Elvinger Hoss Prussen wins landmark CJEU ruling on directors’ defence rights in guarantee call dispute

Elvinger Hoss Prussen is proud to announce that it secured a significant victory before the Court of Justice of the European Union (the “CJEU”) in case C-158/25, decided on 16 July 2026. Acting for the successful party, the firm prevailed in a landmark case concerning the personal and joint liability of company directors for unpaid VAT owed by the company they managed, and the scope of their right to an effective remedy under Article 47 of the Charter of Fundamental Rights of the European Union (the “Charter”).

Background of the case 

The case arose after the Luxembourg VAT authorities issued a bulletin d'appel en garantie (“guarantee call”) under Articles 67-1 et seq. of the LTVA, seeking to hold a former company director (“QJ”) personally and jointly liable for unpaid VAT owed by the company he had managed. QJ challenged the guarantee call, but his objection and subsequent action before the Luxembourg District Court and Appeal Court were unsuccessful.

QJ then appealed to the Court of Cassation, arguing that Article 47 of the Charter applied because the procedural rules concerned VAT and therefore fell within the scope of EU law. The dispute led to a preliminary reference to the CJEU on whether a director pursued under a guarantee call may, when challenging that recovery measure, also contest the underlying VAT assessment issued to the company, even if that assessment has become final.

The CJEU’s ruling 

• First, the CJEU confirmed that the Charter applies to the guarantee call as provided under Articles 67-1 et seq. of the LTVA. Because the guarantee call contributes to the effective recovery of VAT and therefore implements EU law, in particular Article 273 of the VAT Directive, the procedural safeguards guaranteed by Article 47 of the Charter must be respected.
• Second, the CJEU held that a director pursued under such a guarantee call must have access to effective judicial protection. In practical terms, this means that, when challenging the recovery decision addressed to him or her personally, the director must be able to contest, by way of incidental review, the factual findings and legal assessments contained in the VAT assessment issued to the company, including those relating to the taxable amount and the amount of VAT, insofar as those elements are relevant to the director's defense against joint liability.
• The CJEU also made clear that the director may rely on possible infringements of his or her fundamental rights committed during the tax assessment procedure conducted against the company. At the same time, the Court indicated that this does not necessarily mean that the director had to be formally involved, in a personal capacity, in the original tax assessment procedure against the company.

Key takeaways

• This judgment is highly significant for Luxembourg VAT recovery and tax litigation practice. It confirms that where a company director is personally exposed to recovery of a company’s VAT, that person must have a real and effective opportunity to challenge the basis of that debt. National procedural rules that prevent any such challenge are incompatible with Article 47 of the Charter.
• Under the current Luxembourg framework, a director targeted by a guarantee call provided for under Articles 67-1 et seq. of the LTVA does not have a separate autonomous remedy against the ex officio VAT assessment issued to the company. Once that assessment has become final, the director is in principle unable to dispute the existence or amount of the tax debt through an independent action and his or her defense may be substantially limited to the conditions governing personal liability.
• The CJEU’s ruling changes that landscape. It requires national courts to permit the director, when contesting the recovery measure addressed personally to him or her, to challenge incidentally the factual and legal elements underlying the company’s VAT assessment. In practice, this means that the decision of the Luxembourg Court of Appeal denying any defense on the underlying tax debt will have to be reconsidered.
• Further, a similar line of reasoning could be tested in the field of direct taxation, where an analogous guarantee-call mechanism exists under § 119 of the General Tax Law of 22 May 1931, as amended (Abgabenordnung). To the extent such mechanism falls outside the scope of EU law, the debate would arise not under Article 47 of the Charter, but rather under domestic procedural guarantees and, where applicable, Article 6(1) of the ECHR, which guarantees, in the determination of civil rights and obligations or of any criminal charge, the right to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law, subject to the usual qualifications as to its application in tax matters.