C-158/25: the person held liable may challenge the final tax assessment indirectly

CJEU, judgment of 16 July 2026 — C-158/25, QJ v AEDT (Luxembourg), ECLI:EU:C:2026:591 · Full text (PDF)

The case

On 17 March 2018 the Luxembourg tax administration (AEDT) issued two VAT assessments against the company VN for 2014 to 2016. The company’s challenge was out of time; the assessments became final, and the tax went unpaid (para. 11). On 16 May 2019 the AEDT issued a liability notice against QJ, the former director responsible for day-to-day management from 2013 to 2019, under Articles 67-1 to 67-3 of the Luxembourg VAT Act: a fault-based liability of the company officer for the VAT owed but not paid by the company (paras 8-10, 12).

In the liability proceedings QJ disputed the company’s underlying tax debt itself. The Luxembourg courts cut that objection off: the tax assessments were final; as the then director he could have challenged them in the company’s name within the time limit; the person held liable has no challenge of his own against the tax assessment; and, they held, the Charter did not even apply for want of any implementation of EU law (paras 13-17). The Cour de cassation referred both the applicability question and the effective-remedy question to the Court of Justice (para. 20).

The court’s key reasoning

The Charter applies — the civil-law wrapping offers no shelter. A national rule that secures recovery of unpaid VAT from a company’s director implements Article 273 of the VAT Directive read with Article 325(1) TFEU (paras 27, 30 et seq.). That Luxembourg frames the liability as a special case of civil damages liability is “irrelevant”: every national measure that contributes to recovering unpaid VAT from the taxable person or from a third party ensures the correct collection of the tax and, as the case may be, combats evasion (para. 33) — the more so as the “damage” here was identical in amount to the unpaid VAT (para. 35). The requirements of Article 47 of the Charter therefore apply in the liability proceedings (paras 37-40).

Finality carries weight — but not into the very substance of the defence. The Court confirms its Glencore line: being bound by findings from related proceedings is permissible in principle (para. 48), and finality serves legal certainty (para. 49). It is otherwise, however, “where the person concerned is in fact entirely deprived of the right to challenge, appropriately and effectively, the findings of fact and legal assessments concerned in the proceedings concerning him. Such an exclusion would impair the very substance of that person’s rights of the defence” (para. 50). In the liability proceedings the tax assessment against the company is nothing more than a piece of evidence — and evidence must be open to challenge (para. 51).

Full indirect review — including the taxable amount and the figure. The court hearing the challenge to the liability notice must be able to review, indirectly, all the findings of fact and legal assessments on which the liability is based, in so far as they are decisive for the outcome — expressly including the taxable amount and the amount of the unpaid VAT (para. 55). No free-standing remedy against the tax assessment is required; indirect judicial review suffices (para. 53).

The representative role changes nothing. The point with the greatest practical force: the possibility of indirect challenge must “not depend on” whether the director, in view of the scope of his duties, was in a position to contest the assessment in the company’s name during the tax procedure or within the time limit (para. 56). For the rights of the defence “are subjective in nature, so that the parties concerned must themselves be able to exercise them effectively” — and the interests of the company and of the natural person representing it may diverge (para. 57). Nor does the particular effectiveness of the liability mechanism as a collection tool justify wholly excluding the rights of the defence (para. 59). The person held liable may also raise, indirectly, infringements of his own fundamental rights committed during the tax procedure against the company (para. 61); tax confidentiality is to be accommodated through case-by-case balancing, not wholesale denial of access (paras 62-65).

Where the decision sits in the case-law

C-158/25 is, for now, the capstone of the procedural-rights trilogy Glencore (CJEU, judgment of 16 October 2019 — C-189/18) — Adjak (CJEU, judgment of 27 February 2025 — C-277/24) — C-158/25: from the taxable person’s access to the file, through the rights of the third party pursued for payment, to full indirect review of final underlying assessments. The Court also imports the thought from Adler Real Estate (CJEU, judgment of 9 September 2021 — C-546/18): a person who took part in earlier proceedings only as the representative of a legal person cannot be met, in his own proceedings, with the binding effect of the earlier decision (paras 19, 57).

For German law, the force of the decision lies in section 166 of the Fiscal Code (AO). That provision extends the effect of a final tax assessment to a person who could have contested it as the taxpayer’s representative — precisely the reasoning deployed by the Luxembourg courts and rejected by the Court of Justice at paras 56 et seq. for liabilities determined by EU law. The case decides an officer’s fault-based liability — the functional counterpart of section 69 AO (liability of representatives under sections 34 and 35 AO for intentional or grossly negligent breaches of duty). For VAT liability notices under section 69 AO the decision is therefore directly relevant: within the field of VAT, the third-party effect of section 166 AO against the director requires limitation in conformity with EU law. Whether the same holds for section 71 AO (liability of the tax evader and of participants in the evasion) the Court did not decide; in our own assessment the better arguments say it does, since section 71 liability equally serves the recovery of unpaid VAT within the meaning of para. 33, and the “very substance” formula of para. 50 does not distinguish according to the ground of liability — least of all to the detriment of a person simultaneously facing a criminal allegation.

The literature

German commentary documents the fault line the Court now addresses: liability under section 69 AO is partly accessory, partly free-standing; the liability claim also attaches to tax finally assessed within the meaning of section 166 AO, and the reach of the resulting preclusion of objections against the director has long been contested (Hartmann/Müller, in: Flore/Tsambikakis, Steuerstrafrecht, 3rd ed. 2025, § 69 AO para. 8). Wäger reports the Court’s parallel line on director liability (C-613/23): recourse is permissible only where the director can exonerate himself by relying on all circumstances telling against his responsibility (Wäger, UR 2025, 81 [110]). Reiß supplies the systematic frame of the defence critique: the appropriate anti-fraud instrument is liability — but it must then be fully formed in rule-of-law terms and must not produce multiple burdens without effective judicial protection (Reiß, UR 2020, 408 [415 et seq.]).

Three levels — kept strictly apart

Official ruling: The requirements flowing from the right to an effective remedy in Article 47 of the Charter apply to an action brought by a company director against a liability notice issued under a national rule making him jointly and severally liable for the company’s VAT where he culpably fails to meet his statutory VAT obligations (operative part 1). Article 47 of the Charter precludes a national rule that bars the person held liable from indirectly contesting the final tax assessment issued against the company; he must be able to contest the findings of fact and the legal assessments on which the authority relies — including the taxable amount and the amount of the unpaid VAT, in so far as relevant to his defence, and any infringements of his own fundamental rights committed during the tax procedure (operative part 2).

Administrative practice: There is no express administrative provision. No published adjustment of German administrative practice on the third-party effect of final assessments in VAT liability cases to this decision exists as yet.

Our conclusion for the defence: In our assessment, C-158/25 shifts the statics of every VAT liability case against company officers. The reflex “the assessment is final — all that remains in dispute is fault” no longer holds within the field of VAT: the existence and amount of the primary debt can be reopened in full in the liability proceedings, in so far as decisive — irrespective of whether the director could once have contested the assessment for the company. Section 166 AO must be confined accordingly in conformity with EU law. The extension to section 71 AO is our own, well-arguable evaluation, not a decided question. Anyone currently facing liability proceedings should not surrender the objections against the underlying tax debt without a fight.

Defence levers

• Demand full indirect review: in the proceedings against the liability notice, attack the existence and amount of the company’s debt — including the taxable amount (para. 55); the finality of the assessment against the company is no bar (paras 50 et seq., 59).
• Confine section 166 AO by reference to EU law: the objection that the director could have contested the assessment as representative is immaterial under paras 56 et seq. — the rights of the defence belong to him personally, and possible conflicts of interest between company and officer are precisely the reason.
• Enforce access to the file: access to the entire file on which the administration relies (paras 43, 62); tax confidentiality justifies only a case-by-case balancing, not a blanket refusal (paras 64 et seq.).
• Raise your own fundamental-rights violations: procedural breaches in the tax procedure against the company (for instance in the gathering of evidence) can be pleaded indirectly (paras 54, 61).
• Hold the gate open: labelling the liability “civil” or “compensatory” does not remove it from EU law — every measure recovering VAT implements EU law (para. 33).

Defence assessment: POSITIVE · Keywords: Article 47 of the Charter, director liability, finality, indirect challenge, section 166 AO, section 69 AO

FAQ

Source box

Decision: CJEU, judgment of 16 July 2026 — C-158/25, QJ v Administration de l’enregistrement, des domaines et de la TVA (AEDT) and Grand Duchy of Luxembourg, ECLI:EU:C:2026:591 (First Chamber; Advocate General Medina, Opinion of 5 March 2026).

Literature: - Hartmann/Müller, in: Flore/Tsambikakis, Steuerstrafrecht, 3rd ed. 2025, § 69 AO para. 8 (accessory nature of the liability; link to section 166 AO; dispute over the preclusion of objections). - Wäger, UR 2025, 81 (110) (parallel line C-613/23: the director’s opportunity to exonerate himself; proportionality of recourse). - Reiß, UR 2020, 408 (415 et seq.) (liability as the systemically sound instrument instead of cumulative refusal; rule-of-law requirements).

Related decisions: CJEU, judgment of 16 October 2019 — C-189/18, Glencore (dossier); CJEU, judgment of 27 February 2025 — C-277/24, Adjak; CJEU, judgment of 9 September 2021 — C-546/18, Adler Real Estate; CJEU, judgment of 13 October 2022 — C-1/21, Direktor na Direktsia; CJEU, judgment of 12 December 2024 — C-331/23, Dranken Van Eetvelde (dossier).