The Right for Deducting VAT

Abstract

Romania must comply with the VAT Directive, the judgments of the Court of Justice of theEuropean Union and the European Court of Human Rights on VAT matter, that includes the matterof VAT deduction. The right to deduct VAT, in principle, cannot be limited for a taxable person andit is an abuse of law made by tax authorities when refusing this right. There are exceptions though,when the substantive and/or formal requirements are not met, the taxable person was involved in aVAT fraud or its supplier incorrectly drawn-up the invoice. The substantive requirements are: thepurchases must be from a taxable person and must be used for taxable activities. The formalrequirements are the obligations relating to accounting, invoicing and tax declarations. If taxauthorities discover a VAT fraud or/and that a VAT liability has not been declared they must takeimmediate measures, impose compliance and collect the corresponding sums from the responsibleperson.

Keywords

• VAT
• VAT deduction
• VAT fraud
• CJEU
• ECHR