Germany tax update – 30 April 2025
On 30 April 2025, the Court of Justice of the European Union (CJEU) issued two important judgments in the field of indirect taxation. Both decisions provide further guidance on the scope and limits of liability for VAT and customs debts and are of particular relevance to tax directors, compliance professionals, and legal counsel advising on risk exposure in multinational structures.
1. VAT – Case C-278/24, P.K. v. Dyrektor Izby Administracji Skarbowej we Wrocławiu
Date of judgment: 30 April 2025
ECLI: ECLI:EU:C:2025:299
Parties: P.K. (natural person, former managing director) v. Polish Tax Authority
Area of law: Value Added Tax (VAT)
Sector: Corporate / General Commercial
Facts:
The case concerned the personal liability of a former managing director for VAT debts of a company that had ceased operations. Under Polish law, such liability could be imposed irrespective of individual fault or misconduct, provided the tax debt could not be recovered from the company itself.
Ruling:
The CJEU held that while Member States may adopt measures to safeguard tax revenues, such provisions must comply with general principles of EU law—specifically, proportionality, legal certainty, and the protection of legitimate expectations.
Key reasoning:
Liability without a requirement of fault may infringe the principle of proportionality.
The imposition of personal liability must involve an individualised assessment of conduct and circumstances.
EU law precludes national rules that automatically impose liability without affording adequate safeguards.
Practical implications:
For companies: D&O insurance policies and internal governance frameworks should be reviewed to assess potential post-exit exposure for VAT debts.
For tax authorities: Enforcement strategies must strike a balance between revenue protection and respect for EU fundamental principles.
2. Customs – Case C-330/24, Celní jednatelství Zelinka s.r.o. v. Generální ředitelství cel
Date of judgment: 30 April 2025
ECLI: ECLI:EU:C:2025:296
Parties: Czech customs broker v. Czech Customs Authority
Area of law: Customs Duties
Sector: Import/Export, particularly Electronics
Facts:
The dispute arose after a Czech company obtained a refund of customs duties due to a revised tariff classification. The customs authority subsequently sought to re-establish the original debt, arguing the initial refund had been granted in error.
Ruling:
The Court confirmed that a customs debt may be reinstated under Article 116(7) of the Union Customs Code if the incorrect refund was caused by an error attributable to the importer and the applicable limitation period has not expired.
Key reasoning:
The proper functioning of the customs regime requires accurate tariff classification by importers.
Re-establishing a customs debt is permissible, but only under strict conditions.
Retroactive corrections must respect procedural safeguards and legal certainty.
Practical implications:
For importers: Robust internal classification processes and recordkeeping are essential to mitigate the risk of retroactive reassessments.
For customs authorities: The decision underscores the need for transparent and timely audits, particularly in high-volume sectors such as electronics.
Strategic Takeaway
Both rulings reinforce the role of EU general principles—particularly proportionality, individual accountability, and legal certainty—in the enforcement of VAT and customs legislation. They also serve as a reminder that indirect tax compliance is not only a technical exercise but also a matter of strategic risk management.
In-house tax teams and external advisers should proactively assess liability risks—whether arising from executive mandates, delegation of customs responsibilities, or process design—and ensure that structures and controls align with both national requirements and EU standards.
