at issue in the main proceedings, which provides for the removal of a taxable person from the VAT register, is designed as a penalty imposed on that taxable person for the repeated failure to comply with its VAT obligations, it must be borne in mind that, in the absence of harmonisation of EU legislation in the field of the penalties applicable in cases of non-compliance with the conditions laid down by arrangements established under such legislation, Member States have the power to choose the penalties which seem to them to be appropriate (judgment of 17 May 2023, Cezam, C‑418/22, EU:C:2023:418, paragraph 27 and the case-law cited). 38 They must, however, exercise that power, first, in accordance with EU law and its general principles, and, consequently, in accordance with the principles of proportionality and fiscal neutrality (judgment of 17 May 2023, Cezam, C‑418/22, EU:C:2023:418, paragraph 27 and the case-law cited). In order to assess whether a penalty is consistent with the principle of proportionality, account must be taken of, inter alia, the nature and the degree of seriousness of the infringement which that penalty seeks to sanction, and of the means of establishing the amount of that penalty (judgment of 11 April 2024, Legafact, C‑122/23, EU:C:2024:293, paragraph 42 and the case-law cited). 39 Second, when exercising those powers, the Member States must ensure compliance with the requirements pertaining to the right to good administration, reflecting a general principle of EU law, which is applicable in a tax inspection procedure (see, to that effect, judgment of 16 May 2024, Slovenské Energetické Strojárne, C‑746/22, EU:C:2024:403, paragraph 50). 40 It should also be borne in mind that, when choosing the penalties, Member States are required to comply with the principle of effectiveness, which requires effective and dissuasive penalties to be established to counter infringements of harmonised VAT rules and to protect the financial interests of the European Union (judgment of 11 April 2024, Legafact, C‑122/23, EU:C:2024:293, paragraph 43 and the case-law cited). 41 Removal from the VAT register provided for by national legislation vis-à-vis taxable persons who fail to comply with their obligations in respect of that tax, without analysing the nature of the infringements committed, cannot be regarded as a penalty which complies with the principles and the requirements referred to in paragraphs 38 to 40 above. 42 In view of the significant role, recalled in paragraphs 28 and 29 above, played by the VAT identification number as regards proof of the tax status of the taxable person and of the fact that transactions were actually carried out, purchasers of goods and recipients of services supplied by a taxable person who has been removed from the VAT register and therefore does not have a valid identification number for VAT purposes will not, in particular, be certain as to whether they would be able to demonstrate their entitlement to deduct the input VAT paid on that supply of goods or of services. 43 In those circumstances, such potential purchasers of goods and recipients of services could be discouraged from entering into transactions with a taxable person who has been removed from the VAT register. 44 That negative practical consequence of the removal from the VAT register means that the taxable person may be led to cease activity and thus resembles a temporary or permanent prohibition on pursuing that activity. It follows that, if the removal from the VAT register were to be perceived as a penalty for the repeated failure by the taxable person to comply with VAT obligations, that would be a particularly severe penalty. 45 In accordance with the case-law referred to in paragraph 38 above, such a penalty cannot be regarded as consistent with the principle of proportionality, in so far as it is imposed without examining the nature and the degree of seriousness of the infringements committed by the taxable person in order to determine whether such a severe penalty is warranted or whether another, less severe penalty is sufficient in the circumstances that led to the imposition of such a penalty. 46 Legislation which allows the tax authorities to remove a taxable person from the VAT register without providing for an obligation on the part of those authorities to examine fully the conduct of that taxable person in order to assess whether there is a risk to tax revenue and a likelihood of VAT fraud goes beyond what is necessary for ensuring the collection of all the VAT and combating VAT fraud. 47 Without such a full examination of the conduct of the taxable person at issue, it is impossible to ascertain exactly the nature and the extent of any tax fraud committed by that taxable person and, consequently, to assess whether the removal of that taxable person from the VAT register constitutes an appropriate penalty for ensuring the collection of all the VAT and combating VAT fraud. 48 In addition, as regards the requirements pertaining to the right to good administration, referred to in paragraph 39 above, the Court has held that administrative authorities such as the national tax authority must, when carrying out their inspection duties, conduct a diligent and impartial examination of all the relevant matters so that they can be sure that, when they adopt a decision, they have at their disposal the most complete and reliable information possible for that purpose (judgment of 16 May 2024, Slovenské Energetické Strojárne, C‑746/22, EU:C:2024:403, paragraph 50 and the case-law cited). 49 Lastly, it must be borne in mind that, according to the case-law of the Court, the principle of legal certainty requires the tax position of the taxable person, having regard to his or her or its rights and obligations vis-à-vis the tax authority, not to be open to challenge indefinitely (judgment of 5 December 2024, Modexel, C‑680/23, EU:C:2024:1000, paragraph 34 and the case-law cited). 50 It is apparent from paragraph 42 above that a penalty consisting in the removal of a taxable person from the VAT register, without formally prohibiting the exercise, by that taxable person, of the activity subject to VAT, in respect of which that taxable person registered therein, is liable to lead to the tax situation both of that taxable person and of purchasers of goods and recipients of services supplied by that taxable person being constantly and repeatedly called into question. Therefore, such a penalty also cannot be regarded as consistent with the principle of legal certainty. 51 In the light of all the foregoing considerations, the answer to the questions referred for a preliminary ruling is that the first subparagraph of Article 213(1) and Article 273 of the VAT Directive and the principles of legal certainty and proportionality must be interpreted as precluding national legislation which, as interpreted by the tax authorities and the national courts, provides for the possibility for the competent tax authority to remove a taxable person from the VAT register on the ground of a failure to comply with VAT obligations on that taxable person’s part, without that tax authority analysing the nature of the infringements committed and the conduct of the taxable person at issue. Costs 52 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Tenth Chamber) hereby rules: The first subparagraph of Article 213(1) and Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, as amended by Council Directive (EU) 2017/2455 of 5 December 2017, and the principles of legal certainty and of proportionality must be interpreted as precluding national legislation which, as interpreted by the tax authorities and the national courts, provides for the possibility for the competent tax authority to remove a taxable person from the value added tax (VAT) register on the ground of a failure to comply with VAT obligations on that taxable person’s part, without that tax authority analysing the nature of the infringements committed and the conduct of the taxable person at issue. [Signatures] * Language of the case: Bulgarian.