Judgment;Summary — ECLI:EU:C:2021:40
Date: 2021-01-20
Language of the case: Romanian
Court formation: Sixth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Romania

Summary C-655/19 — 1 
Case C-655/19 
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: 
30 August 2019 
Referring court: 
Curtea de Apel Alba Iulia (Romania) 
Date of the decision to refer: 
22 March 2018 
Respondent and applicant at first instance: 
LN 
Appellants and defendants at first instance: 
Administrația Județeană a Finanțelor Publice Sibiu 
Direcția Generală Regională a Finanțelor Publice Brașov 
  
Subject of the main proceedings 
Appeal brought by the appellant, the defendant at first instance, Administrația 
Județeană a Finanțelor Publice Sibiu (Regional Public Finance Administration of 
Sibiu, Romania), in the name and on behalf of the Direcția Generală Regională a 
Finanțelor Publice Brașov (Regional Directorate-General of Public Finances of 
Brașov, Romania), in proceedings initiated by the respondent, the applicant at first 
instance, LN, challenging the judgment delivered by the Tribunalul Sibiu 
(Regional Court, Sibiu, Romania) annulling an administrative act 
Subject matter and legal basis of the request for a preliminary ruling 
Request for a preliminary ruling, pursuant to Article 267 TFEU, concerning the 
interpretation of provisions of Articles 2 and 9 of Council Directive 2006/112/EC 
of 28 November 2006 on the common system of value added tax 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-655/19 
 
2  
Questions referred 
1. Does Article 2 of Directive 2006/112 on the common system of value added 
tax preclude a transaction, one whereby a taxpayer, as creditor, acquires 
immovable property in the context of an enforcement procedure and, some time 
later, sells it in order to recover a sum of money which he had loaned, from being 
regarded as an economic activity in the form of the exploitation of tangible or 
intangible property for the purposes of obtaining income therefrom on a 
continuing basis? 
2. Can an individual who has carried out such a legal transaction be regarded 
as a taxable person within the meaning of Article 9 of Directive 2006/112? 
Provisions of EU law cited 
Directive 2006/112: Article 2(1)(a), Article 9(1) and Article 12 
Provisions of national law cited 
Legea nr. 571/2003 privind Codul fiscal (Law No 571/2003 establishing the Tax 
Code), published in the Monitorul Oficial al României (Official Journal of 
Romania), Part I, No 927, of 23 December 2003, as amended, in the version in 
force at the relevant time (‘the Tax Code’) 
– Article 126, pursuant to which transactions which constitute or are treated as a 
supply of goods carried out in Romania by a taxable person, and which result 
from one of the economic activities referred to in Article 127(2), are taxable 
transactions; 
– Article 127(1), pursuant to which any person who independently carries out in 
any place an economic activity as referred to in paragraph 2, whatever the 
purpose or results of that activity, is a taxable person; Article 127(2), which 
provides that any activity, including that of a trader, as well as the exploitation 
of tangible property for the purposes of obtaining income therefrom on a 
continuing basis is an economic activity; under Article 127(21), the situations 
in which natural persons selling immovable property become taxable persons 
must be expressly stipulated in rules; 
– Article 152, which establishes a special exemption scheme for small businesses 
whose annual turnover is below the threshold of EUR 35 000; 
– Article 153, which provides, essentially, that taxable persons established in 
Romania who engage in or intend to engage in an economic activity involving 
taxable transactions and/or VAT-exempt transactions with a right to deduction, 
are required to request registration for VAT purposes if, in the course of one 
calendar year, they reach or exceed the threshold laid down in Article 152(1); 
ADMINISTRAȚIA JUDEȚEANĂ A FINANȚELOR PUBLICE SIBIU E DIRECȚIA GENERALĂ REGIONALĂ A FINANȚELOR PUBLICE 
BRAȘOV 
 
3 
Article 153 also provides that, where a taxable person fails to request 
registration, the tax authorities may register that person ex officio. 
HG (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 provisions for the application of Law No 571/2003 
establishing the Tax Code), published in the Monitorul Oficial al României, Part I, 
No 112, of 6 February 2004, as amended 
– the provisions for the application of Article 127 of the Tax Code, set out at 
paragraph 3, provide as follows: 
‘3. … (3) A natural person who has not already become a taxable person in 
respect of another activity shall be regarded as carrying on an economic 
activity involving the exploitation of tangible or intangible property if he 
acts as such, in an independent manner, and if the activity in question is 
carried on in order to obtain from it income on a continuing basis within the 
meaning of Article 127(2) of the Tax Code. … 
(5) Where land and/or buildings are acquired by a natural person for the 
purposes of being sold, the supply of that property shall be regarded as an 
economic activity of a continuing nature if the natural person completes 
more than one single transaction in the course of one calendar year. … The 
first such supply shall be regarded as occasional; however, if a second such 
supply takes place in the course of the same calendar year, the first such 
supply, while not being subject to tax, shall be taken into account for the 
purposes of the threshold referred to in Article 152 of the Tax Code. The 
supply of buildings and land that are exempt from tax in accordance with 
Article 141(2)(f) of the Tax Code shall be taken into account both for the 
purposes of establishing the continuing nature of the economic activity and 
for the purposes of the upper limit for exemption referred to in Article 152 
of the Tax Code’; 
– the provisions for the application of Article 152(6) of the Tax Code govern the 
position of taxable persons who exceed the upper limit for exemption but fail to 
request registration as a taxable person for value added tax purposes under the 
normal scheme; they are set out in paragraph 62 and provide that, once a 
taxable person has reached or exceeded the upper limit for exemption but has 
failed to request registration in accordance with Article 153 of the Tax Code, 
within the period prescribed by law, the competent tax authorities shall require 
that taxable person to pay the value added that that he would have had to pay if 
he had been registered for VAT purposes under the normal scheme in 
accordance with Article 153 of the Tax Code and shall register him for VAT 
purposes ex officio, in accordance with Article 153(7) of the Tax Code. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-655/19 
 
4  
Outline of the facts and the main proceedings 
1 In 2009, LN, the applicant at first instance, a natural person, granted JM various 
loans totalling EUR 80 400. Repayment of the loans was guaranteed by the 
granting of mortgages over various immovable properties. The loan was not 
repaid and consequently three of the properties were auctioned to LN, who was 
also a creditor. 
2 In 2010, LN sold for RON 611 364 one of the properties he had acquired at 
auction and also sold for EUR 1 000 another property which he had purchased in 
2005. 
3 After exceeding the VAT threshold, in 2011 and 2012, LN sold the remaining two 
properties which he had acquired at auction. 
4 LN was then the subject of a tax inspection, following which, in 2016, the 
Administrația Județeană a Finanțelor Publice Sibiu issued a tax inspection report 
and a tax assessment notice stating that the transactions carried out in 2010 had, 
by 30 June 2010, resulted in the obtaining of income the value of which meant 
that the activity was classified as an economic activity carried on in order to 
obtain from it income on a continuing basis. The tax authority took the view that 
the two properties which the tax payer had sold in 2010 had not been intended for 
his personal use, but had been purchased for the purpose of re-selling them and 
obtaining an income, the manner in which they had been acquired being 
irrelevant. On the view that LN had exceeded the annual upper limit for VAT 
exemption laid down in the Tax Code, the tax authority determined the date on 
which he should have registered for VAT, 10 July 2010, and the date from which 
he became a taxable person for VAT purposes, 1 August 2010. 
5 In so far as concerns the properties sold in 2011 and 2012, the tax authority 
classified the first transaction as exempt from VAT, on the ground that the sale 
had taken place after 31 December of the year following the year of first entry into 
possession. It regarded the second transaction as subject to VAT. It found that LN 
was liable to pay the sum of RON 55 224, including RON 35 145 in VAT, an 
additional amount of RON 14 807 representing interest on the VAT, and 
RON 5 272 in late payment penalties.  
6 LN brought an administrative action before the Tribunalul Sibiu (Regional Court, 
Sibiu) seeking the annulment of the tax inspection report and tax assessment 
notice of 2016, as well as annulment of the decision of the Direcția Generală 
Regională a Finanțelor Publice Brașov (Regional Directorate-General of Public 
Finances of Brașov) on his appeal against the tax assessment notice. He disputed 
the classification of the property sale and purchase transactions as an ‘economic 
activity’ and, consequently, also his registration as a taxable person for VAT 
purposes. 
7 The Tribunalul Sibiu (Regional Court, Sibiu) partly upheld LN’s action, holding 
that the chief characteristic of an economic activity was the obtaining of income 
ADMINISTRAȚIA JUDEȚEANĂ A FINANȚELOR PUBLICE SIBIU E DIRECȚIA GENERALĂ REGIONALĂ A FINANȚELOR PUBLICE 
BRAȘOV 
 
5 
on a continuing basis and that the mere purchase and sale of immovable property 
did not, in and of itself, constitute an economic activity. The subsequent sale of 
the properties was regarded by the court solely as an attempt to recover the loan 
granted in 2009. 
8 The appellants, the defendants at first instance, have brought an appeal 
challenging the judgment of the Tribunalul Sibiu (Regional Court, Sibiu) before 
the referring court, the Curtea de Apel Alba Iulia (Court of Appeal, Alba Iulia). 
Main arguments of the parties to the main proceedings 
9 In its appeal, the appellants request the court to set aside the judgment under 
appeal, to set the case down for a fresh decision on the merits and to dismiss the 
applicant’s action as unfounded and unlawful. The appellants, the defendants at 
first instance, submit that the court first hearing the case on the merits erred in 
holding that the transactions which LN had carried out were not an economic 
activity. 
Outline of the reasons for the reference 
10 The Curtea de Apel Alba Iulia (Court of Appeal, Alba Iulia), finding there to be 
no case-law of the Court of Justice on the point, and that the conditions for the 
application of Article 267 TFEU are met, seeks interpretation of Articles 2 and 9 
of Directive 2006/112 so that it may determine whether the applicant may be 
regarded as a taxable person and whether the subsequent sale of immovable 
property acquired by a creditor in the course of an enforcement procedure 
constitutes an economic activity with the purpose of obtaining income on a 
continuing basis, or whether it is merely an action designed to recover a loan.