On 29 January 2024, a preliminary ruling request from the Romanian Supreme Court to Court of Justice of the European Union, was published in the Official Journal of the European Union. The preliminary question refers to the right to deduct input VAT paid for purchase of production assets which were subsequently reclassified as out of the scope of VAT by the tax authorities.
It happened that one commercial transaction has been treated differently by the tax authorities, i.e.:
- by Seller side – as a transaction for which VAT is due (and VAT has been received from the Customer and paid to the tax authorities by the Seller);
- by Customer side – as a transaction for which VAT is not due/out of the scope (and VAT is not deductible for the Customer).
The current case involves the interpretation of Directive 2006/112, particularly whether the tax authorities of a Member State may, in line with the principles set in VAT Directive, refuse the right to deduct VAT paid on a sales transaction that has been reclassified as a transfer of assets not subject to VAT.
Hence, the preliminary question asks whether principles indicated in VAT Directive prevent the deduction of VAT in cases where the VAT has already been collected and cannot be refunded under national law also due to prescription period elapsed.
The request for a preliminary ruling to Court of Justice of the European Union is available here.
The information contained in the alert are general and do not represent the tax opinion and do not cover all changes resulting from the proposed regulation. Before making any decision or action, as well as in case of any questions or concerns, please contact our tax advisers, tel.+48 22 250 31 00.