Case C 73 of 2019 ITH Comercial Timișoara SRL

29.07.2021
in Laws
by Cristian Meneghetti

Reading Time: 4 min

Recent EC senteza: Case C 73 of 2019 ITH Comercial Timișoara SRL exercises the right to deduct VAT related to procurement for real estate projects that were subsequently abandoned for external reasons at the will of the decision taxable person.

The European Court of Justice examined today is ruling very recently and was made public on November 12, 2020 Unfortunately there is again a dispute between a taxpayer from Romania and the Romanian tax authority This litigation would not have had to happen because the existing regulatory framework covered situations in the case described Case Description Company ITH Comercial Timișoara SRL is a taxable person, registered in For VAT purposes in Romania In 2006 it purchased from another economic operator a company producing elevators, land and several old buildings, with the following two real estate projects a) Realization of a residential complex B) Realization of office space and production space on which they rent the elevator company for a period of at least 10 years Right Romanian Legislation, all these projects required obtaining permits, resulted in the allocation of expenses and the company deducted VAT on these purchases In the case of the second rental project, the company submitted notification for the option to rent with VAT the buildings intended use by the elevator company.

These acquisitions made in 2007 As a result of the economic crisis since 2009 2010 the company decided to abandon these projects and discarded these investments from the accounting records under construction in 2015 In two tax assessments, the right to deduct VAT was canceled by the inspection teams, with the following main reasoning a) For the first project, the inspection teams found that company was aware is the eminence of the economic crisis and to continuous investment, despite having all the elements to fail the project B) For the second project, the inspection teams found that a commissary structure is created, in the sense that the company had to re-invoice the mirror to the elevator production company, allocated investments As the re-invoicing was not carried out, the right to deduct VAT from the purchases was cancelled On Consequently, the inspection teams issued a tax decision, and the company’s appeal was subsequently rejected The company appealed to the Bucharest court, and this court a addressed to the European Court of Justice, a significant number of questions about the current situation In essence, the Romanian court seeks a ruling on exercising the right to deduct VAT for these abandoned projects and whether a commission structure is set up by itself for the second project.

1 Articles 167 168 184 and 185 of Directive 2006 112/EC a Council Decision of 28 November 2006 on the common system of value added taxation must be interpreted as meaning that the right to deduct value added tax (input for goods, in particular real estate and for services purchased for the purpose of carrying out taxable transactions is retained when the initially planned investment projects were abandoned due to circumstances beyond their taxable person’s control, and that it is not necessary to carry out a regularization of that VAT if the taxable person continues to want to exploit those goods in the purposes of a taxable activity 2 Directive 2006 112, in particular Article 28, must be interpreted to mean that in the absence of a contract of mandate without representation, the mechanism of the commissioner structure is not applicable when a taxable person performs a construction in accordance with the requirements and the requirement of another person who is presumed to take in the position of that building In the conclusion, provided that the current investments are abandoned for reasons independent of the will of the company and s a observed the purpose of carrying out taxable transactions cf. the notification for invoicing with VAT of the rent, this company is entitled to retain the deduction of VAT For the situation in the present case, there is no fee structure to be invoiced reflects the expenses, in the absence of a contract that stipulates so express this will of the parties around the ECJ ruling can be downloaded here http :: // itva ro / documents / CauzaC 73 din 2019 ITHComercialTimi C 8 99 oaraSRL pdf

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