The High Court has established that the tax authorities are under an obligation to provide concrete evidence that the company director is liable for the non-disclosure and/or non-payment of tax obligations by the insolvent company.
In short, the tax authority held the company liable for non-disclosure and non-payment of tax liabilities. At the same time, the tax authority also held the director jointly and severally liable.
In dismissing ANAF’s appeal, the High Court held that the director’s liability in this case is tortious (so bad faith must be proven), and at no point does the fiscal legislation establish that the mere capacity as director entails a presumption of bad faith.
Moreover, the Court held that the tax authority cannot rely on mere factual matters (such as having the capacity as director or the company’s failure to pay taxes) but is obliged to produce evidence to prove that the director acted intentionally. Furthermore, the High Court has expressly stated that poor management policies or decisions that are inappropriate for the financial development of the company cannot be assimilated to bad faith.