Joint and several liability excluding VAT if the debtor was unaware of the fraud

Joint and several liability for VAT purposes: limited scope?

In the ALTI case (C-4/20), the CJEU held that Article 205 of Directive 2006/112/EC authorized a Member State to make jointly and severally liable for VAT payment a person who should have known that the VAT due for that transaction would not be paid. However, this cannot introduce a system of unlimited liability. Economic operators who take all reasonable measures to ensure that their transactions are not part of an abusive or fraudulent supply chain must be able to rely on the lawfulness of such transactions without risking being jointly and severally liable for the VAT due by another taxable person.

Now, taking a step back, Article 205 of Directive 2006/112/EC provides: 205 Directive 2006/112/EC authorizes Member States, in the cases specified in Articles 193 to 200, 202, 203, and 204, to establish that a person other than the person liable for payment of VAT is jointly and severally liable for payment of VAT (Dranken Van Eetvelde, C‑331/23). This is an accessory liability—unlike, for example, the refusal to allow the deduction of input tax in the case of abusive conduct—meaning that its extent and persistence depend on the tax debt of the person liable for payment.

The provision in Article 205 does not shift the tax debt to another party, as occurs, for example, in the case contemplated by Arti...