The Russian Constitutional Court has limited recovery from individuals if no arrears can be recovered from a taxpayer

By its Resolution No. 32-P dated 2 July 2020 the Russian Constitutional Court has banned recovery from individuals under a civil law procedure (article 1064 of the Russian Civil Code) of damage caused to the state in the amount of arrears provided that the impossibility to recover such arrears in the manner established by tax legislation is not connected with the actions of the individual.

The Resolution has been issued in connection with the failure by an individual entrepreneur to pay VAT. The conclusions set out in it, however, can be applied to the liability of companies’ management.

Pepeliaev Group’s lawyers handled the case before the Russian Constitutional Court, which involved drafting an appeal of the individual, as well as replies to the statements of defence by the representatives of the State Duma, the Federation Council and the Russian President.