Costaș, Negru & Asociații managed to obtain, at the Alba Tribunal, a new referral to the Court of Justice of the European Union regarding several issues of tax law and tax procedural law.
Thus, by the decision of April 10, 2025, the Alba Court – Second Civil, Administrative, Tax and Insolvency Section, ordered the referral to the Court of Justice of the European Union with the following preliminary questions:
Question no. 1: Does the general principle of respect for the rights of the defence, as provided for in Article 48(2) of the Charter of Fundamental Rights of the European Union, as it has been outlined at Union level, and also the right to good administration, as provided for in Article 41(2)(b) of the Charter, preclude a national practice such as that in the main proceedings, in which access to the administrative file is refused to the taxpayer at the administrative stage of the tax process, on the grounds that the tax inspection body claims that some of the documents contained therein were not taken into account in establishing the tax facts?
Question no. 2: If the answer to the first question is in the affirmative, do the provisions of Article Do Articles 41, 47, 48 and 53 of the Charter of Fundamental Rights of the European Union, namely the principles of respect for the right of defence and the right to a fair trial, preclude a practice of the tax administration and the court of law not to annul administrative tax acts prejudicial to the individual, in the event that the condition that the administrative procedure could have had a different outcome was met?
Question no. 3: Does Article 52(2) of the Charter of Fundamental Rights of the European Union, read in conjunction with Article 8(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms, preclude the use, in an administrative procedure of a fiscal nature, of the results of secret intelligence gathering in an operation unrelated to the economic aspects of the case, evidence that has not been brought to the attention of the taxpayer?
Question no. 4: Do the provisions of Articles 178, 213 and 214 of the VAT Directive and the principle of fiscal neutrality preclude internal rules by which a Member State requires a national to collect and remit VAT to the State, without, however, recognising his right to deduct VAT, on the grounds that a commercial partner’s VAT number has been cancelled, although he has fulfilled his payment obligations to the State budget?
Question no. 5: In relation to the circumstances of the main proceedings, must the principle of legal certainty, the principle of the protection of legitimate expectations, the principle of proportionality and loyal cooperation, as they arise from the VAT Directive, be interpreted as prohibiting the establishment of an obligation to collect and pay VAT on the taxpayer, without however recognising his right to deduct VAT, as long as it is not proven that there has been any fraud on the part of the taxpayer against the state budget, in accordance with Article 273 of the VAT Directive?
In a nutshell, the most recent referral of the Court of Justice of the European Union concerns both the issue of the right of access to the tax inspection file and the situation of inactive taxpayers, following the cancellation of the VAT code.
Company M. was subject to a tax inspection, during which it was criticized for considering as deductible expenses in the calculation of corporate income tax the purchases of services from company C., a fiscally inactive taxpayer since 7.03.2018. During the litigation, the following were clarified:
- Company C. lost its VAT code on 30.08.2016, as it would not have justified the intention to carry out economic activities. Through a judicial solution, the tax administration’s refusal to assign a VAT code to company C. was confirmed.
- Subsequently, company C. was considered an inactive taxpayer.
- Company C. declared the deliveries to company M., respectively paid, in the relevant period, the tax on microenterprise income (the turnover being also generated by the value of the services provided to company M.).
Procedurally, company M. requested access to the entire administrative file of the tax inspection. With regard to some documents, the Alba County Administration of Public Finance refused access, stating that the documents would not have been used in the inspection activity, namely that they contain personal data and cannot be made available without the consent of the inspected persons.
Subsequently, in the procedure for resolving the tax appeal, the Regional General Directorate of Public Finance Brașov indicated that there were other documents and information in the file regarding company C., which would justify the refusal to recognize deductible expenses, without detailing what these documents and information were and without making them available to the taxpayer.
The documents in question, referred to above, were not submitted to the court file either.
The main dispute is under retrial before the Alba Tribunal. In the first procedural cycle, an expert report submitted to the case file concluded that the company M. correctly deducted the expenses for the services it benefited from, there being no indication or accusation regarding the unreality of the services provided.
In our opinion, this referral to the Court of Justice of the European Union obtained by the lawyers Costaș, Negru & Asociații is important from both a procedural and a material perspective.
Thus, although it was the subject of two other cases that reached Luxembourg (Ispas and C.F.), the issue of access to the administrative file is still unresolved at national level. The factual situation predates the introduction of art. 7 para. (41) of the Tax Procedure Code – which enshrines at national level the right of access to the administrative file of the tax inspection. The discussion, however, concerns the practice of tax authorities of considering certain information and documents “secret” without invoking reasons of general interest to justify their refusal of access to the administrative file.
Separately, the issue of inactive taxpayers must be analysed in the continuation of the Paper Consult case law. In principle, national legislation is compatible with European law if a refusal to recognise deductible expenses and deductible VAT on the relationship with a definitive taxpayer is not final. In this case, however, this refusal is final, company C. having already been removed from the Trade Register. The situation was, however, generated by other events:
- On the one hand, in terms of VAT, company C.’s registration for VAT purposes was cancelled for subjective reasons, contrary to the case law of the Court of Justice in the Ablessio case, and the national courts did not correct the abusive conduct of the tax authorities.
- On the other hand, the declaration of inactivity is the consequence of the loss of the VAT code, company C. being in a situation where it could not deduct its own purchases when calculating corporate income tax, respectively when calculating VAT.
The taxpayer was represented before the national courts by av. dr. Cosmin Flavius Costaș of the Arad Bar and by av. Diana Ioana Badiu of the Cluj Bar.
Costaș, Negru & Asociații is a civil law firm with offices in Cluj-Napoca, Bucharest and Arad, which provides assistance, legal representation and consultancy in several areas of practice through a team composed of 18 lawyers and consultants. Details regarding legal services and the composition of the team can be found on the website https://www.costas-negru.ro. All rights for the materials published on the company’s website and through social networks belong to Costaș, Negru & Asociații, their reproduction being permitted only for information purposes and with correct and complete citation of the source.
