News referring to VAT

Recently, the Court of Justice of the European Union (CJEU) has settled a dispute between a Romanian company and the Regional Directorate of Public Finance (DGRFP), as the DGRFP refuses to such company the right to deduct VAT paid in relation to the services purchased from a taxpayer declared as “fiscal inactive”.

The CJEU has decided that it is an illegal practice of the Romanian tax authorities to refuse a taxpayer the right to deduct VAT on the ground that the partner who issued the invoice was declared inactive.

This decision of the CJEU applies retroactively from 2007. More precisely, if you were denied the right to deduct VAT from 2007 on the ground that the invoice issuer was declared inactive, you can now deduct such VAT.

Another effect of the CJEU’s decision is that the fiscal authorities can no longer refuse deduction of VAT on invoices issued by a service provider / vendor / declared as “fiscal inactive”.

The CJEU decision, however, does not mention anything about the net amount (i.e. the price) of the invoice, which means that the fiscal regime of such expense remains the same – non-deductible expense.

Paulopol Attorneys and Counselors team can assist you in VAT recovery procedures by analyzing, on a case-by-case basis, the causes for which VAT deduction was refused.