Ruling [CJEU] ¦ Absolute 15-Year Limitation for EU Fraud Upheld, and Criminal Organisations May Be Punished Harder Than Their Frauds

Gidzhinov: a hard 15-year limit for EU fraud cases is lawful, and criminal organisations may be punished harder than their frauds

In a judgment of 15 October 2026 in Case C-321/25 [Gidzhinov], the Court of Justice of the European Union answered two questions from the Sofia City Court on how far EU law shapes national criminal law against organised VAT fraud. A rule under which prosecutions for serious fraud against the EU budget become time-barred once 15 years have passed without a final conviction, whatever interruptions or mishaps occur along the way, is compatible with Article 325 TFEU and the PIF Convention – unless it produces a systemic risk of impunity in the Member State concerned. And the Framework Decision on organised crime does not stop a Member State from punishing the leaders and members of a criminal organisation more severely than the offences the organisation was set up to commit, with maximum sentences above five years.

Four VAT frauds, one organised crime group and three judges

The case concerns five defendants, identified only by letters, who were indicted in Bulgaria in 2015. Two are accused of leading an organised crime group set up for the purpose of enrichment between March 2011 and November 2012, an offence punishable by five to 15 years’ imprisonment. The other three are accused of participating in that group, which carries three to ten years. Four of them are also charged with VAT fraud through the wrongful deduction of input tax between June 2011 and October 2012, in amounts of roughly EUR 0.63 million, EUR 1.13 million, EUR 1.02 million and EUR 1.24 million. Each of these tax offences carries three to eight years and confiscation of all or part of the offender’s assets, with an overall cap of eight years. The total suspected fraud exceeds EUR 4 million.

The trial has already restarted twice. The first panel held 48 hearings between 2015 and 2021 before its judge was appointed a European Delegated Prosecutor, and the case had to begin again from scratch. A second panel held 18 hearings between 2022 and 2025 without taking any evidence. That judge retired in March 2025, and a third panel took over.

Under the Bulgarian Criminal Code, the ordinary limitation period depends on the maximum penalty and can be interrupted or suspended, but an absolute period of one and a half times the ordinary period applies regardless. For the VAT offences and for participation in the group, that absolute limit is 15 years and expires in 2026 and 2027. For leading the group, which carries up to 15 years, it is 22 years and six months, running to May 2035. The referring court considered it objectively impossible to complete proceedings at three levels of jurisdiction before the shorter deadlines.

Bastian Schwind-Wagner _Follow

"After Lin and Lin II, one could have expected the Court to treat any rigid limitation deadline in EU fraud cases with suspicion. Gidzhinov shows the limits of that line: a 15-year absolute period is fine, and a case that runs out of time because judges change and proceedings restart is a national failure, not proof of systemic impunity.

The second answer may matter more in practice. Organised VAT fraud is rarely the work of one person, and EU law lets Member States punish the organisation more severely than the fraud itself, which in Bulgaria also means a much longer limitation horizon. Banks should keep that in mind when deciding how long VAT fraud files and suspicious activity records stay retrievable."

The legal questions

The Sofia City Court first asked whether Article 325 TFEU and Article 2(1) of the PIF Convention preclude a limitation regime that is set solely by reference to the maximum penalty, ignores the factual and legal complexity of the case and makes no allowance for events that force proceedings to restart. It relied on the Court’s 2023 judgment in Lin, which requires national limitation rules to allow effective punishment of VAT fraud and rules out a systemic risk of impunity, particularly in complex cases.

Its second question was whether Article 3(1)(b) of Framework Decision 2008/841/JHA precludes national law that punishes an agreement to commit offences – here, leading or participating in an organised crime group – with a higher maximum sentence than the offences the agreement targets. The Bulgarian court leaned towards seeing a proportionality problem in punishing the organisation more harshly than the tax fraud that was its only purpose.

Why the case falls within EU fraud law

Because the conduct took place in 2011 and 2012, the PIF Convention applies rather than the PIF Directive that replaced it on 6 July 2019. With more than EUR 4 million at stake, the fraud is “serious” within the meaning of Article 325 TFEU and the PIF Convention, in line with Lin and the Court’s July 2026 Grand Chamber judgment in Lin II.

The Court also confirmed that Article 325(1) TFEU covers attempts as well as completed fraud and, recalling Taricco, that forming a criminal association with a view to committing VAT offences is itself fraud affecting the Union’s financial interests. If the charges are proven, the VAT frauds and the participation in the organised crime group both amount to serious fraud against the EU budget, and both attract the obligation to provide effective and dissuasive criminal penalties.

A hard limit is acceptable if it leaves enough time

Limitation rules for PIF offences were not harmonised at the material time and are only partly harmonised under the PIF Directive, so they fell within national competence. Member States must still exercise that competence in line with Article 325 TFEU and the PIF Convention, and a systemic risk that serious fraud goes unpunished is incompatible with both.

An absolute limitation period serves legal certainty by preventing proceedings from being stretched indefinitely through repeated interruptions. It must, however, be long enough not to make protection of the EU’s financial interests impossible or excessively difficult in practice. That depends on the limitation rules as a whole and on how complex it is to establish the offences concerned.

Applying that test, the Court agreed with Advocate General Campos Sánchez-Bordona that 15 years in principle gives Bulgarian authorities reasonable time to obtain a final judgment in serious fraud cases, even across three instances. The referring court had not shown that obtaining a final decision within that time was, on a systemic basis, excessively difficult in Bulgaria. Changes in the composition of a trial panel in an isolated case do not establish a systemic risk of impunity.

Organised crime may carry heavier sentences than the target offence

On the second question, the Court first noted that it could not second-guess the referring court’s classification of the Bulgarian offences under Article 2(b) of the Framework Decision (the agreement variant) instead of Article 2(a) (active participation), as the Commission had suggested. The answer would be the same under either provision.

The language versions of Article 3(1) diverge. The Italian text speaks of a maximum sentence “between two and five years”, while most others, including the English, require a maximum of “at least between two and five years”. The Court resolved this through the legal basis and purpose of the Framework Decision, which was adopted under a minimum harmonisation power. Article 3 therefore only sets floors, and Member States may set maximum penalties above five years.

The Framework Decision also allows the organisation offence to be punished more severely than the offences it aims at. It covers organisations formed to commit offences punishable by at least four years, while letting Member States punish the agreement with more. A criminal organisation is a structured association of more than two people acting over time to commit serious offences for financial or material gain, and the EU legislature adopted the Framework Decision to counter the particular dangers of such organisations and the difficulty of detecting them.

Proportionality under Article 49(3) of the Charter still applies: the penalty must reflect the seriousness of the offence and deter effectively without going beyond what is necessary. In the Court’s view, the Bulgarian ranges of five to 15 years for leading and three to ten years for participating in a group dedicated to VAT fraud stay within those limits.

What it means for fraud and money laundering cases

For prosecutors and investigators, Gidzhinov separates systemic failure from failure in a single case. After Lin and Lin II, national limitation regimes for EU fraud are under close scrutiny, yet an absolute deadline is compatible with EU law as long as it is not too short across the board to bring complex fraud to a final judgment. One case that runs out of time because of judicial reassignments and restarts does not show that, and the court raising the issue has to demonstrate a structural pattern.

Carousel and missing trader VAT fraud is almost always organised, and EU law lets Member States treat the organisation itself as the more serious wrong. In Bulgaria, where limitation follows the maximum penalty, that also changes the timeline: leading the group carries a 22-and-a-half-year horizon, so the organisation charge can outlive the underlying tax offences.

For financial institutions, both tax evasion and participation in a criminal organisation are predicate offences for money laundering. These prosecutions have a long tail. Conduct from 2011 and 2012, an indictment in 2015, and the case still at first instance in 2025 mean that records, transaction data and suspicious activity reports filed years earlier may still be needed as evidence, which makes retention periods and the quality of reporting at the time of the suspicion relevant long after an account has been closed.

Dive deeper

• CURIA ¦ Case C-321/25 [Gidzhinov], Judgment of the Court (Third Chamber) of 15 October 2026 ¦ Link