CJEU: joint and several liability on import VAT can only be applied after an unequivocal and explicit provision from Member States

On 12 May 2022 , the Court of Justice of the European Union (CJEU) issued a judgment (case C-714/20, U.I. Srl) concerning the joint and several liability of the indirect customs representative for the payment of import VAT.

The case concerns an import VAT debt which the Italian authorities demanded from the indirect customs representative of an importing company which was bankrupt. Since it was not possible for the administration to collect the VAT directly from said company, it decided to claim it from the customs representative in his capacity, according to their view, as jointly and severally liable for the VAT.

The customs representative acknowledged that he had acted in his own name and on behalf of the importing company on the basis of the mandate formalized among them and therefore acknowledged that he had filed the relevant customs declarations according to said mandate. However, it argued that there was no provision in the Italian legislation claiming for joint and several liability of the indirect customs representative for the payment of VAT on importation.

Following a dispute between the parties, it was decided to refer two questions to the CJEU for a preliminary ruling which, in summary, seek to clarify the scope of the joint and several liability of the indirect customs representative and whether, in accordance with the provisions of EU law, that liability may be extended in a generalized manner to the payment of VAT on importation.

In that regard, the CJEU points out that the indirect customs representative acts in his own name but on behalf of another person. Thus, when he lodges a customs declaration, he does so in his own name but on behalf of the person who has given him a mandate to represent him and whom he represents, so that he acts as declarant.

In turn, EU customs legislation (Regulation 952/2013 laying down the Union Customs Code) states that the declarant is the debtor of the customs debt and, in the case of indirect representation, the person on whose behalf the customs declaration is made is also the debtor. Said legislation refers exclusively to the customs debt, but does not refer to VAT on importation.

The concept of customs debt is defined in the Community Customs Code as “”the obligation on a person to pay the amount of import or export duty which applies to specific goods under the customs legislation in force”.

According to the above, import VAT does not seem to be part of import duties, which in turn are defined as “customs duty payable on the import of goods“.

If we turn to the VAT Directive, we can see that Article 201 (“on importation, VAT shall be payable by any person or persons designated or recognized as liable by the Member State of importation”) does not refer to the provisions of the Customs Code as regards the payment of import VAT, but states that this obligation is incumbent on the persons designated by the Member State of importation.

Accordingly, the CJEU concludes that, as a general rule, the indirect customs representative is liable only for the payment of the customs duties due on the goods which he has declared to customs, but not for the payment of VAT on importation. 

The VAT Directive also states that Member States are free to designate the person liable for payment of import VAT. These persons could, for example, be the indirect customs representatives.

In other words, it will be up to the Member States to determine whether a customs representative can be jointly and severally liable for VAT on importation. If they do so, and in order to respect the principle of legal certainty and therefore to ensure that the persons concerned are aware of their rights and obligations, they must do so in a sufficiently clear and precise manner in their national legislation. 

Otherwise, it is not possible to hold the customs representative liable in the absence of national provisions designating him or recognizing him, explicitly and unequivocally, as the person liable for that tax.

The CJEU defends the principle of legal certainty. According to its judgment, a customs representative cannot be required to pay VAT on importation if that joint and several liability is not clearly, explicitly and unequivocally laid down in the domestic legislation of a Member State. There are no provisions neither in EU customs legislation nor in the VAT Directive to support this.

CJEU´s judgment must be very much welcome as it is a clearly defends  legal certainty. Joint and several liability for the payment of a given tax must always be based on clear and precise rules. Unfortunately, this is not always the case