Judgment;Summary — ECLI:EU:C:2025:175
Date: 2025-03-13
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-640/23 – 1 
Case C-640/23 
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: 
25 October 2023 
Referring court: 
Înalta Curte de Casație și Justiție (Romania) 
Date of the decision to refer: 
26 June 2023 
Appellants and defendants at first instance: 
Direcția Generală Regională a Finanțelor Publice Galați – 
Administrația Județeană a Finanțelor Publice Vrancea 
Direcția Generală de Administrare a Marilor Contribuabili 
Respondent and applicant at first instance: 
Greentech SA 
  
Subject matter of the main proceedings 
Appeals against a judgment partially upholding the administrative appeal brought 
by the respondent and applicant at first instance seeking the annulment of certain 
administrative and tax measures relating to value added tax (VAT) issued by the 
appellants and defendants at first instance. 
Subject matter and legal basis of the request 
On the basis of Article 267 TFEU, interpretation is sought of Articles 2, 19 and 
168 of Council Directive 2006/112/EC of 28 November 2006 on the common 
system of value added tax (‘Directive 2006/112’), read in conjunction with 
Article 203 thereof. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-640/23 
 
2  
Question referred for a preliminary ruling 
Do the principles of neutrality, legal certainty and the protection of legitimate 
expectations, governed by the provisions of Articles 2, 19 and 168 of [Directive 
2006/112], read in conjunction with Article 203 thereof, preclude a refusal to 
recognise the right to deduct the VAT paid in respect of a sales transaction, which 
has subsequently been reclassified by the tax authorities as a transfer of an 
undertaking falling outside the scope of VAT, where the VAT has already been 
collected by the State budget and cannot be refunded under national legislation? 
Provisions of European Union law [and case-law] relied on 
Articles 2, 19 and 168 of Directive 2006/112, read in conjunction with Article 203 
thereof 
Case-law of the Court of Justice of the European Union (‘the Court’), in particular 
the judgments of 26 April 2017, Tibor Farkas, C-564/15, EU:C:2017:302; of 
11 April 2019, PORR Építési, C-691/17, EU:C:2019:327; and of 14 March 2013, 
Agrargenossenschaft Neuzelle, C-545/11, EU:C:2013:169 
Provisions of national law [and case-law] relied on 
[Legea nr. 571 din 22 decembrie 2003 privind Codul fiscal (Law No 571 of 
22 December 2003 establishing the Tax Code)], Article 3 (under which the taxes 
and duties governed by that code are based on, inter alia, the principle of fiscal 
neutrality); Article 126(1) (under which transactions which constitute or are 
treated as a supply of goods for consideration are subject to VAT); Article 128(7) 
(under which the transfer of a totality of assets or part thereof, inter alia, following 
a sale, does not constitute a supply of goods if the person to whom the assets have 
been transferred is a taxable person); and Article 145(2) (under which every 
taxable person is entitled to deduct VAT in respect of purchases subject to VAT). 
[Ordonanţa Guvernului nr. 92/2003 privind Codul de procedură fiscală 
(Government Order No 92/2003 on the Code of Tax Procedure)], Article 84 
(under which, in principle, tax returns may be corrected by the taxpayer, on his or 
her own initiative, within the limitation period laid down for the right to establish 
tax liabilities) and Article 91 (under which the right of the tax authority to 
establish tax liabilities is in principle limited to five years from 1 January of the 
year after the year in which the tax claim arose). 
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 detailed rules for the implementation of Law 
No 571/2003 establishing the Tax Code), paragraphs (7) and (8) of point 6, 
clarifying what is meant by the concept of the transfer of a totality of assets 
referred to in Article 128(7) of the Tax Code. 
GREENTECH 
 
3 
Succinct presentation of the facts and procedure in the main proceedings 
1 Between 23 November 2015 and 15 July 2016, the Direcția Generală Regională a 
Finanțelor Publice Galați – Administrația Județeană a Finanțelor Publice Vrancea 
(Regional Directorate-General of Public Finances of Galați – District 
Administration of Public Finances of Vrancea) (‘the AJFP Vrancea’) carried out a 
tax audit at the premises of Greentech SA (‘Greentech’), as a result of which that 
company was found to have additional tax liabilities in the amount of 4 388 720 
Romanian lei (RON) for VAT and related charges. Those tax liabilities resulted 
from the new legal classification of the transaction for the sale of equipment by 
Greenfiber International SA (‘GFI’) to Greentech (a transaction which the latter 
regarded as a supply of goods subject to VAT) and which the AJFP Vrancea 
classified as a transfer of a partial totality of assets between two related companies 
(a transaction not subject to VAT). 
2 The complaint brought by Greentech against those tax liabilities was rejected by 
the Direcția Generală de Administrare a Marilor Contribuabili (Directorate-
General for the Administration of Large-Scale Taxpayers) (‘the DGAMC’). 
3 In response to that decision of the DGAMC rejecting the tax complaint, Greentech 
brought an administrative appeal before the Curtea de Apel Ploiești (Court of 
Appeal, Ploiești), which was partially upheld. 
4 By decision of 23 November 2021, the Înalta Curte de Casație și Justiție (High 
Court of Cassation and Justice) (‘the ÎCCJ’) partially upheld the appeals brought 
by the AJFP Vrancea and the DGAMC against the judgment of the Court of 
Appeal, Ploiești. 
5 Greentech submitted an application for revision of the ÎCCJ’s decision, claiming 
that it infringed the case-law of the Court, in particular the judgments in Tibor 
Farkas, C-564/15, EU:C:2017:302, and PORR Építési, C-691/17, 
EU:C:2019:327; according to that case-law, the right to deduct VAT must also be 
recognised in cases where the transactions at issue do not fall within the scope of 
VAT, where it is clear from the particular circumstances of the case that it would 
be impossible or extremely difficult for the person who paid the VAT to recover 
it, unless the principles of neutrality and effectiveness of VAT were breached. 
6 By decision of 31 January 2023, the ÎCCJ granted the application for revision, 
partially annulled the decision being contested by means of the application for 
revision as regards the ground of appeal relating to the legal reclassification of the 
sale of equipment as a transfer of a totality of assets, and upheld the case for re-
examination of the appeal on that ground. 
The essential arguments of the parties in the main proceedings 
7 Greentech, the respondent and applicant at first instance, argues that it is 
necessary to clarify whether, in interpreting the provisions of Directive 2006/112 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-640/23 
 
4  
and the principles of fiscal neutrality, legal certainty and the protection of 
legitimate expectations, the tax authorities of a Member State may refuse to 
recognise the right to deduct the VAT paid in respect of a sales transaction which 
is subsequently reclassified by the tax authorities as a transfer of assets not subject 
to VAT, where the VAT has been collected by the State budget, the refund of that 
tax to the person who paid it is impossible, since the limitation period in tax 
matters has expired, and national legislation does not provide for the procedural 
instruments and mechanisms for the refund by the tax authorities of the amount 
paid by way of VAT where such reclassification is carried out. 
8 Greentech contends that, under the principle of fiscal neutrality, VAT must have a 
neutral effect, that is to say, it must produce the same final result irrespective of 
the intermediaries, by means of the mechanism for exercising the right to deduct. 
The only situation in which this principle does not apply is where a good or 
service is received by a final consumer, in which case the latter must bear the 
VAT. It has been consistently held in the case-law of the Court that any limitation 
on the right to deduct constitutes a breach of the principle of fiscal neutrality 
(judgment of 26 April 2017, Tibor Farkas, C-564/15, EU:C:2017:302). 
9 According to Greentech, GFI could not correct the invoice relating to the sale in 
question once the tax audit at Greentech had been completed, since GFI had 
previously been the subject of a tax audit, following which the group of auditors 
concluded that that commercial transaction had been correctly regarded by the 
parties as a transaction subject to VAT and that GFI had therefore correctly 
collected VAT and paid it to the State budget. 
10 Thus, the same national tax authority treated the commercial transaction in 
question in a completely different way: as subject to VAT for GFI, to which 
Greentech paid VAT, and as not subject to VAT for Greentech. Greentech argues 
that it was therefore deprived of the right to deduct the VAT paid. 
11 The AJFP Vrancea, one of the appellants and defendants at first instance, submits 
that account should be taken of the particular features of the present case, 
inasmuch as the transaction between the two related companies involved the sale 
of a production line and, on the same date, a lease agreement was signed under 
which Greentech was to use the same premises as the related party, namely GFI, 
to carry on its business at the same industrial site, and take on the specialist staff. 
It was not apparent that the identity of the related entity would be maintained 
following the takeover of the latter’s economic activity. 
12 According to the AJFP Vrancea, in the context of the transfer of a totality of assets 
or part thereof from a taxable person, which does not constitute a supply of goods 
within the meaning of Article 128(7) of the Tax Code, the right to deduct is not 
applicable, in so far as such a transfer does not fall within the scope of VAT. 
13 However, the AJFP Vrancea argues that the tax authorities have not limited the 
taxpayer’s right to correct the VAT returns. Greentech had the opportunity to 
GREENTECH 
 
5 
recover the non-deductible VAT from GFI by correcting the invoice that had been 
incorrectly issued and by refunding the tax paid on the basis of that invoice, a 
procedure about which Greentech was informed during the tax audit. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
14 The referring court states that the answer to the question raised is relevant to the 
analysis to be carried out, in relation to compliance with the principle of fiscal 
neutrality, in three respects: first, whether Greentech may recover VAT from its 
trading partner GFI; second, whether the transaction falls within the scope of VAT 
for the purpose of obtaining tax advantages; and, third, whether there is fraud that 
is detrimental to the State budget. 
15 According to the referring court, Articles 2, 19, 168 and 203 of Directive 
2006/112, in respect of which interpretation is sought, are essential to the 
resolution of the dispute since the common system of VAT is based on a series of 
binding principles of EU law. On the basis of the Court’s interpretation of those 
provisions, the referring court will determine whether the tax authorities’ 
approach in this instance is consistent with the spirit of the EU legislation or, on 
the contrary, whether it is incorrect. 
16 The referring court states that it is not aware of a judgment of the Court of Justice 
concerning the interpretation of EU law for the purpose of determining whether, 
in the event of the reclassification of a supply of goods falling within the scope of 
VAT as a transfer of assets which falls outside the scope of VAT, the national tax 
authorities may refuse the right to deduct VAT where there is no effective means 
of recovering the amount paid by way of VAT. 
17 Moreover, according to the referring court, it follows from the existing case-law 
of the Court in cases dealing with similar questions that, for the purpose of 
determining the right to deduct, priority must be given to compliance with the 
principles of fiscal neutrality, legal certainty and the protection of legitimate 
expectations, and that the measures adopted by the national authorities must take 
account of whether or not there has been any detriment to the State budget and of 
whether it is possible to establish the good or bad faith of the parties concerned. 
18 First, as regards the principle of fiscal neutrality, it has been consistently held in 
the case-law of the Court that any limitation of the right to deduct constitutes a 
breach of that principle resulting in double taxation of the transactions carried out 
by taxpayers. 
19 According to the referring court, the judgment of 26 April 2017, Tibor Farkas 
(C-564/15, EU:C:2017:302), in which the Court held as follows, is relevant in the 
present case: 
‘The provisions of [Directive 2006/112] and the principles of fiscal neutrality, 
effectiveness and proportionality must be interpreted to the effect that, in a 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-640/23 
 
6  
situation such as that in the main proceedings, they do not preclude the purchaser 
of an item of property from being deprived of the right to deduct the [VAT] which 
he paid to the seller when that tax was not due, on the basis of an invoice drawn 
up in accordance with the rules of the ordinary [VAT] regime, where the relevant 
transaction came under the reverse charge mechanism, and the seller paid that tax 
to the Treasury. However, to the extent that reimbursement of the unduly invoiced 
[VAT] by the seller to the purchaser becomes impossible or excessively difficult, 
in particular in the case of the insolvency of the seller, those principles require that 
the purchaser be able to address his application for reimbursement to the tax 
authority directly.’ 
20 Unlike in the Tibor Farkas case, in the present case, the impossibility of 
recovering VAT does not result from the seller’s insolvency, but from the 
impossibility of correcting the invoice in relation to VAT because of the expiry of 
the limitation period for the right to make such a correction. 
21 The referring court notes that, although it cannot speculate as to the fault of the 
parties with regard to the expiry of the limitation period, as it would risk 
prejudging that case, there are a number of relevant arguments according to which 
it is not possible to find that the parties have failed to take action to recover VAT 
and which support the view that it is impossible to correct the invoice in relation 
to VAT before the expiry of that period. 
22 The referring court also refers to other cases decided by the Court in which similar 
questions have been examined. Thus, in the judgment of 11 April 2019, PORR 
Építési (C-691/17, EU:C:2019:327), the Court held as follows: 
‘[Directive 2006/112] and the principles of fiscal neutrality and effectiveness must 
be interpreted as not precluding a practice of the tax authority whereby, in the 
absence of any suspicion of tax evasion, that authority refuses an undertaking the 
right to deduct the [VAT] which that undertaking, as the recipient of services, 
unduly paid to the supplier of those services on the basis of an invoice drawn up 
by that supplier in accordance with the rules on the ordinary [VAT] regime, 
whereas the relevant transaction fell under the reverse charge mechanism, and 
where the tax authority did not 
– examine, prior to refusing the right to deduct, whether the issuer of that 
incorrect invoice could reimburse the recipient of the invoice the amount of 
VAT unduly paid and could correct that invoice under a self-correction 
procedure, in accordance with the applicable national rules, in order to recover 
the tax which it unduly paid to the Treasury, or 
– itself decide to reimburse the recipient of that invoice the tax which the 
recipient unduly paid to the issuer of the invoice and that the latter, 
subsequently, unduly paid to the Treasury. 
Those principles require, however, in the situation where the reimbursement by 
the supplier of services to the recipient of those services of the VAT unduly 
GREENTECH 
 
7 
invoiced would be impossible or excessively difficult, […] that the recipient of the 
services must be able to address its application for reimbursement to the tax 
authorities directly.’ 
23 The referring court considers that the case before it is similar to that in the PORR 
Építési case as regards the condition that the recovery of VAT from the issuer of 
the invoice has not become impossible or excessively difficult, which appears to 
be the case here, since Greentech cannot correct the invoice in so far as (i) the 
limitation period for the right to make that correction has expired and (ii) that 
correction must be carried out by GFI, a company in respect of which, following 
the audit that was carried out, the tax authorities confirmed that the tax had been 
correctly levied. 
24 Second, as regards the principles of legal certainty and the protection of legitimate 
expectations, the referring court observes that it has been consistently held in the 
case-law of the Court that the possibility of relying on those principles extends to 
any economic operator to which an institution has given rise to justified hopes. 
Within the meaning of that case-law, in whatever form it is given, information 
which is precise, unconditional and consistent and comes from authorised and 
reliable sources constitutes assurances capable of giving rise to such hopes 
(judgment of 14 March 2013, Agrargenossenschaft Neuzelle, C-545/11, 
EU:C:2013:169, paragraphs 24 and 25). 
25 In the light of those principles, the referring court considers it relevant that the tax 
authorities which carried out the audit of GFI, before the audit of Greentech, 
confirmed the tax treatment – namely the supply of goods subject to VAT – 
applied by both companies to the transaction for the sale of equipment. Thus, the 
same national tax authority treated the commercial transaction concerning the 
equipment whose transfer gave rise to VAT in a completely different manner: it 
held that GFI, the company from which Greentech acquired the equipment in 
question and to which it paid VAT, was liable for VAT, and that Greentech was 
not, and thus denied Greentech the right to deduct the VAT paid.