Summary;Judgment — ECLI:EU:C:2021:442
Date: 2021-06-03
Language of the case: Romanian
Court formation: Eighth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Romania

Summary C-182/20 — 1 
Case C-182/20 
Summary of a request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
23 April 2020 
Referring court: 
Curtea de Apel Suceava (Romania) 
Date of the decision to refer: 
30 March 2020 
Applicants for revision: 
BE 
DT 
Defendants: 
Administrația Județeană a Finanțelor Publice Suceava 
Direcția Generală Regională a Finanțelor Publice Iași 
Accer Ipurl — lichidator judiciar al BE 
EP 
  
Subject matter of the dispute in the main proceedings 
Application submitted by BE, a company which has been declared insolvent, and 
DT, a partner and administrator thereof, seeking revision of the judgment 
delivered in appeal proceedings by the Curtea de Apel Suceava (Court of Appeal, 
Suceava, Romania), by which that court upheld the decision of the tax authorities 
(Administrația Județeană a Finanțelor Publice Suceava) (District Directorate of 
Public Finances, Suceava, Romania) and the Direcția Generală Regională a 
Finanțelor Publice Iași (Regional Directorate General of Public Finances, Iași, 
Romania)) to adjust value added tax (VAT) in favour of the State, by refusing to 
deduct VAT on taxable transactions prior to the initiation of insolvency 
proceedings in relation to that company. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-182/20 
 
2  
Subject and legal basis of the request for a preliminary ruling 
An interpretation of Directive 2006/112/EC and the principles of fiscal neutrality, 
the right to deduct VAT and fiscal certainty, is requested pursuant to Article 267 
TFEU. 
Question referred 
Do Directive 2006/112/EC and the principles of fiscal neutrality, the right to 
deduct VAT and fiscal certainty preclude, in circumstances such as those in the 
main proceedings, national legislation which requires, once insolvency 
proceedings in respect of an economic operator have been initiated, automatically 
and without further checks, adjustment of VAT, by refusing to allow the economic 
operator to deduct VAT on taxable transactions that occurred prior to the 
declaration of insolvency and ordering the operator to pay the deductible VAT? 
Does the principle of proportionality preclude, in circumstances such as those in 
the main proceedings, such provisions of national law, given the economic 
consequences for the economic operator and the definitive nature of such an 
adjustment? 
Provisions of EU law relied on 
Council Directive 2006/112/EC of 28 November 2006 on the common system of 
value added tax, Articles 168 and 185 to 189. 
Provisions of national law relied on 
Legea nr. 571/2003 privind Codul fiscal (Law No 571/2003 establishing the Tax 
Code) — Article 11, which provides for the adjustment of VAT in the case of a 
transaction which does not have an economic purpose; Article 148, regarding the 
adjustment of deductible VAT in the case of acquisitions of goods other than 
capital goods; and Article 149, regarding the adjustment of deductible VAT in the 
case of capital goods, which provides that the taxable person is to lose the right to 
deduct tax on undelivered moveable property where they are to be used to carry 
out non-deductible transactions, and adjustment of the right of deduction where 
capital goods are used for purposes other than the conduct of economic activity or 
for non-deductible transactions. 
Hotărârea Guvernului nr. 44/2004 pentru aprobarea Normelor metodologice de 
aplicare a Legii 571/2003 privind Codul fiscal (Government Decision No 44/2004 
approving the detailed rules for the implementation of Law No 571/2003 
establishing the Tax Code), paragraphs 53 and 54, relating to the application of 
Articles 148 and 149 of Law No 571/2003. 
ADMINISTRAȚIA JUDEȚEANĂ A FINANȚELOR PUBLICE SUCEAVA AND OTHERS 
 
  
      
Legea nr. 227/2015 privind Codul fiscal (Law No 227/2015 establishing the Tax 
Code), Article 305(7) and (8), which governs the adjustment of VAT by 
reassessment of the right of deduction. 
Legea nr. 85/2006 privind procedura insolvenței (Law No 85/2006 on insolvency 
procedure), Article 3(23), setting out the insolvency procedure; Article 47(7), 
which provides that, from the date of declaration of insolvency, only the activities 
necessary for the purposes of the winding-up operations are to be carried out; 
Article 116(1) and (2), laying down rules governing the winding-up procedure, 
and Article 123 relating to the ranking in which claims, including budgetary 
claims, are to be settled in the case of insolvency. 
Legea contenciosului administrativ nr. 554/2004 (Law No 54/2004 on 
administrative proceedings), Article 21(1), which allows an application for 
revision to be submitted in the event of an infringement of EU law. 
Succinct presentation of the facts and the main proceedings 
1 BE is a commercial company in respect of which the Tribunalul Suceava 
(Regional Court, Suceava, Romania) ordered the initiation of insolvency 
proceedings on 10 February 2015. 
2 By tax assessment notice of 26 November 2015, the Romanian tax authorities 
informed BE that it was required to pay the amount of 646 259 Romanian lei 
(RON) by way of VAT on certain taxable transactions carried out during the 
period from 20 May 2013 to 13 February 2014. Before the insolvency proceedings 
were initiated, that amount was regarded as deductible on the ground that it 
corresponded to the above period, during which BE engaged in an economic 
activity and was registered as a taxable person for the purposes of VAT. 
3 All the goods, commodities and capital goods in respect of which the tax 
authorities ordered that VAT be adjusted to the benefit of the State were sold in 
the insolvency proceedings. Following these sales VAT was levied and BE 
continued to be registered as a taxable person for the purposes of VAT. 
4 BE lodged an appeal against the tax assessment notice in question, which the 
Direcția Generală Regională a Finanțelor Publice Iași — Administrația Județeană 
a Finanțelor Publice Suceava (Regional Directorate General of Public Finances, 
Iași — District Directorate of Public Finances, Suceava) dismissed by decision of 
22 January 2018.  
5 BE brought an administrative action against those decisions of the tax authorities 
before the Tribunalul Suceava (Regional Court, Suceava), which upheld the action 
and cancelled the obligation to pay the amount of RON 646 259. 
6 The tax authorities lodged an appeal against that judgment before the Curtea de 
Apel Suceava (Court of Appeal, Suceava), which was allowed by judgment of 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-182/20 
 
4  
18 June 2019, and therefore BE was required to pay the abovementioned VAT. 
Upholding the reasoning of the tax authorities, the appeal court held that the 
insolvency in itself constituted a ground for cessation of the right of deduction, 
without analysing the transactions actually carried out in that procedure. 
7 BE and DT submitted an application for revision of the judgment given in the 
appeal proceedings, alleging infringement of the provisions of Directive 
2006/112/EC and the case-law of the Court of Justice relating to VAT. 
The essential arguments of the parties to the main proceedings 
8 The tax authorities consider that the company lost the right of deduction on being 
declared insolvent and therefore they required the adjustment of the VAT, which 
they had initially regarded as deductible, both as regards the goods previously 
acquired and held in stock and the existing capital goods owned by the applicant 
for revision at the time the insolvency proceedings were initiated. 
9 The tax authorities claim in this respect that a declaration of insolvency is 
tantamount to a cessation of economic activity and that insolvency consists solely 
of a procedure for the liquidation of assets with a view to extinguishing the 
company’s debts. In their view, the capital goods are no longer used for the 
conduct of an economic activity and the transactions carried out in connection 
with the liquidation have no economic purpose in themselves. 
10 Those authorities add that it is irrelevant that VAT continued to be levied 
following the sale of those goods in connection with the insolvency. 
11 By contrast, the applicant for revision points out that, in the insolvency 
proceedings, it continued to be registered as a taxable person for the purposes of 
VAT and the winding-up operations (sale of movable and immovable property, 
leasing of immovable property) were still subject to VAT, which continued to be 
levied. 
12 BE further maintains that it was placed at a disadvantage in comparison with other 
economic operators since the adjustment of VAT in favour of the State deprived it 
of a considerable amount of money which it had paid by way of VAT at the time 
the goods were acquired and which it considered to be deductible. 
13 The applicant for revision further states that, by issuing the tax assessment notice, 
the tax authorities secured an advantage in the insolvency proceedings since 
budgetary claims are settled as a matter of priority in the liquidation. 
14 The tax authorities reply by stating that the applicant for revision has the right to a 
re-adjustment of VAT in its favour, following the sale of the goods in connection 
with the insolvency proceedings, as a result of a reassessment of the right of 
deduction, in accordance with the provisions of the old and new tax codes. 
ADMINISTRAȚIA JUDEȚEANĂ A FINANȚELOR PUBLICE SUCEAVA AND OTHERS 
 
  
      
Succinct presentation of the reasons for the request for a preliminary ruling 
15 In the grounds for the reference for a preliminary ruling the referring court raises 
the question of the compatibility with Directive 2006/112/EC, and the principles 
of fiscal neutrality, the right to deduct VAT and fiscal certainty, of the Romanian 
national legislation under which an economic operator subject to insolvency 
proceedings is required, automatically and without further checks of the goods and 
transactions relating to the liquidation, to adjust, in favour of the State, the VAT 
corresponding to certain taxable transactions that took place before that those 
proceedings were initiated. It notes in that regard that neither the tax authorities 
nor the appeal court actually analysed the commercial transactions carried out 
during the insolvency proceedings. 
16 The national court also states that sales of goods in connection with insolvency are 
subject to VAT and that the economic operator retains its status as a taxable 
person for the purposes of VAT, and it therefore seeks to ascertain whether the 
directive and the abovementioned principles preclude national legislation under 
which transactions carried out during the insolvency proceedings are 
automatically regarded as having no economic purpose. 
17 Furthermore, if the Court of Justice holds that that form of taxation pursues a 
legitimate objective, the referring court is uncertain as to whether it is 
proportionate to the objective pursued, since such a form of taxation creates a 
burden for the economic operator who has been declared insolvent which is, on 
the one hand, additional (by placing it at a disadvantage in comparison with other 
economic operators and procuring an advantage for the tax authority in the form 
of priority settlement of budgetary claims) and, on the other, definitive. The 
referring court notes, as regards the latter point, that the tax authority has not 
shown that a re-adjustment was made to deductible VAT following the insolvency 
proceedings.