Penalties EU VAT case law

3 cases of the Court of Justice and the General Court of the European Union on this point of VAT law, from 2018 to 2022.

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Provisions these cases interpret most

Article 2 of Directive 2006/112/EC Subject matter and scope · 3 of these cases
Article 273 of Directive 2006/112/EC Obligations of taxable persons and certain non-taxable persons · 3 of these cases
Article 206 of Directive 2006/112/EC Payment arrangements · 1 of these cases
Article 250 of Directive 2006/112/EC Returns · 1 of these cases

The 3 cases, most recent first

Under each case, what the Court decided, from its summary. The summaries are AI-generated and are not official documents: open the case for the Court’s own text.

C-570/20 BV

Judgment · 5 May 2022 · France

Combining tax penalties and criminal sanctions for VAT fraud, ne bis in idem

Article 50 read with Article 52(1) does not preclude the limitation to the most serious cases resting solely on settled restrictive case-law, provided it was reasonably foreseeable when the offence was committed that duplication could follow. Professionals may be expected to take legal advice. But it does preclude legislation that fails to ensure, by clear and precise rules (including as interpreted by the courts), that the total severity of penalties does not exceed the seriousness of the offence where a financial penalty is combined with a custodial sentence. Confirms that Member States may build the "most serious cases" filter for parallel VAT surcharges and prosecutions through case-law rather than statute, so long as the outcome was foreseeable, with a lower foreseeability threshold for taxable persons acting professionally.

C-574/15 Scialdone

Judgment · 2 May 2018 · Italy

Criminal thresholds for late payment of declared VAT

The Grand Chamber held EU law does not preclude the higher VAT threshold. Failure to pay correctly declared VAT is not fraud under Article 325(1) TFEU or the PFI Convention, so the EUR 50 000 figure is irrelevant. It is an "illegal activity" requiring only effective and dissuasive penalties, which the 30% fine plus interest supplies. Non-remittance of withholding tax is not an infringement of similar nature and importance, as its constituent elements differ and certification makes it harder to detect, so equivalence permits different thresholds. Confirms that late or non-payment of declared VAT sits in a different category from VAT fraud. Relevant to advisers handling Italian and other national criminal tax exposure for directors, and to arguments that penalties on the company alone are inadequate.

C-524/15 Menci

Judgment · 20 March 2018 · Italy

Criminal proceedings for unpaid VAT after a final administrative penalty are allowed under strict conditions

The Court holds that Article 50 of the Charter does not preclude such legislation, even where the administrative penalty is criminal in nature, provided three conditions are met. The legislation must pursue an objective of general interest such as combating VAT offences, with proceedings and penalties pursuing additional objectives, it must contain rules of coordination limiting the extra burden to what is strictly necessary, and it must ensure that the severity of all the penalties together remains limited to what the seriousness of the offence requires. It is for the national court to check that the actual burden on the person is not excessive. This is the Grand Chamber judgment that sets the test for duplicating tax and criminal penalties in VAT.