Judgment;Summary — ECLI:EU:C:2022:512
Date: 2022-06-30
Language of the case: Romanian
Court formation: Seventh Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Romania

Summary C-146/21 – 1 
Case C-146/21 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
3 March 2021 
Referring court:  
Curtea de Apel Bucureşti (Court of Appeal, Bucharest, Romania) 
Date of the decision to refer:  
9 December 2020 
Appellant:  
Direcţia Generală Regională a Finanţelor Publice Bucureşti ‒ 
Administraţia Sector 1 a Finanţelor Publice 
Respondents:  
VB 
Direcţia Generalā Regională a Finanţelor Publice Bucureşti ‒
Serviciul Soluţionare Contestaţii 1 
….. 
Subject matter of the main proceedings 
Appeal brought by the Direcția Generală Regională a Finanțelor Publice București 
‒ Administrația sector 1 a finanțelor publice (Regional Directorate-General of 
Public Finances of Bucharest ‒ Public Finance Office, Sector 1, Romania) 
(appellant and defendant at first instance) against VB (respondent and applicant at 
first instance) and the Direcția Generală Regională a Finanțelor Publice 
București – Serviciul soluționare contestații 1 (Regional Directorate-General of 
Public Finances of Bucharest – Complaints Office 1, Romania) (respondent and 
defendant at first instance) against the judgment of the Tribunalul București 
(Regional Court, Bucharest, Romania) concerning the annulment of certain 
administrative fiscal acts relating to VAT 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-146/21 
 
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Subject matter and legal basis of the reference for a preliminary ruling 
Pursuant to Article 267 TFEU, the referring court seeks interpretation of Directive 
2006/112/EC and of the principle of neutrality 
Question referred for a preliminary ruling 
In circumstances such as those in the main proceedings, do Directive 
2006/112/EC and the principle of neutrality preclude national legislation or a tax 
practice in accordance with which the reverse charge mechanism (simplification 
measures), which is mandatory for the sale of standing timber, is not applicable to 
a person who has been the subject of an inspection and who has been registered 
for VAT purposes following that inspection, on the grounds that the person 
subject to the inspection had neither applied for nor obtained registration for VAT 
purposes either before the transactions were carried out or by the date on which 
the upper limit [for exemption] was exceeded? 
Provisions of EU law and the case-law cited 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, in particular, Article 9(1), Article 193 and Article 395(1) 
Council Implementing Decision 2010/583/EU of 27 September 2010 authorising 
Romania to introduce a special measure derogating from Article 193 of Directive 
2006/112/EC on the common system of value added tax 
Council Implementing Decision 2013/676/EU of 15 November 2013 authorising 
Romania to continue to apply a special measure derogating from Article 193 of 
Directive 2006/112/EC on the common system of value added tax 
Council Implementing Decision (EU) 2016/1206 of 18 July 2016 amending 
Implementing Decision 2013/676/EU authorising Romania to continue to apply a 
special measure derogating from Article 193 of Directive 2006/112/EC on the 
common system of value added tax 
Judgments of 6 October 1982, CILFIT v Ministry of Health, 283/81, 
EU:C:1982:335, paragraph 21; of 9 September 2015, Ferreira da Silva e Brito 
and Others, C-160/14, EU:C:2015:565, paragraphs 37 and 38; of 7 March 2018, 
Dobre, C-159/17, EU:C:2018:161, paragraphs 32 and 33; of 20 October 2016, 
Plöckl, C-24/15, EU:C:2016:791, paragraphs 22 and 23, and of 6 February 2014, 
Fatorie, C-424/12, EU:C:2014:50, paragraph 59 
Provisions of national law cited 
Legea nr. 571/2003 privind Codul fiscal, în forma în vigoare în 2011 (Law 
No 571/2003 establishing the Tax Code, in the version in force in 2011) 
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Article 134, paragraphs 2 and 3, pursuant to which tax becomes chargeable on 
the date on which the tax authority becomes entitled to require its payment by a 
person liable for payment of the tax, which is to say, on the date on which a 
person incurs the obligation to pay the tax to the treasury; paragraph 4, in 
accordance with which the tax regime that applies to a taxable transaction is the 
regime in force on the date on which the chargeable event occurs, and 
paragraph 6, in accordance with which, by way of derogation from the provisions 
of paragraph 4, in respect of the transactions provided for in Article 160, the 
applicable regime is that which applies on the date when the tax becomes 
chargeable 
Article 134(1), which provides that the chargeable event occurs on the date of the 
sale of goods or the provision of services 
Article 160(1), which provides, by way of derogation from Article 150(1), that, in 
the case of taxable transactions, the person liable for payment of the tax is the 
recipient in the context of the transactions referred to in paragraph 2, provided that 
both the supplier and the recipient are registered for VAT purposes; 
Article 160(2)(b), which provides that reverse charging applies, inter alia, on the 
supply of standing timber and woody material 
Ordonanța de urgență a Guvernului nr. 44/2008 privind desfășurarea activităților 
economice de către persoanele fizice autorizate, întreprinderile individuale și 
întreprinderile familiale (Government Emergency Order No 44/2008 on the 
economic activities of authorised natural persons, sole traders and family 
businesses), Article 6(1) of which provides that any economic activity carried on 
in Romania on a permanent, occasional or temporary basis by an authorised 
natural person, a sole trader or a family business must be registered and 
authorised, in accordance with that emergency order 
Hotărârea Guvernului nr. 44/2004 pentru aprobarea Normelor metodologice de 
aplicare a Legii nr. 571/2003 privind Codul fiscal (Government Decision 
No 44/2004 approving the procedure for the application of Law No 571/2003 
establishing the Tax Code), Paragraph 62(2)(a) of which provides that, where a 
taxable person reaches or exceeds the upper limit for exemption and has not 
applied for registration, the tax authorities shall require payment of the tax which 
the taxable person should have collected during the period between the date on 
which he should have applied for registration and the date on which non-
compliance with the relevant legislative provisions is established, and shall, at the 
same time, register the taxable person in question ex officio 
Outline of the facts and the main proceedings 
1 The respondent and applicant at first instance, VB, is the owner of forested land 
which, between 2011 and 2017, was utilised on the basis of a contract for the sale 
of standing timber concluded with a number of companies. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-146/21 
 
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2 Between 5 December 2017 and 2 February 2018, a tax inspection was carried out 
the purpose of which was to review the tax obligations relating to the period from 
1 October 2011 to 30 September 2017. 
3 The tax inspectors checked the sales of standing timber and found that, in 
September 2011, the turnover of the applicant at first instance had exceeded the 
119 000 Romanian Lei (RON) special upper limit for exemption for small 
businesses laid down in Article 152(1) of the Tax Code, in accordance with which 
VB should have registered for VAT purposes within 10 days of the end of 
September 2011 and become liable to VAT with effect from 1 November 2011. 
4 Since VB had failed to register for VAT purposes, the tax inspectors made a 
retroactive calculation of the VAT due from November 2011 onwards, applying 
the ‘percentage increase’ method on the basis that the sale price included VAT. 
The tax inspectors also required VB to register for VAT purposes and to submit 
declaration 70. VB complied with this on 20 November 2017, within the period of 
10 days granted him. 
5 In those circumstances, on the basis of the tax inspection report and by way of a 
tax assessment notice dated 16 February 2018, VAT was calculated on all the 
sales made by VB after he had exceeded the threshold of RON 119 000, without 
applying reverse charge measures, with the result that the VAT due was set at 
RON 196 634. 
6 VB lodged an objection against the assessment notice, arguing, in essence, that 
sales of standing timber are subject to the reverse charge mechanism, the 
application of which is not conditional on the supplier having a VAT registration 
number, since, in that regard, it is necessary for both parties to be taxable persons, 
irrespective of whether they have complied with the obligation to register for VAT 
purposes or not. 
7 That objection was rejected on 12 July 2018 on the ground that, in order for 
reverse charging to apply, it is a necessary condition that both the supplier and the 
recipient are registered for VAT purposes. 
8 In those circumstances, VB brought an action before the Tribunalul București 
(Regional Court, Bucharest, Romania), seeking annulment of the assessment 
notice and of the decision on his objection. The action was upheld on 24 June 
2019 and the assessment notice and the decision were annulled. VB was relieved 
of the obligation to pay RON 196 634 and the interest thereon, as well as the 
penalties applied. 
9 The Tribunalul București (Regional Court, Bucharest) held that, in accordance 
with the case-law of the Court, registration for the purposes of VAT is a purely 
formal requirement that did not alter the substance of the right of the applicant at 
first instance and that, where there is no specific evidence of tax evasion, the right 
to apply the mechanisms established by EU law cannot be denied. Consequently, 
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in the absence of any suspicion of tax evasion, the tax authority could not oppose 
the application of the reverse charge mechanism. 
10 It appeared from a systematic interpretation of the provisions of Article 160 of the 
Tax Code of 2003 and Paragraph 62(2)(a) of the procedure for the application of 
the Tax Code that, when it establishes that a taxable person has reached or 
exceeded the upper limit for exemption but has not applied for registration for 
VAT purposes, the tax authority is required to treat the taxable person as being 
registered for VAT purposes and to apply the reverse charge procedure governed 
by Article 160 of the Tax Code. Consequently, the tax authority had acted 
unlawfully in finding that the reverse charge procedure did not apply. 
11 On 5 September 2019 the Direcția Generală Regională a Finanțelor Publice 
București ‒ Administrația Sector 1 a Finanțelor Publice brought an appeal against 
that judgment before the referring court. 
Principal arguments of the parties to the main proceedings 
12 The appellant claims that the judgment at issue is incorrect, since VB not only 
failed to register for VAT purposes, but also took no legal steps to register in the 
companies’ register or with the competent tax authorities with reference to his 
economic activity. He never declared the income obtained and paid no taxes, 
duties or contributions to the treasury. 
13 VB has requested the Curtea de Apel București (Court of Appeal, Bucharest, 
Romania) to make a reference for a preliminary ruling on the interpretation of 
Directive 2006/112 and the principle of neutrality. 
Outline of the reasons for the reference for a preliminary ruling 
14 The referring court states that, in the present case, a decision must be given 
against which there is no judicial remedy under national law, within the meaning 
of Article 267 TFEU. 
15 After setting out the case-law of the Court on the principle of fiscal neutrality and 
the consequences of a taxable person’s failure to comply with a formal 
requirement, the referring court observes that the issue before it is whether reverse 
charging applies to sales of standing timber in the event that no VAT registration 
number has been obtained, bearing in mind that Romania was granted a 
derogation for the application of that simplification measure by means of several 
successive Council decisions. 
16 The referring court points out that, in addition to the general rule that VAT should 
be collected at each stage of the distribution chain, the EU legislature has provided 
for a derogating mechanism for the collection of the tax, namely reverse charging, 
which is a simplification mechanism, inasmuch as there is no actual payment of 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-146/21 
 
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VAT between the recipient and the supplier of goods or services and it is the 
recipient that is liable for payment of the input tax relating to the transactions 
carried out. In addition, at the same time the recipient is entitled to deduct that tax. 
Thus, the mechanism presupposes that, in respect of transactions between taxable 
persons, VAT is not actually collected, with the result that the final sale or final 
supply of services triggers the payment to the treasury of the VAT relating to the 
entire value of the sale to the final consumer. 
17 According to the referring court, even if VB had been registered for VAT 
purposes at the time he exceeded the upper limit for exemption laid down in the 
Tax Code, he would not have been under any obligation to collect VAT, as that 
obligation fell upon the purchasers of the timber, since the reverse charge 
mechanism would have applied to VB’s sales of standing timber. 
18 However, the principle of fiscal neutrality prohibits treating economic operators 
that carry on the same activity differently with regard to VAT, and the common 
system of VAT guarantees the complete neutrality of all economic activities as 
regards tax liability. 
19 The Curtea de Apel (Court of Appeal) observes that, in the case-law of the Court 
dealing with the issue of the relevance of the VAT registration number, it has been 
held that that number cannot be a substantive requirement for the application of 
the VAT system. 
20 The Curtea de Apel (Court of Appeal) is of the opinion that, although EU 
legislation and the case-law of the Court allow the Member States to adopt, in 
accordance with the principle of proportionality, measures to ensure the correct 
collection of VAT and to prevent tax evasion, an approach such as that taken by 
the Romanian tax authorities could adversely affect the recipient of supplies of 
goods or services, since, following tax inspection and registration for VAT 
purposes, the person regarded as liable for payment of the VAT retroactively is no 
longer able to issue invoices to his purchasers under the reverse charge procedure, 
but only under the normal taxation regime, given that the latter have no right to 
deduct the tax since, with reference to when the chargeable event occurred, the tax 
was not correctly invoiced. 
21 The obligation to comply with the reverse charge system as a substantive 
condition of exercise of the right to deduct has already been established by the 
judgment of the Court in Case C-424/12, Fatorie. 
22 Consequently, the issue arises as to the compatibility with Directive 2006/112 and 
the principle of neutrality of the tax provisions in accordance with which the 
reverse charge mechanism, which is mandatory for sales of standing timber, does 
not apply to a person who has been the subject of an inspection and who has 
registered for VAT purposes after that inspection on the ground that the person 
subject to the inspection had neither applied for nor obtained registration for VAT 
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purposes either before the transactions were carried out or by the date on which 
the upper limit was exceeded.