Let sleeping lions lie

For years, the Belgian company Cezam did not submit VAT returns because its request for installment payments had previously been rejected by the tax authorities.

The authorities tolerated this for a while, but after unsuccessful reminders, they assessed the tax liabilities for the missing years themselves. As a penalty, they imposed 20% of the payable tax amount, without considering the deductible tax.

In case C-418/22, the decision of the European Court of Justice states that the principle of proportionality was not violated since the deductible tax was taken into account by the authorities during the VAT assessment (meaning the taxpayer’s right was not violated), and the 20% rate overall corresponds to the tax interest at stake in a proportionate manner.