In view of the issues raised regarding the treatment to be given to tax claims in the acquittal process of liabilities in the context of a bankruptcy procedure, the Eighth Section of the Provincial Court of Alicante has set a precedent by requesting, by Order of 11 October 2022, the opinion of the Court of Justice of the European Union (CJEU) on the compatibility of Article 23.4 of Directive (EU) 2019/1023 (Restructuring and Insolvency Directive( (the “Directive”) whether the exclusion of tax claims shall be accorded in accordance with the Spanish insolvency law rules. All this, in accordance with Article 267 of the Treaty on the Functioning of the European Union (TFEU), which regulates in detail the principles, policies, external actions and institutional and financial organisation of the European Union.
What are the proceedings on which the question referred to the CJEU was made?
The question referred to for a preliminary ruling to the CJEU derives from a conflict of individuals declared bankrupt, and the claims made by the Spanish national tax administration agency (AEAT or Agencia Estatal de la Administración Tributaria). It has its origin in the exoneration of debts requested by the debtors within the bankruptcy proceeding, which was rejected by the AEAT claiming that it should be considered a privileged public credit claim.
The bankruptcy proceeding concluded that the AEAT's public law claims were not exonerated. For this reason, the debtors appealed to the Provincial Court of Alicante to have these credits included in the exoneration, and thus reduce the total liabilities.
What is raised in the question referred to the CJEU?
The question referred for a preliminary ruling refers to the admissibility of the exclusion of public claims from the acquittal of debts. This is a recurring issue in the Spanish courts, which is based on the compatibility of the exoneration regime provided for in Law 16/2022, of 5 September, amending the Consolidated and Restated Insolvency Law (TRLC), which incorporates the Directive.
To assess this issue and decide on it, the CJEU analysed Article 23.4 of the Directive.
Specifically, Article 23.4 of the Directive provides that Member States may exclude certain specific categories of debts, or limit access to it or set a longer period for debt discharge, provided that the exclusions are duly justified. However, it makes explicit reference to secured debts, debts arising from or related to criminal sanctions, debts arising from non-contractual liability, debts relating to maintenance obligations arising from family, kinship, marriage or affinity relationships, debts incurred after the application or the opening of proceedings leading to the exoneration of debts, and debts arising from the obligation to pay the costs of a procedure leading to the discharge of debts. On the contrary, it makes no mention of public law debts (e.g. tax claims).
What has the CJEU resolved?
By a recent judgment dated 11 April 2024, the CJEU has declared that the list of claims provided for in Article 23.4 of the Directive is not exhaustive and that the exclusion of a category other than those listed can occur only if it is duly justified in the national legislation, that is, that it pursues a legitimate public interest.
In this sense, it can be interpreted that the CJEU endorses the limitation of the exemption of tax claims, as the Spanish legislator does seem to justify it, as it is specifically referred to the explanatory notes to the TRLC, which states that the exceptions must be based on the special relevance of their satisfaction for a fair and supportive society, based on the rule of law (such as debts for maintenance, public law, those derived from criminal offences or even debts for non-contractual liability).
In summary
It is important to take into account the clarification made by the CJEU and what this means for bankruptcy matters. This undoubtedly establishes the interpretative guideline that will guide both the Provincial Court of Alicante and future proceedings that may arise in other courts.
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