EU Charter of Fundamental Rights applicable to VAT matters

At a glance

By ruling that the EU Charter of Fundamental Rights applies to VAT matters, the CJEU has opened new avenues for taxpayers to challenge certain decisions of the VAT authorities.

A closer look

On 16 July 2026, the Court of Justice of the European Union (the “CJEU” or the “Court”) ruled in “QJ” (Case C-158/25) that the EU Charter of Fundamental Rights (the “Charter”) is applicable in VAT matters.

By confirming the applicability of the Charter to VAT proceedings, the Court has opened new avenues for taxpayers and other affected persons to challenge certain decisions of the VAT authorities on the basis of fundamental rights protected under EU law.

Background

QJ served as the manager of the Luxembourg company VN from 2013 to 2019. In 2018, the Luxembourg VAT authorities issued ex officio tax assessments against the company for the years 2014, 2015 and 2016.  

VN lodged an appeal against those assessments but it was declared inadmissible because it had been filed out of time. As the company subsequently failed to pay the assessed VAT, the Luxembourg VAT authorities issued, on 16 May 2019, a guarantee call (bulletin d'appel en garantie) against QJ in his capacity as manager responsible for the day-to-day management of VN during the relevant period, QJ was required to pay the outstanding VAT liabilities relating to the years 2014 to 2016.

This guarantee call was based on Article 67-1 of the Luxembourg VAT Law, which provides that: “Managing directors, managers and any de jure or de facto directors responsible for the day-to-day management of the persons liable to pay value added tax are required to ensure that the legal obligations laid down by this law are complied with, and in particular that value added tax due is paid from the financial resources which they are responsible for managing.”

QJ challenged the guarantee call. He argued that, as the person held liable to guarantee payment of the ex officio tax assessments issued against the company, he should be entitled to file a third-party objection because those tax assessments had not been personally notified to him. He further argued that denying him the opportunity to challenge those tax assessments in his own name was incompatible with Article 47 of the EU Charter of Fundamental Rights, which guarantees everyone the right to an effective remedy before a tribunal¹.

The Luxembourg VAT authorities, as well as the Luxembourg District Court and Court of Appeal, refused to allow QJ to file such an objection on the ground that Luxembourg VAT law does not provide for such a remedy.   However, the Luxembourg Court of Cassation referred the case to the CJEU for a preliminary ruling.

Findings of the Court

The Court first recalled that the EU Charter of Fundamental Rights applies in all situations governed by EU law.  It then noted that Article 273 of the EU VAT Directive requires Member States to adopt all legislative and administrative measures necessary to ensure the collection of all the VAT due within their territory and to prevent tax evasion.

The Court observes that the guarantee mechanism at issue constituted a measure adopted to ensure the collection of VAT due and that Article 47 of the Charter guarantees everyone the right to an effective remedy before a tribunal.

Decision of the Court

In light of the foregoing, the Court held that Article 47 of the Charter is applicable in judicial review proceedings brought by a company manager who is the subject of a guarantee decision.

The Court further held that the EU Charter precludes a national legislation that does not allow such a person, in the context of an appeal against that guarantee call decision, to challenge the underlying tax assessment for which he or she is held liable, where that assessment has become final. The fact that the manager could have challenged the original tax assessment on behalf of the company while acting as its manager does not deprive him or her of the right to defend himself or herself in the guarantee proceedings.

Accordingly, that person must be able to challenge the findings of fact and legal classifications on which the VAT assessments and the corresponding VAT debt are based, where this is necessary for the effective exercise of his or her rights of defence. This includes the ability to rely on any infringements of that person’s fundamental rights committed during the tax assessment procedure.

Our comments

This decision will certainly be welcomed by individuals who have been, or may in the future be, held personally liable for unpaid VAT debts of companies they manage or have managed.

However, the implications of the decision may extend well beyond the specific guarantee call mechanism at issue. The Court's reasoning is based on Article 273 of the EU VAT Directive, which broadly covers measures adopted by Member States to ensure the proper collection of VAT. As a result, the judgment confirms that the EU Charter applies in the context of VAT matters governed by EU law.

While the case specifically concerned the right to an effective remedy and a fair trial under Article 47 of the Charter, the Court's reasoning could support the application of other fundamental rights in the VAT arena. These may include the rights of defense, the presumption of innocence, the principles of legality and proportionality of criminal offences and penalties, and the right not to be tried or punished twice for the same offence (ne bis in idem).

The judgment therefore provides taxpayers and other affected persons with an additional basis for challenging certain decisions and procedures of the VAT authorities where fundamental rights protected under EU law may be at stake.

The Deloitte Luxembourg Indirect Tax Team remains at your disposal to discuss the potential impact on your organization.

Footnote

¹ Article 47 of the Charter foresees that:

 “Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article.

Everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law. Everyone shall have the possibility of being advised, defended and represented.

Legal aid shall be made available to those who lack sufficient resources in so far as such aid is necessary to ensure effective access to justice.”