Unreliable VAT Payer: No Blanket Application, Individual Assessment Required
The tax administration must not apply the unreliable-payer institute under Sec. 106a of the VAT Act in a blanket, schematic way. Each breach of obligations must be assessed individually — particularly with regard to the payer's person, the authority's previous experience with them, and the degree of risk the breach poses to public budgets.
Facts
The tax administration designated a payer unreliable after finding the criteria of the General Financial Directorate's methodological guidance on serious breaches fulfilled. The payer argued the authority mechanically ticked off the methodological criteria without considering the specific circumstances, its compliance history, and the actual threat to tax collection.
Legal assessment
The SAC stressed that unreliable-payer status is a serious interference — it has defamatory effects, triggers business partners' liability under Sec. 109(3) of the VAT Act, and effectively excludes the payer from part of the market. Precisely for that reason it is no automatic consequence of tabular criteria: the indeterminate concept of a 'serious breach' must be interpreted in the light of the specific case and the authority's reasoning must be reviewable. The GFD methodology is an aid, not a substitute for administrative discretion; a decision lacking an individual assessment of the payer and the real fiscal risk cannot stand.
Practical impact
For designated payers: appeal on the absence of individual assessment — the authority must weigh your payment history, the nature of the breach and the real fiscal risk, not just tick GFD methodology boxes; a decision lacking that reasoning is unreviewable. One year after the decision becomes final you may request removal of the status (Sec. 106ab(3) VAT Act). For customers: verify the counterparty's status on the date of each taxable supply, not just at onboarding — liability under Sec. 109(3) runs from the moment of publication — and file the check records with the invoices; ongoing register monitoring of regular suppliers is standard compliance.