ع
The Court of Justice of the European Union delivered its judgment in case C-158/25 on July 16, 2026, addressing whether a former company director could contest the underlying VAT assessment issued to the business when held personally liable for unpaid taxes. In the proceedings involving applicant QJ against Luxembourg tax authorities known as the AEDT and the state, the court examined a guarantee call mechanism under national law that made directors jointly and severally responsible for corporate VAT debts. The CJEU concluded that denying the director an opportunity to challenge relevant findings from the now-final company assessment violated the right to an effective remedy, according to the judgment in QJ v Administration de l’enregistrement, des domaines et de la TVA and État du Grand-duché de Luxembourg.
Luxembourg’s Cour de cassation had referred three questions to the CJEU concerning the applicability of the Charter of Fundamental Rights to director liability rules, the scope of incidental challenges in guarantee call appeals, and the permissible grounds for such contests. The CJEU answered affirmatively on all points, ruling that Article 47 of the Charter applies because the guarantee call implements EU VAT directives aimed at ensuring proper tax collection and protecting the Union’s own resources. A VATupdate.com analysis of the decision highlighted that the court stressed the distinct legal interests of the director and the company, preventing the finality of the corporate assessment from becoming irrebuttable against the individual whose personal assets were at risk.
Reasoning in the judgment turned on the need for effective judicial protection when adverse decisions affect an individual’s rights, with the CJEU determining that national legislation could not bar a director from raising factual and legal objections to the VAT assessment insofar as they bore on personal liability. The court specified that such challenges could cover findings on tax bases, unpaid amounts, and any infringements of the director’s fundamental rights during the taxation process, though limited to what was necessary for defense. Confidentiality concerns around tax files could restrict full disclosure but must not render the right to a defense meaningless, the CJEU held.
Legal observers following the case, including those at Deloitte Luxembourg, noted that the ruling reinforces the Charter’s role in VAT matters by linking strict collection obligations under EU law to procedural safeguards for individuals. The decision builds on earlier jurisprudence such as the Åkerberg Fransson case, where the court established that VAT rules fall within the Charter’s scope due to their impact on the EU budget. This latest interpretation may prompt Luxembourg to adjust its Law of 12 February 1979 on value added tax to accommodate incidental challenges in guarantee call proceedings.
Directors now have practical avenues to request access to relevant audit correspondence and calculations or to coordinate defenses with any ongoing company matters, according to strategies outlined in commentaries on the VATupdate.com briefing of the judgment. The ruling does not release the director from liability nor invalidate the original assessment against the company but ensures an effective opportunity to contest its basis when personal stakes are involved. Elvinger Hoss Prussen, the Luxembourg firm that represented the successful applicant QJ, described the outcome as a landmark affirmation of directors’ defense rights in a statement following the July decision.
The implications extend potentially beyond VAT to other areas of Luxembourg general tax law involving personal liability for corporate obligations, a development that could influence similar mechanisms across EU member states. The CJEU emphasized that while companies and their managers are separate persons, interests may diverge once personal assets face enforcement, necessitating independent remedies. Future cases may test the precise boundaries of file access and the weight given to a director’s prior role in the company when balancing secrecy with defense needs.
