Court of Justice of the European Communities (including Court of First Instance Decisions)

Provisional text

JUDGMENT OF THE COURT (Tenth Chamber)

14 November 2024 (*)

( Reference for a preliminary ruling - Common system of value added tax (VAT) - Directive 2006/112/EC - Article 273 - VAT payable by a taxable entity - National legislation providing for the joint and several liability of the director of the entity - Presumption of liability in respect of the director in the absence of notification that the entity is unable to pay the VAT due - Principle of proportionality )

In Case C-613/23 [Herdijk], (i)

REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), made by decision of 6 October 2023, received at the Court on 6 October 2023, in the proceedings

KL

v

Staatssecretaris van Financiën,

THE COURT (Tenth Chamber),

composed of D. Gratsias (Rapporteur), President of the Chamber, S. Rodin and Z. Csehi, Judges,

Advocate General: T. Ćapeta,

Registrar: A. Lamote, Administrator,

having regard to the written procedure and further to the hearing on 11 July 2024,

after considering the observations submitted on behalf of:

- KL, by J.F. van Dijk,

- the Netherlands Government, by M.K. Bulterman and J.M. Hoogveld, acting as Agents,

- the European Commission, by M. Herold and P. Vanden Heede, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation, in the light of the principle of proportionality, of Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1).

2 The request has been made in proceedings between KL and the Staatssecretaris van Financiën (State Secretary for Finance, Netherlands) concerning certain additional tax assessments on turnover.

Legal context

European Union law

3 The first paragraph of Article 273 of Directive 2006/112 falls under Title XI of that directive, which lays down the obligations of taxable persons and certain non-taxable persons concerning, inter alia, the payment of value added tax (VAT), the identification of taxable persons, invoicing, accounting, VAT returns and recapitulative statements. The provision in question reads as follows:

‘Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.’

Netherlands law

4 Article 36 of the Invorderingswet 1990 (Law of 1990 on the Collection of Tax; ‘the Collection Law’) provides:

‘1. Joint and several liability for debts in respect of the tax on salaries, turnover tax, excise duties, consumption taxes on non-alcoholic beverages, chewing tobacco and nasal tobacco, the taxes referred to in Article 1 of the [Wet belastingen op milieugrondslag (Law establishing taxes for the protection of the environment)] and the tax on gambling and betting payable by an entity with legal personality within the meaning of the [Algemene wet inzake rijksbelastingen (Tax Code)] and which has full legal capacity, in so far as it is subject to corporation tax, shall be imposed on: any director, in accordance with the provisions set out in the following paragraphs.

2. As soon as it is apparent that it cannot pay the tax on salaries, turnover tax, excise duties, consumption tax on non-alcoholic beverages, consumption tax on chewing tobacco and nasal tobacco, one of the taxes referred to in Article 1 of the Law establishing taxes for the protection of the environment or the tax on gambling and betting, the entity referred to in paragraph 1 is required to provide written notice thereof to the collector and, at the latter’s request, to communicate and produce additional information and documents. Any director shall be entitled to comply with that obligation on behalf of the entity. The detailed rules relating to the content of that notification, the nature and content of the information to be communicated and the documents to be produced, and the time limits for the notification, the communication of information and the production of documents shall be established by or pursuant to a general administrative order.

3. Where the institution has duly fulfilled its obligation under paragraph 2, a director shall be liable if it is established to the requisite standard that non-payment of the tax debt is due to manifest mismanagement attributable to that director in the three-year period preceding the day of notification.

4. Where the entity has failed to fulfil or has not duly fulfilled its obligation under paragraph 2, a director shall be liable pursuant to the provisions of paragraph 3 on the basis that non-payment is presumed to have arisen due to that person and that the three-year period is deemed to commence on the day on which the entity defaulted. A director is permitted to rebut that presumption only if he or she establishes to the requisite standard that failure by the entity to fulfil its obligation under paragraph 2 was not due to him or her.

…

6. The second sentence of paragraph 4 shall not apply to a former director.

…’

5 Article 7 of the Uitvoeringsbesluit Invorderingswet 1990 (Decree implementing the Law of 1990 on the Collection of Tax) is worded as follows:

‘1. The notification referred to in Article 36(2) of the [Collection] Law shall take place at the latest within two weeks of the day on which the tax due should have been paid or settled pursuant to Article 19 of the Tax Code …

2. In the event of an inability to pay in relation to a tax assessment issued owing to the fact that the tax due is greater than that which, according to the return, has been or should have been paid or settled, and if that circumstance is not attributable to fraud or gross negligence on the part of the entity, notification may take place, by way of derogation from paragraph 1, at the latest within two weeks of the expiry of the time limit set by that assessment.

3. The notification shall specify the circumstances which caused the non-remittance or non-settlement, in the declaration, of the tax due or the lack of payment thereof.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

6 KL was the director and sole shareholder of a holding company. Until 29 March 2019, the holding company was the director and sole shareholder of an operating company. On that date the holding company transferred the shares which it held in the operating company to a third party.

7 The operating company was issued with additional assessments on salary tax in respect of the months of December 2018 to February 2019 and additional assessments on turnover tax in respect of November 2018 to February 2019. Those assessments were based on the declarations made by the operating company. The operating company did not pay those assessments.

8 By decision of 5 July 2019, the Ontvanger van de Belastingdienst (the tax collection authority, Netherlands), acting on the basis of Article 36 of the Collection Law, held KL liable for the unpaid additional tax assessments. It also held KL liable for the payment of interest on the tax referred to in the additional tax assessments and for the payment of costs.

9 KL challenged the decision of 5 July 2019 before the Rechtbank Den Haag (District Court, The Hague, Netherlands), which dismissed his action. By judgment of 1 July 2021, delivered after KL appealed against the judgment of that latter court, the Gerechtshof Den Haag (Court of Appeal, The Hague, Netherlands) found that the operating company had failed to fulfil its notification obligation, in accordance with Article 36(2) of the Collection Law, in respect of the salary and turnover tax which it owed for the periods referred to in paragraph 7 above.

10 Nevertheless, the Gerechtshof Den Haag (Court of Appeal, The Hague) found that KL had been wrongly held liable for the salary and turnover tax due for February 2019 since he had resigned from his position as director of the holding company as of 29 March 2019. The period provided for notifying the inability to pay the tax due for February 2019 had in fact not yet expired on that date. KL should therefore have been classified as a former director for that month, as provided for in Article 36(6) of the Collection Law. The court thus permitted KL, by adducing the appropriate evidence, to rebut the presumption in the first sentence of Article 36(4) of that law that the non-payment of tax debts is attributable to the director. According to the court, KL succeeded in rebutting that presumption.

11 However, the court in question held that KL had to be held liable for the salary and turnover tax debts related to the months from November 2018 to January 2019, during which, first, KL was acting as director of the holding company and, second, the operating company had not duly notified its inability to pay those taxes. It thus followed that the non-payment of the tax debts was deemed to be due to manifest mismanagement on the part of KL, who had failed to establish that that omission could not be attributed to him.

12 An appeal against the judgment of 1 July 2021 was lodged with the Hoge Raad der Nederlanden (Supreme Court of the Netherlands), which is the referring court. That court states that, according to Article 36 of the Collection Law, the notification obligation under paragraph 2 of that article must be fulfilled in a manner that complies with the requirements laid down in that article. If the entity has fulfilled that obligation, the director will incur liability for payment of the entity’s tax debt only if the tax authority proves that the entity’s non-payment of that debt is due to manifest mismanagement on the part of the director. By contrast, if the entity has not duly fulfilled that obligation, the non-payment of the tax debts will be deemed to have been caused by manifest mismanagement on the part of the director. The director is able to rebut that presumption only if that person first of all establishes that he or she is not responsible for the fact that the entity has failed duly to fulfil the notification obligation. According to the information provided by the referring court, national case-law allows that circumstance to be considered as established in the event of sickness or accident, or where the director has relied on the opinion of a third party which he or she was entitled to regard as having sufficient expertise in the matter.

13 Accordingly, it is only in the event of force majeure, or if he or she has relied in good faith on the opinion of a third party which he or she was entitled to regard as having sufficient expertise in the matter, that a director will be able to establish to the requisite standard that he or she cannot be held responsible for the failure by the entity to comply with its notification obligation. According to the referring court, those are such exceptional circumstances that, in the vast majority of cases where an entity has failed to fulfil its notification obligation or has failed to fulfil it in a manner that is compliant with the Collection Law, it is practically impossible for a director to provide the required proof.

14 According to that court, that system of joint and several liability falls within the scope of Article 273 of Directive 2006/112. The referring court observes in addition that a system of strict liability in principle goes beyond what is necessary to preserve the rights of the public exchequer and that such a system thus infringes the principle of proportionality, as enshrined in EU law. In any event, that principle would be infringed where a person who has committed no fault, but who is held responsible for the payment of taxes, has nothing whatsoever to do with the conduct of the person liable, over which he or she has no influence. However, where a director exercises at least some influence over the acts or omissions of the entity liable for the tax, he or she cannot be regarded as a person who has nothing whatsoever to do with it. The question is therefore whether those factors are sufficient to find that virtually strict liability on the part of the director of an entity which has failed duly to notify its inability to pay turnover tax is compatible with the principle of proportionality enshrined in EU law.

15 According to the referring court, that question is all the more relevant since it is apparent from the judgment of the Gerechtshof Den Haag (Court of Appeal, The Hague) that KL had not displayed manifest mismanagement during the period in respect of which the entity did not fulfil its notification obligation. It follows that KL had acted in good faith, exhibiting all the due diligence of a circumspect trader, that he had taken every reasonable measure in his power, and that his involvement in abuse or fraud was excluded.

16 In those circumstances the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court of Justice 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 [Collection Law], 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 authority] 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?’

Consideration of the questions referred

The first question

17 By its first question, the referring court asks, in essence, whether Article 273 of Directive 2006/112, read in the light of the principle of proportionality, must be interpreted as precluding national legislation under which a director of an entity which has not complied with the obligation to notify its inability to pay a VAT debt must, in order to be relieved of his or her joint and several liability for the payment of that debt, demonstrate that the failure to comply with that notification obligation is not attributable to him or her.

18 It should be observed that a system of joint and several liability such as that at issue in the main proceedings is intended to facilitate the collection of amounts of VAT which have not been paid by a taxable legal person within the mandatory time limits laid down by the provisions of Directive 2006/112, with the result that it helps to ensure the correct collection of VAT. In principle, therefore, such a system falls within the discretion enjoyed by the Member States in implementing Article 273 of Directive 2006/112 (see, to that effect, judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraphs 61 and 69).

19 That finding cannot be called into question by the fact that the person held jointly and severally liable, namely the director of the legal person, is not, in that capacity, himself or herself subject to VAT (see, to that effect, judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 62).

20 In that regard, and first of all, it is not apparent from the wording of Article 273 of Directive 2006/112 that the obligations laid down by the Member States pursuant to that provision can apply only to persons subject to VAT (judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 63).

21 Next, that provision forms part of Title XI of Directive 2006/112, the heading of which expressly refers to the ‘obligations of taxable persons and certain non-taxable persons’ (judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 64).

22 Lastly, the obligation on the Member States to take all measures necessary to ensure collection of all VAT may, in certain circumstances, require a Member State to hold liable non-taxable persons who take part in decision-making within a taxable legal person, otherwise the effectiveness of such measures would be undermined (see, to that effect, judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 65).

23 Outside the limits which it establishes as regards observance of equal treatment and the prohibition on laying down formalities connected with the crossing of frontiers, Article 273 of Directive 2006/112 does not specify the obligations which the Member States may impose. It therefore gives Member States discretion with regard to the means of ensuring collection of all the VAT due (see, to that effect, judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 69 and the case-law cited).

24 Nevertheless, the Member States must exercise that power in accordance with EU law and its general principles and, consequently, in accordance with the principle of proportionality. That principle means that Member States must employ means which, whilst enabling them effectively to attain the objectives pursued by their domestic laws, cause the least possible detriment to the objectives and principles laid down by the relevant EU legislation. Therefore, while it is legitimate for the measures adopted by the Member States to seek to preserve the rights of the public exchequer as effectively as possible, they must not go further than is necessary for that purpose (judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraphs 72 and 73 and the case-law cited).

25 In that regard, national measures which bring about a system of strict joint and several 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, therefore, be considered contrary to the principle of proportionality. It would clearly be 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 (judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 74 and the case-law cited).

26 Accordingly, exercise of the Member States’ power to designate a joint and several debtor other than the person liable for payment of the tax in order to ensure efficient collection of that tax must be justified by the factual and/or legal relationship between the two persons concerned in the light of the principles of legal certainty and of proportionality (judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 75).

27 The fact that a 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 or she took every reasonable measure in his or her power and that his or her participation in abuse or fraud is excluded are points to be taken into account in deciding whether that person can be obliged to account for the VAT owed (judgment of 13 October 2022, Direktor na Direktsia ‘Obzhalvane i danachno-osiguritelna praktika’, C-1/21, EU:C:2022:788, paragraph 76).

28 In the present case, it is apparent from the request for a preliminary ruling that the system of joint and several liability at issue in the main proceedings has the following characteristics.

29 In the first place, the person designated as jointly and severally liable must be a director of the taxable entity which owes unpaid VAT. That person may therefore be regarded as participating in decision-making within that entity, which means that it is not possible to consider him or her as a person who has nothing whatsoever to do with the acts of that entity.

30 In the second place, if that entity has duly notified its inability to pay a tax debt, the director concerned is not held jointly and severally liable for the payment of the related debt, unless the tax authority establishes that the failure to pay is the result of manifest mismanagement by the director during the three years preceding the notification date.

31 In the third place, as the Netherlands Government submitted in its observations, that notification obligation pursues a specific legitimate objective, of definite importance, namely that the tax authority be informed in time of any inability to pay, with the aim of assessing the possibility of adopting appropriate measures in order to avoid or limit a loss of tax revenue.

32 In the fourth place, notification of the inability to pay a tax debt does not appear to present any particular difficulties, either as regards its form or as regards the requisite content, and it may, moreover, be supplemented later at the request of the tax authority.

33 In the fifth place, it is possible to rebut the presumption of director liability resulting from manifest mismanagement, which applies only in the event of a failure to comply with the notification obligation, provided that the director in question establishes first that that failure is not attributable to him or her. That latter condition is not applicable as regards a former director who was no longer exercising any functions on the date of expiry of the notification period, with that person being able to rebut the presumption of manifest mismanagement in respect of the period covered by the VAT declaration, without being required to establish first that the failure to comply with the notification obligation was not attributable to him or her.

34 Since it does not appear to be excessively difficult for an entity or, as the case may be, its director, to comply with the notification obligation laid down by Netherlands law and thus to avoid, as a rule, the incurring of liability by the latter for the entity’s VAT debts, a failure to comply with that obligation may be regarded as constituting misconduct. Moreover, as the Netherlands Government observes, the consequences of that conduct would remain largely theoretical if the director could avoid them by justifying the failure to comply with the notification obligation other than by circumstances that demonstrate that that failure is not attributable to him or her.

35 That said, the referring court is in particular asking the Court as regards the fact that it is, in its view, ‘extremely difficult’ for a director to demonstrate that the failure to comply with the obligation to notify an inability to pay is not attributable to him or her.

36 In that regard, taking account of the principle of proportionality, which the Member States must observe when they designate a joint and several debtor other than the person liable for payment of the tax, the forfeiture of a right owing to failure to comply with a time limit must, at the very least, be unenforceable as against the person concerned if he or she demonstrates that the failure in question is not attributable to him or her, while the possibility of such a demonstration should not be purely theoretical owing to an unduly broad interpretation of the concept of attribution by the national authorities or courts.

37 However, first, it is apparent from the information provided by the referring court that a director of an entity which has failed to fulfil the obligation to notify its inability to pay a VAT debt may set out the circumstances which enable him or her to demonstrate that he or she is not responsible for the entity’s failure to fulfil that obligation.

38 Second, according to that information, it is not only force majeure that is included in such circumstances, but also the fact that the director relied on the opinion of a third party which he or she was entitled to regard as having sufficient expertise in the matter.

39 Third, the second sentence of Article 36(4) of the Collection Law does not set out an exhaustive list of the circumstances on which the director may rely, which suggests that he or she may draw support from any circumstance capable of establishing to the requisite standard that the entity’s failure to fulfil its obligation to notify its inability to pay is not attributable to him or her.

40 Moreover, it is apparent from the request for a preliminary ruling that if the director succeeds in establishing that the failure to comply with that obligation is not attributable to him or her, it is also open to that person to demonstrate that the entity’s inability to pay is not the result of manifest mismanagement on his or her part during the three years preceding the due payment date. Since, in that situation, the director is only required to raise circumstances which exclude manifest mismanagement on his or her part, the fact that that person bears the burden of proof does not appear to constitute an excessive procedural obligation or one that is contrary to the case-law set out in paragraph 25 above.

41 Consequently, the answer to the first question is that Article 273 of Directive 2006/112, read in the light of the principle of proportionality, must be interpreted as not precluding national legislation under which a director of an entity which has not complied with the obligation to notify its inability to pay a VAT debt must, in order to be relieved of his or her joint and several liability for the payment of that debt, demonstrate that the failure to comply with that notification obligation is not attributable to him or her, in so far as the legislation in question does not limit the possibility of demonstrating that circumstance solely to cases of force majeure, but allows the director to raise any circumstance capable of showing that he or she is not responsible for the failure to comply with that notification obligation.

The second question

42 It should be borne in mind that, according to settled case-law, in the context of the procedure laid down in Article 267 TFEU which provides for cooperation between national courts and the Court of Justice, it is for the Court to provide the referring court with an answer which will be of use to it and enable it to decide the case before it. To that end, the Court may have to reword the questions referred to it, extracting from all the information provided by the national court, in particular from the grounds of the order for reference, the points of EU law which require interpretation in view of the subject matter of the dispute (judgment of 29 July 2024, CU and ND (Social assistance - Indirect discrimination), C-112/22 and C-223/22, EU:C:2024:636, paragraph 30 and the case-law cited).

43 In the present case, it is apparent from the request for a preliminary ruling that KL was considered as being a former director of the entity liable for the additional VAT assessments for February 2019, on the ground that the period for notifying the entity’s inability to pay the VAT due for that month had not yet expired when KL’s resignation as director took effect.

44 Accordingly, pursuant to Article 36(6) of the Collection Law, KL was allowed to demonstrate that the failure to pay the VAT debt due for that month was not the result of manifest mismanagement attributable to him during the three years preceding the expiry of the period for payment in relation to that month. As stated by the referring court, the Gerechtshof Den Haag (Court of Appeal, The Hague) held that KL had been able to provide that proof, that he had acted in good faith exhibiting all the due diligence of a circumspect trader, that he had taken every reasonable measure in his power, and that his participation in abuse or fraud was excluded.

45 However, KL performed the functions of director of the entity in the months of November and December 2018 and in January 2019 and he was not able to demonstrate that the failure to comply with that entity’s obligation to notify an inability to pay was not attributable to him, as required by Article 36(4) of the Collection Law. Accordingly, pursuant to that provision, he was not allowed to demonstrate that the failure to pay the VAT debt in respect of those months was not the result of manifest mismanagement on his part during the three years preceding the expiry of the period for payment in relation to those months. KL was therefore held jointly and severally liable for the debts of the entity of which he was director in the months of November and December 2018 and in January 2019.

46 In the light of the foregoing, it must be held that, by the second question, the referring court asks, in essence, whether Article 273 of Directive 2006/112, read in the light of the principle of proportionality, must be interpreted as precluding national legislation which has the effect that the director of an entity which has failed to notify the latter’s inability to pay remains jointly and severally liable for the payment of a VAT debt relating to a particular period, whereas he or she has been released from a debt on the same basis related to an immediately following period, after being able to demonstrate that he or she acted in good faith and exhibited, during the previous three years, all the due diligence required of a circumspect trader in order to prevent the entity from being unable to honour its obligations and his or her participation in abuse or fraud is excluded.

47 In that regard, first, as stated in paragraphs 31, 32 and 34 above, an obligation such as that laid down by Netherlands law to notify an inability to pay pursues a legitimate objective, which consists in promptly providing information to the tax authority of any inability to pay, and compliance therewith does not present any particular difficulties, such that failure to comply with that obligation must be regarded as constituting misconduct.

48 Second, as is apparent from Article 7 of the Decree implementing the Law of 1990 on the Collection of Tax, the notification of an inability to pay must be given no later than two weeks after the date scheduled for payment of the tax due. That rule means, as the Netherlands Government stated in its observations, that whereas the tax authorities may consider that such a notification is valid for several subsequent tax periods, an earlier tax period, not covered by that notification, maintains a standalone character with respect to the possible joint and several liability of the director of the taxable entity. That also applies to the reference period of three years which is taken into account, according to Article 36(3) of the Collection Law, when assessing the question of whether the inability to pay is the result of manifest mismanagement on the part of the director.

49 Accordingly, although national legislation such as that applicable in the main proceedings, which implies standalone tax periods, may entail the joint and several liability of the director of an entity in the event of failure to notify the inability to pay the latter’s debts, that consequence is mitigated by the fact that, in some circumstances, the standalone character of the periods may also circumscribe that director’s liability. Indeed, the joint and several liability of that director, which, in accordance with Article 36(4) of the Collection Law, is established where he or she has failed to ensure that the entity notifies its inability to pay, produces effects only in respect of the period to which the missing notification relates, without affecting a subsequent period in respect of which that entity has duly notified the inability to pay.

50 It follows from the foregoing that legislation such as that at issue in the main proceedings, which implies the standalone character of each tax period for which there is a notification obligation, cannot be regarded as going beyond what is necessary for the correct collection of VAT merely because its application may have negative consequences for the director of an entity which has failed to notify its inability to pay for a certain period, even though he or she has, moreover, performed his or her duties in good faith and without committing any abuse or fraud.

51 The answer to the second question is therefore that Article 273 of Directive 2006/112, read in the light of the principle of proportionality, must be interpreted as not precluding national legislation which has the effect that the director of an entity which has failed to notify the latter’s inability to pay remains jointly and severally liable for the payment of a VAT debt relating to a particular period, whereas he or she has been released from a debt on the same basis related to an immediately following period after being able to demonstrate that he or she acted in good faith and exhibited, during the previous three years, all the due diligence required of a circumspect trader in order to prevent the entity from being unable to honour its obligations and his or her participation in abuse or fraud is excluded.

Costs

52 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national 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:

1. Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in the light of the principle of proportionality,

must be interpreted as not precluding national legislation under which a director of an entity which has not complied with the obligation to notify its inability to pay a value added tax debt must, in order to be relieved of his or her joint and several liability for the payment of that debt, demonstrate that the failure to comply with that notification obligation is not attributable to him or her, in so far as the legislation in question does not limit the possibility of demonstrating that circumstance solely to cases of force majeure, but allows the director to raise any circumstance capable of showing that he or she is not responsible for the failure to comply with that notification obligation.

2. Article 273 of Directive 2006/112, read in the light of the principle of proportionality,

must be interpreted as not precluding national legislation which has the effect that the director of an entity which has failed to notify the latter’s inability to pay remains jointly and severally liable for the payment of a value added tax debt relating to a particular period, whereas he or she has been released from a debt on the same basis related to an immediately following period after being able to demonstrate that he or she acted in good faith and exhibited, during the previous three years, all the due diligence required of a circumspect trader in order to prevent the entity from being unable to honour its obligations and his or her participation in abuse or fraud is excluded.

[Signatures]

* Language of the case: Dutch.

i The name of the present case is a fictitious name. It does not correspond to the real name of any of the parties to the proceedings.