Judgment;Summary — ECLI:EU:C:2022:92
Date: 2022-02-10
Language of the case: Romanian
Court formation: Eighth Chamber
Subject matter: Taxation;Value added tax
Procedure: Reference for a preliminary ruling
Origin: Romania

Translation C-487/20-1 
Case C-487/20 
Request for a preliminary ruling 
Date lodged:  
2 October 2020 
Referring court:  
Curtea de Apel Alba Iulia (Romania) 
Date of the decision to refer:  
22 September 2020 
Applicant:  
Philips Orăștie SRL 
Defendant:  
Direcția Generală de Administrare a Marilor Contribuabili 
  
[…] 
CURTEA DE APEL ALBA IULIA 
SECȚIA DE CONTENCIOS ADMINISTRATIV ȘI FISCAL (Court of Appeal, 
Alba Iulia ‒ Section for administrative and fiscal matters) 
[…] 
ORDER 
Public hearing of 22 September 2020 
[…] 
Registered in the roll is the request for a reference to the Court of Justice of the 
European Union made by the applicant SC Philips Orăștie SRL in an 
administrative action against the defendant Direcția Generală de Administrare a 
Marilor Contribuabili (Directorate-General for the Administration of Large-scale 
Taxpayers), […] seeking the annulment of an administrative act. 
[…] 
EN 
REQUEST FOR A PRELIMINARY RULING OF 22. 9. 2020 – CASE C-487/20 
 
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CURTEA DE APEL 
Regarding the request for a reference to the Court of Justice of the European 
union: 
I. Subject matter of the main proceedings. Relevant facts 
1 The applicant, SC Philips Orăștie SRL, is a Romanian legal person with registered 
offices in the municipality of Orăștie, in Hunedoara County. 
2 On 14 September 2016, the competent tax authority, Direcția Generală de 
Administrare a Marilor Contribuabili (Directorate-General for the Administration 
of Large-scale Taxpayers, ‘the DGAMC’) issued tax assessment notice No 423 
establishing a liability on the part of the applicant to pay the sum of 31 628 916 
Romanian Lei (RON) by way of VAT and ancillary tax liabilities. 
3 Enforcement of the debt stated in the tax assessment notice was not suspended 
and, in its ‘300’ value added tax return for the month of September 2016, the 
applicant completed line 36 […] stating a sum of RON 21 799 334, representing a 
balance of VAT due as established in the tax assessment notice and not paid prior 
to the submission of the VAT return, without requesting a refund. Thus, Philips 
Orăștie remained liable, after set-off, for a sum of RON 12 096 916. 
4 On 4 November 2016, Philips Orăștie brought a tax appeal (No 82252) against 
the tax assessment notice, in which it disputed in part the lawfulness of the notice, 
to the extent of RON 21 799 334. 
5 On lodging its tax appeal, the applicant submitted to the DGAMC the original of 
bank guarantee No 5163090001 of 4 November 2016, issued by Citibank Europe; 
the guarantee was for the sum of RON 31 577 059 and was extended to 4 March 
2020 by subsequent documents. 
6 After lodging its tax appeal against the assessment notice and submitting the bank 
guarantee (in November 2016), and up to March 2019, Philips Orăștie submitted 
VAT returns in which it did not complete line 38 with the balance of VAT due 
[Or. 2] as established by the tax inspection authorities in the notice 
communicated and not paid prior to the submission of the company’s VAT return. 
At the same time it requested the refund of VAT, taking the view that, in light of 
the provisions of Articles 233 and 235(1) and (5) of the Codul de procedură 
fiscală – Legea 207/2015 (Code of Tax Procedure – Law 207/2015), the payment 
obligations in question could not be classified as outstanding and could not be 
included in the cumulative amount of VAT due, as defined in Article 303(4) of the 
Codul fiscal – Legea 227/2015 (Tax Code – Law 227/2015). That interpretation 
was implicitly confirmed by the tax authority, which issued orders for the refund 
of VAT (copies of which have been placed on the file), without raising any 
objection to the manner in which the VAT return had been prepared or, by 
implication, to the interpretation of the relevant provisions. 
PHILIPS ORĂȘTIE 
 
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7 On 5 March 2019, the Curtea de Apel București (Court of Appeal, Bucharest, 
Romania) upheld the action for annulment brought by the applicant against the tax 
assessment notice […] and, by Civil Judgment No 813 of 5 March 2019, 
cancelled the additional VAT in the sum of RON 21 799 334. That judgment has 
not yet become final. 
8 The applicant drew up its VAT returns for April 2019 and May 2019 in the same 
manner, that is to say, it did not complete line 38 with a balance of VAT due as 
established by the tax inspection authorities in the notice communicated and not 
paid prior to the submission of the VAT return. 
9 Although there was no change in the applicable regulatory framework, the tax 
authorities informed the applicant of the incorrect completion of line 38 relating to 
VAT due in the sum of RON 12 096 916. The applicant asserted that this was not 
an error, but intentional, and was based on interpretation of the relevant rules. The 
tax authority did not, however, accept that view and issued two VAT adjustment 
notices by which it altered the amount of VAT due as stated in the returns, 
including in the cumulative amount of VAT due the sum of RON 21 799 334, with 
direct effect on the amount of VAT to be refunded. 
10 The applicant brought an administrative appeal, but the solution was confirmed. 
The applicant therefore applied to the administrative court, on 23 December 2019, 
seeking the annulment of the two VAT adjustment notices. 
II. Applicable provisions 
NATIONAL LEGISLATION 
Codul de procedură fiscală – Legea 207/2015 (Code of Tax Procedure – Law 
207/2015) 
11 Article 157 […] – Outstanding tax liabilities 
‘(2) The following shall not be regarded as outstanding tax liabilities: 
(b1) tax liabilities established in fiscal administrative acts that are challenged in 
accordance with the law and for which a guarantee in accordance with 
Articles 210 and 211 or Article 235 is provided’. 
12 Article 233 – Stay of enforcement 
‘(21) Enforcement shall be stayed or shall not be commenced in the following 
cases: 
(a) for tax liabilities established in a decision of the competent tax authority if, 
after communication of the decision, the debtor informs the tax authority of the 
REQUEST FOR A PRELIMINARY RULING OF 22. 9. 2020 – CASE C-487/20 
 
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lodging of a letter of guarantee or insurance policy of guarantee in accordance 
with Article 235. Enforcement shall proceed or shall be commenced if the debtor 
fails to lodge the letter of guarantee or insurance policy of guarantee within 
45 days of the date of communication of the decision in which the tax liability is 
established; 
(b) for tax liabilities established in fiscal administrative acts that are challenged 
in accordance with the law and guaranteed in accordance with Articles 210 and 
211; enforcement shall proceed or shall be commenced upon the fiscal 
administrative acts becoming final in the system of administrative appeals or 
judicial proceedings. [Or. 3] 
(22) Throughout the period of the stay of enforcement in accordance with 
paragraph 21, the tax liability which is the subject of the stay shall not be 
extinguished, unless the debtor chooses that it should be extinguished in 
accordance with Article 165(8).’ 
13 Article 235 – Stay of enforcement on presentation of a letter of guarantee or 
insurance policy of guarantee 
‘(1) If a challenge is brought against a fiscal administrative act establishing a tax 
liability, in accordance with this Code, even while the administrative proceedings 
are being considered, enforcement shall be stayed or shall not be commenced in 
relation to the disputed tax liability if the debtor presents to the competent tax 
authority a letter of guarantee or insurance policy of guarantee covering the tax 
liability which is disputed and has not been discharged at the time of presentation 
of the guarantee. The validity of the letter of guarantee or insurance policy of 
guarantee must be at least six months from the date of issue. 
[…] 
(5) Throughout the period of a stay of enforcement in accordance with this 
article, the tax liability which is the subject of the stay shall not be extinguished, 
unless the debtor chooses that it should be extinguished in accordance with 
Article 165(8).’ 
Codul fiscal – Legea 227/2015 (Tax Code – Law 227/2015) 
14 Article 303 – Refund of tax to taxable persons registered for VAT purposes 
‘(1) If the tax on purchases made by a taxable person registered for VAT 
purposes, in accordance with Article 316, which is deductible in a tax period 
exceeds the tax levied on taxable transactions, an excess shall arise in the 
reporting period, referred to as a negative tax amount. 
(2) After determining the amount of tax payable or the negative tax amount 
relating to the transactions carried out in the course of the reporting period, 
PHILIPS ORĂȘTIE 
 
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taxable persons shall make the adjustments provided for in this article using the 
tax return referred to in Article 323. 
(3) A cumulative negative tax amount shall be determined by adding together 
the negative tax amount for the reporting period, the balance of the negative tax 
amount carried forward from the return for the preceding tax period, where a 
refund has not been requested, and the negative balance of VAT as established by 
the tax inspection authorities in a decision communicated prior to the submission 
of the tax return. 
(4) A cumulative amount of tax due shall be determined in the reporting period 
by adding together the tax due in the reporting period and any portion not paid to 
the Treasury — prior to the submission of the tax return referred to in Article 323 
— of the balance of tax due from the preceding tax period, and any portion not 
paid to the Treasury — prior to the submission of the tax return — of the balance 
of VAT due established by the tax inspection bodies in a decision communicated 
prior to the submission of the return. By way of exception: 
(a) in the first tax return submitted to the tax authority after the date of approval 
of a payment facility, the cumulative amount of tax due in respect of which the 
payment facility has been approved shall not be carried forward from the return 
for the preceding tax period; 
(b) in the first tax return submitted to the tax authority after the date of 
registration of the tax authority in the body of creditors referred to in Law 
No 85/2014, the cumulative amount of tax due in respect of which the authority is 
registered in the body of creditors in accordance with the provisions of Law 
No 85/2014 shall not be carried forward from the return for the preceding tax 
period. 
(5) By way of derogation from the provisions of paragraphs 3 and 4, any 
negative VAT balance established by the tax inspection authorities and any 
portion that has not been paid to the Treasury by the date of submission of the tax 
return of the balance of the VAT due established by the tax inspection bodies in a 
decision the enforcement of which has been stayed by a court in accordance with 
the law, shall not be added to the negative amount or to the cumulative amount of 
tax due, depending on the case, relating to the period(s) for which enforcement of 
the decision is suspended. Such amounts shall be imputed to the return for the tax 
period in which [Or. 4] the stay of enforcement of the decision is lifted, so as to 
determine the cumulative negative tax amount or, as the case may be, the 
cumulative amount of tax due. 
(6) Using the tax return referred in in Article 323, taxable persons are required 
to determine the difference between the amounts referred to in paragraphs 3 and 4, 
which represent the tax adjustments, and to determine the balance of tax due or 
the balance of the negative tax amount. If the cumulative amount of tax due 
exceeds the cumulative negative tax amount, a balance of tax due shall arise in the 
REQUEST FOR A PRELIMINARY RULING OF 22. 9. 2020 – CASE C-487/20 
 
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reporting period. If the cumulative negative tax amount exceeds the cumulative 
amount of tax due, a balance of the negative tax amount shall arise in the reporting 
period. 
[…]’. 
EU law 
Council Directive 2006/112/EC of 28 November 2006 on the common system 
of value added tax 
15 Article 179 
The taxable person shall make the deduction by subtracting from the total amount 
of VAT due for a given tax period the total amount of VAT in respect of which, 
during the same period, the right of deduction has arisen and is exercised in 
accordance with Article 178. 
However, Member States may require that taxable persons who carry out 
occasional transactions, as defined in Article 12, exercise their right of deduction 
only at the time of supply. 
16 Article 183 
Where, for a given tax period, the amount of deductions exceeds the amount of 
VAT due, the Member States may, in accordance with conditions which they shall 
determine, either make a refund or carry the excess forward to the following 
period. 
However, Member States may refuse to refund or carry forward if the amount of 
the excess is insignificant. 
III. The referring court’s reasons for making the request for a preliminary 
ruling 
The applicant’s position 
17 The applicant maintains that, given that the national tax procedure legislation 
recognises that there may be a stay of the enforcement of tax liabilities established 
in a fiscal act that has been challenged and in respect of which a bank guarantee 
has been lodged, it is obvious that the same rule should apply in the case where 
such a liability relates to an amount of additional VAT established in a tax 
assessment notice that has been challenged, especially since, between November 
2016 and March 2019, the tax authorities confirmed that interpretation. 
PHILIPS ORĂȘTIE 
 
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18 The VAT refund mechanism expressly described in Article 183 of the VAT 
directive is to be found, as such, in Article 303(1) of the Tax Code. Consequently, 
the formula for determining the negative excess VAT in relation to the VAT due 
under another fiscal act — established by Article 303(2), (4) and (5) of the Tax 
Code, which was the basis for the adjustments made by the DGAMC that are 
disputed in the present case — was adopted in the exercise of the procedural 
autonomy which the Member States enjoy, in principle, at the time of transposing 
the VAT directive. That autonomy, however, is limited and subject to the 
requirement of compliance with generally applicable principles, namely the 
principles of equivalence, effectiveness and VAT neutrality, as developed in the 
relevant case-law of the Court of Justice. 
19 The applicant maintains that the Romanian State has infringed the principle of 
equivalence, in that Article 303(4) and (5) of the Tax Code establishes a different, 
less favourable treatment of the VAT refund procedure [Or. 5] by comparison 
with the national procedure for the refund of taxes and duties, in that the 
extinguishing of the VAT due by the VAT to be refunded occurs even when the 
taxable person has lodged a guarantee for a stay of enforcement of the VAT due, 
whereas, in the case of national taxes, the lodging of a guarantee has the effect of 
paralysing tax liabilities, which can no longer be extinguished or in any way 
reduce the VAT to be refunded. 
20 The applicant also maintains that the principle of effectiveness has been infringed, 
in that procedural autonomy should not be exercised in such a way as to hinder the 
exercise of the right to a refund or render it impossible. However, such a situation 
unquestionably arises because national tax law contains no other provision or 
procedure governing application of the VAT return to regulate the way in which 
the status quo ante prior to extinguishment is restored, in the event that a court 
annuls the act imposing the VAT. 
21 The applicant also considers that the principle of neutrality has been infringed, in 
that the uncertainty created by the legislative lacuna and the unclear, ambiguous 
nature of the solutions brought about under Article 303(4) and (5) of the Tax Code 
entail an evident financial risk for taxable persons, both regarding the 
impossibility of obtaining a refund within a reasonable period of time and 
regarding the costs incurred in lodging a guarantee for the stay of enforcement of 
the assessment notice establishing the VAT with which the VAT to be refunded is 
extinguished. This is clearly inconsistent with the Court of Justice’s relevant VAT 
case-law. 
The defendant’s position 
22 The defendant maintains that the mechanism for determining the VAT due or to 
be refunded is a special one and that the provisions of [Article] 303(4) and (5) of 
the Tax Code – Law 227/2015 are special provisions unlike those of Articles 157, 
REQUEST FOR A PRELIMINARY RULING OF 22. 9. 2020 – CASE C-487/20 
 
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233 and 235 of the Code of Fiscal Procedure – Law 2017/2015, which apply only 
to other types of tax or duty. 
23 Consequently, the lodging of a bank guarantee is not sufficient to result in tax 
liabilities established in a tax assessment notice that has been challenged not being 
included in the calculation of the cumulative VAT due, even if the liabilities in 
question are guaranteed. 
Position of the referring court 
24 The rule introduced by [the first paragraph of] Article 179 and [the first paragraph 
of] Article 183 of Directive 2006/112/EC – which establishes the VAT to be 
refunded only by reference to the difference between the VAT levied and the 
deductible VAT – for a given tax period – has been transposed by the national 
legislature in Article 303(1) of the Tax Code. 
25 However, to this mechanism for determining the VAT to be refunded, provided 
for by the VAT directive, the Romanian legislature has added the concept of 
‘cumulative amount of VAT due’, by which it determines the VAT to be refunded 
after the amount due for the reporting period is added to the amount of VAT due 
stated in tax assessments in accordance with Article 303(4) of the Tax Code. 
26 The final mechanism for the refunding of VAT established in accordance with 
paragraphs 2 to 4 of Article 303 of the Tax Code adds to the mechanism described 
by the VAT directive and transposed in paragraph 1 of Article 303 of the Tax 
Code, the difference consisting in the introduction into the calculation of the 
amount to be refunded the concept of ‘cumulative amount of VAT due’; this 
means, in fact, that account is taken of any VAT due on the basis of earlier tax 
assessments. This is a concept not found in the wording of the VAT directive. 
27 Consequently, since the mechanism for determining the negative balance of VAT 
provided for under national law is different from the mechanism expressly 
provided for by the VAT directive, it follows that the Romanian State 
intentionally derogated from the provisions of the VAT directive and instituted, in 
Article 303(2) to (4) of the Tax Code, a mechanism of its own for the calculation 
of VAT [to be refunded]. [Or. 6] 
28 The national court therefore considers that the point that must be resolved in this 
dispute is whether the concept of ‘VAT due’ in [the first paragraph of] Article 179 
and [the first paragraph of] Article 183 of Directive 2006/112/EC may be 
interpreted as the equivalent of ‘cumulative amount of VAT due’ described in 
Article 303(4) of the Tax Code – Law 227/2015. 
29 The second point to be clarified is whether such a mechanism, established in the 
exercise of procedural autonomy, is consistent with the principles of equivalence, 
effectiveness and neutrality. 
PHILIPS ORĂȘTIE 
 
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30 The principle of equivalence requires the Member States not to establish 
procedural rules that are less favourable, in the case of applications for the refund 
of a tax arising from the application of EU law, than the rules which apply to 
claims that are similar, having regard to their subject matter, basis and essential 
characteristics, but arise from the application of national law. 
31 The principle of effectiveness precludes the introduction of procedural rules that 
would make it excessively difficult or practically impossible to exercise rights 
conferred by the EU legal order. 
32 The general scheme governing liability for national taxes and duties, Articles 157, 
233 and 235 of the Code of Tax Procedure – Law 207/2015, includes the rule that, 
where a tax decision is disputed and a bank guarantee is lodged in respect of the 
entire disputed liability, enforcement is stayed and the liability may be 
extinguished prematurely only at the request of the debtor. 
33 With regard to VAT, Article 30[3](5) of the Tax Code – Law 227/2015 omits to 
stipulate any express derogation from the inclusion in the cumulative amount of 
tax due of any portion, not paid to the Treasury prior to the submission of the tax 
return, of the balance of VAT due as established by the tax inspection authorities 
in decisions the enforcement of which has been suspended following the lodging 
of a bank guarantee. 
34 From the time when the bank guarantee was lodged (November 2016) until the 
time when the substantive ruling in the case was given (April 2019), the tax 
authority implicitly acknowledged that the provisions of Article 235(1) and (5) of 
the Code of Tax Procedure – Law 207/2015 applied, processing the VAT returns 
submitted without taking into account the guaranteed liabilities. However, 
following the annulment of the tax decision (April 2019) by a ruling which has not 
yet become final (but which enjoys the authority of a provisional judgment and 
thus creates significant doubt about the lawfulness of the administrative act), the 
tax authority changed its position, adopting the view that only the provisions of 
Article 303(4) and (5) of the Tax Code – Legea 227/2015 applied. 
35 The question therefore arises of whether such a disparity is objectively justified, 
given that the measures which the Member States may adopt under Directive 
2006/112/EC in order to ensure the correct levying and collection of the tax and 
for the prevention of fraud must not go further than is necessary to attain such 
objectives and must not undermine the neutrality of VAT (as held by the Court of 
Justice of the European Union in its judgments in Gabalfrisa and Others, 
C-110/98 to C-147/98, EU:C:2000:145, paragraph 52, Collée, C-146/05, 
EU:C:2007:549, paragraph 26, Nidera Handelscompagnie, C-385/09, 
EU:C:2010:627, paragraph 49, and Idexx Laboratories Italia, C-590/13, 
EU:C:2014.2429, paragraphs 36 and 37). The existence of a bank guarantee 
makes the collection of the tax very simple for the tax authority once the 
lawfulness of the tax assessment has been confirmed definitively by a court. [Or. 
7] 
REQUEST FOR A PRELIMINARY RULING OF 22. 9. 2020 – CASE C-487/20 
 
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36 In addition, it is necessary to clarify to what extent the principle of neutrality is 
observed so long as the interpretation and actual application of the national rules 
creates an additional financial burden for the company, both regarding the 
impossibility of obtaining a refund within a reasonable period of time and 
regarding the costs incurred in lodging a guarantee for the stay of enforcement of 
the tax assessment. 
37 […] 
38 […] 
FOR THOSE REASONS, 
IN THE NAME OF THE LAW 
ORDERS 
that, pursuant to Article 267 of the Treaty on the Functioning of the European 
Union, the following question be referred to the Court of Justice of the European 
Union for a preliminary ruling: 
May the provisions of [the first paragraph of] Article 179 and [the first 
paragraph of] Article 183 of Directive 112/2006/EC, regard being had to the 
principles of equivalence, effectiveness and neutrality, be interpreted as 
precluding national legislation or practices in accordance with which the amount 
of VAT to be refunded is reduced by including in the calculation of the VAT due 
amounts representing additional liabilities established in a notice of assessment 
that has been annulled by a judgment that is not yet final, where such additional 
liabilities are guaranteed by a bank guarantee and the national tax procedure rules 
recognise that such a guarantee has the effect of staying enforcement in the case of 
other taxes and duties? 
[…] [procedural matters, signatures] […]