ECJ-Guarantee required upon registration
The principal EU VAT directive contains articles which permit EU member states to request a financial guarantee at the time businesses apply for VAT registration. Such guarantees are generally required where there is a history of non-compliance, or other factors which may risk the payment of revenue due to the authorities.
In a recent Slovakian case, a large guarantee was requested on the basis that the director of a business had formerly been a director of a non-compliant business. The amount requested was 10 times the estimated annual turnover of the new business, and was subsequently appealed.
Questions were referred to the ECJ and the judge's opinion was that whilst such guarantees are perfectly acceptable, the amount requested must be proportionate to the figures involved.