Landmark judgment of the CJEU of 27 February 2025 in case C-277/24 (Adjak) on the liability of management board members for a company’s tax debts
Management board members may be held jointly and severally liable with their entire assets for any company tax debts that arose during their term of office.
However, at the same time, the current rules do not allow them to defend themselves effectively, as they are unable to call into question the factual and legal findings made in the proceedings against the company. They can only challenge the formal grounds on which they are held jointly and severally liable for the company’s tax debts.
Although the legal provisions governing the tax liability of members of the management boards of capital companies may appear to protect their interests, in practice the application of these provisions raises many interpretative doubts and reveals significant legal loopholes.
Natural persons who were members of the management board at the time when the tax arrears arose, but who are no longer in that position at the time when the arrears are determined by the authority, may not request the taking of evidence or call into question the amount of the debt, e.g. by appealing against the decision.
The current rules therefore prevent former management board members from effectively defending themselves, which is contrary to the fundamental principles of EU law.
However, a landmark ruling by the CJEU on this issue was handed down on 27 February 2025 in Case 277/24 (Adjak). The CJEU has set out key procedural guarantees that should be granted to management board members in order to enable them to defend themselves effectively in cases concerning their joint and several liability for a company’s tax debts.
In the operative part of its judgment in the Adjak case, the CJEU ruled that although a third party (a member of the management board) who may be held jointly and severally liable for the tax debt of a legal person (a company) cannot be a party to the proceedings brought against that company to establish the tax debt of that legal person, it is however necessary for that third party (management board member), during any joint and several liability proceedings brought against that third party, to be able effectively to call into question the findings of fact and the legal classifications made by the tax authority in the context of the first set of proceedings, and to have access to the file of the tax authority.
Substance of the CJEU judgment
This is a landmark ruling that may have a significant impact on procedural practice, and should also serve as a basis for amending the relevant Polish legislation.
Moreover, the judgment may be invoked in all proceedings, regardless of their current status, i.e. whether or not they have been finally concluded.
The Adjak judgment was published in the Official Journal of the European Union on 22 April 2025. This date is important for the possibility of resuming closed proceedings concerning the joint and several liability of board members for a company’s tax debts.
As a result of the CJEU judgment, it is now possible to:
- Resume proceedings before the tax authorities within 30 days of the date of publication of the judgment in the Official Journal of the European Union
- Resume proceedings before administrative courts within 3 months from the date of publication of the judgment in the Official Journal of the European Union
It is therefore worth analysing whether it is possible to reopen proceedings, challenge previous negative decisions and recover tax liabilities paid or enforced against members of the management board.
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