In its recent judgment, the Supreme Administrative Court made a decision on joining value-added tax liability, when a customer made a payment on the supplier’s bank account that has not been published by the tax administrator in the public register.
The point of the problem in judgment No. 2 Afs 382 / 2019-33 consisted in the payment of the received taxable supply to the bank account of the supplier, which was not published in the register of VAT payers. Subsequently, the supplier did not pay VAT liability arising from the provided taxable performance. In this connection, the tax administrator initiated proceedings in the matter of unpaid VAT liability. The decision of the tax administrator was based on the logic of joint VAT liability pursuant to Section 109 (2) of Act No. 235/2004 Coll., VAT Act, that the so-called knowledge test is met (the customer knew, could or should have known that the tax would not be paid by his supplier), therefore the customer was liable for unpaid tax. Based on the join VAT liability the tax administrator assessed the unpaid VAT to the customer.
Both the Regional Court and the SAC argued with an earlier SAC judgment No. 5 Afs 78 / 2017-33, which concluded that the join VAT liability does not arise solely from the payment of tax to the supplier's foreign bank account, which is not published by the tax administrator. He argued similarly in the current judgment, which, even after referring to the case law of the Court of Justice of the European Union, that the customer did not commit infringement when he made the payment to an account other than the one registered by the tax administrator moreover, this fact does not in itself give rise to joint liability for unpaid VAT. In this context, the SAC emphasized that in order to apply joint VAT liability, it is also necessary to prove to the recipient of the taxable performance that the knowledge test was met. In any case, this condition must be assessed individually and cannot be generalized, as the tax administrator foresaw in this case.
After evaluating the other facts, the SAC agreed with the arguments of the Regional Court and found the cassation complaint groundless, as the customer's joint liability for unpaid VAT did not arise. In order to arise joint VAT liability, the proof that the customer could or should have known that the tax would not be paid by his supplier should be made. The argument that the payment was made to an unpublished bank account in the VAT register was not sufficient. On the contrary, it would be necessary to provide other evidence, such as information that the customer will be unable to pay the tax or that he does not intend to pay the tax.
