Judgment;Summary — ECLI:EU:C:2024:961
Date: 2024-11-14
Language of the case: Dutch
Court formation: Tenth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Netherlands

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:  
6 October 2023 
Referring court:  
Hoge Raad der Nederlanden (Netherlands) 
Date of the decision to refer:  
6 October 2023 
Appellant:  
KL 
Respondent:  
Staatssecretaris van Financiën 
  
Subject matter of the main proceedings 
The main proceedings concern a dispute between KL, in his capacity as the former 
director of a company, and the Staatssecretaris van Financiën (State Secretary for 
Finance; ‘the Staatssecretaris’). The Staatssecretaris holds KL liable for the 
unpaid additional assessments in payroll tax and turnover tax imposed on that 
company for the periods during which KL was the director of the company. 
Subject matter and legal basis of the request 
This request under Article 267 TFEU concerns the question of whether the 
Netherlands system of holding directors of legal entities liable for the tax debts of 
those entities (Article 36 of the Invorderingswet 1990 (1990 Law on the collection 
of State taxes) (‘the IW 1990’)) complies with the principle of proportionality 
under EU law. 
 
i This is a fictitious name, and does not correspond to the actual name of any party to the proceedings. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-613/23 
 
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Questions referred for a preliminary ruling 
1. Does the principle of proportionality provided for under EU law preclude a 
legal rule such as that set out in Article 36(4) of the IW 1990, which, in practice, 
makes it extremely difficult for a director of a legal person that has failed to 
comply, or has failed to comply properly, with its obligation to notify the tax 
collection authorities of its inability to pay, to escape liability for tax debts of that 
legal person, including turnover tax debts? 
2. Does the answer to Question 1 depend on whether the director acted in good 
faith in that he or she acted with the care of a prudent business person, did 
everything reasonably within his or her power, and his or her involvement in 
abuse or fraud may be ruled out? 
Provisions of national law cited 
Article 36 of the IW 1990 
Succinct presentation of the facts and procedure in the main proceedings 
1 KL was the director and sole shareholder of a company until 29 March 2019. 
Additional assessments in payroll tax and turnover tax were imposed on this 
company for specific periods. These additional assessments went unpaid. By 
decision of 5 July 2019, the tax authorities held that KL was liable under 
Article 36 of the IW 1990 for the unpaid additional assessments, plus tax interest 
and costs charged. The total amount involved was EUR 142 852. 
2 Under Article 36(1) of the IW 1990, each director of a legal entity is in principle 
jointly and severally liable for certain taxes owed by that legal entity. If the legal 
entity is unable to pay the taxes that it owes, it must notify the tax authorities of 
this inability to pay under Article 36(2) of the IW 1990. This notification must 
take place within two weeks after the date by which the tax ought to have been 
paid. If the notification has been properly made, the director will be liable only if 
the tax authorities prove that the non-payment of tax was due to manifestly 
improper management attributable to that director during the three-year period 
preceding the time of the notification. Improper management can be said to exist 
only if no right-thinking director would have acted as the liable director did. 
Under Article 36(4), first sentence, of the IW 1990, if the notification has not been 
made or has not been made properly (for instance, if it was not made in a timeous 
manner), there will be a presumption that the non-payment of the tax is 
attributable to improper management on the part of the director. The director will 
be allowed to rebut this presumption only if he or she proves that it was not his or 
her fault that the legal entity did not comply, or did not comply properly, with its 
notification obligation. By contrast, the former director, that is to say, the person 
who was no longer a director at the latest time by which the legal entity ought to 
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have fulfilled its notification obligation, is always permitted to rebut this 
presumption. 
3 The court at second instance, the Gerechtshof Den Haag (Court of Appeal, The 
Hague, Netherlands), first of all found that, in this case, the company in question 
had not complied with the aforementioned notification obligation. As KL had 
already resigned as director before the deadline for paying some of the tax debts 
expired, he was allowed to prove that the non-payment of those debts was not 
attributable to him. According to the Gerechtshof, he did so to the requisite legal 
standard, with the result that the tax authorities had wrongfully held him liable for 
that portion of the debts. However, for the period during which KL was incumbent 
director, there was a presumption that the non-payment of the tax debts was due to 
his apparent mismanagement. Under the Netherlands legal system, as described in 
paragraph 2 above, he cannot rebut this presumption if he does not first prove that 
he is not to blame in connection with the failure to notify the inability to pay. As 
KL was unable to do so, the Gerechtshof held that the tax authorities had acted 
correctly in holding him liable in the amount of EUR 92 394. 
The essential arguments of the parties in the main proceedings 
4 KL has in particular argued before the referring court, the Hoge Raad der 
Nederlanden (Supreme Court of the Netherlands) (‘the Hoge Raad’), that that 
Netherlands legislation is contrary to the principle of proportionality under EU 
law, a contention which the respondent disputes. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
5 In this regard, the Hoge Raad first notes that it is only in cases of force majeure or 
if a director of a legal entity relied in good faith on the advice of a third party that 
he or she will be able to argue plausibly that it was not his or her fault that the 
legal entity did not properly comply with its notification obligation. These are 
such special circumstances that in the vast majority of cases a director will not be 
able to provide the requisite evidence. Consequently, the director will very rarely 
be allowed to provide counter-evidence to rebut the presumption that it is due to 
his or her manifestly improper management that the legal entity has failed to settle 
its tax debts. The Hoge Raad is therefore of the opinion that, in practice, it is 
extremely difficult for a director of a legal entity that has not properly fulfilled its 
notification obligation to escape liability for tax debts of the company. 
6 With regard to the principle of proportionality under EU law, the Hoge Raad 
refers to the judgment of the Court of Justice of 13 October 2022, Direktor na 
Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788 
(‘the Direktor na Direktsia judgment’). In paragraph [73] of that judgment, the 
Court first held that it is legitimate for measures taken by Member States to seek 
to protect the public exchequer’s rights as effectively as possible, but that they 
must not go beyond what is necessary to that end. It then noted in paragraph 74 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-613/23 
 
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that national measures leading de facto to a system of strict liability of directors go 
beyond what is necessary to protect the public exchequer’s rights. Where liability 
for a tax debt is placed on a person other than its debtor, without giving him or her 
the opportunity to escape that liability by proving that he or she is completely 
unconnected with that debtor’s actions, that is contrary to the principle of 
proportionality. In this regard, the Court refers in paragraph 76 of the Direktor na 
Direktsia judgment to paragraph 36 of its judgment of 20 May 2021, ALTI, 
C-4/20, EU:C:2021:397, in which it held that it is permissible for a Member State 
to hold a person jointly and severally liable for an unpaid tax debt and to rely on 
presumptions in so doing, provided that those presumptions are not formulated in 
such a way as to make it impossible or excessively difficult in practice for the 
taxpayer to rebut those presumptions and do not thereby introduce a system of 
strict liability. The Court further held that the circumstances that (i) a person other 
than the tax debtor acted in good faith by proceeding with the diligence of a 
prudent business person, (ii) that he or she did everything reasonably within his or 
her power, and (iii) that his or her involvement in abuse or fraud could be ruled 
out, are factors to be taken into account in deciding whether that person should be 
made jointly and severally liable to pay the tax due. 
7 It is not clear from the foregoing case-law of the Court of Justice whether the 
concept of ‘strict liability’ also refers to a liability that is assumed without 
question (de facto) only in a certain category of cases, such as the category of 
directors of a legal entity that has failed to comply with its notification obligation. 
The question is whether using criteria to delineate such a category (in this case, 
the criterion that the legal entity has failed to fulfil its notification obligation) 
implies that liability is nevertheless conditional in nature. After all, satisfying 
those criteria can be seen as satisfying a condition. 
8 On the other hand, if it is to be assumed that strict liability can be said to exist 
even where liability is limited to a particular group of persons, this is in principle 
contrary to the principle of proportionality provided for under EU law. It follows 
from the Direktor na Direktsia judgment that conflict with this principle arises in 
any event in situations where the person liable has ‘nothing whatsoever to do with 
the acts of the person liable to pay the tax’ and where the tax debts have arisen 
from the actions of a third party over which the person liable ‘has no influence 
whatsoever’. However, a director of a legal entity cannot be said to have no 
influence whatsoever over the acts of that legal entity or to have nothing 
whatsoever to do with those acts. It is questionable, however, whether that 
suffices to make it possible to conclude that, in practice, almost strict liability of 
the director of a legal entity that has failed to notify, or has failed to notify 
properly, its inability to pay is consistent with the principle of proportionality 
under EU law. 
9 According to the Hoge Raad, another relevant factor in the present case is that KL, 
as a former director for a certain period of time, did have the right to oppose the 
presumption that he was responsible for the tax debt in question, and that, 
according to the Gerechtshof, he did so successfully. Therein lies the finding that 
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KL acted in good faith by proceeding with the diligence of a prudent business 
person, that he did everything reasonably within his power and that any 
involvement in abuse or fraud on his part could be ruled out. These are 
circumstances that, as follows from paragraph 6 above, are relevant in 
determining whether, in accordance with the principle of proportionality under EU 
law, it can be assumed that the person concerned is jointly and severally liable for 
tax due by the legal entity. The Hoge Raad is therefore unsure whether these 
circumstances are relevant for the purpose of answering the first question referred 
to the Court of Justice. 
10 In view of the foregoing considerations, it is not clear whether Article 36(4) of the 
IW 1990 is compliant with the principle of proportionality under EU law. For this 
reason, the Hoge Raad submits to the Court of Justice the questions formulated 
above.