Opinion of the Faculty of Law in the case resolved by the High Court of Cassation and Justice by Decision (RIL) no. 6/2026 (negative VAT balance)

On April 6, 2026, by Decision (RIL) no. 6/2026, the High Court of Cassation and Justice – The panel competent to judge the appeal in the interest of the law pronounced the following solution: In the unified interpretation and application of the provisions of art. 1473 paragraph. (6) of Law on the Fiscal Code no. 571/2003, as amended and supplemented, and art. 303 paragraph. (7) of Law no. 227/2015 on the Fiscal Code, as amended and supplemented, establishes that: The right of the taxable person to carry forward the balance of the negative VAT amount in the VAT return relating to subsequent fiscal periods is not subject to prescription. Mandatory, according to art. 517 paragraph. (4) of the Code of Civil Procedure.

In relation to this decision, which awaits its justification, we present the opinion formulated by the Faculty of Law, at the request of the High Court of Cassation and Justice, regarding the legal issue in question.

Opinion regarding the legal issue that is the subject of file no. 2286/1/2025

At the request of the High Court of Cassation and Justice – Panel for resolving the appeal in the interest of the law, regarding the legal issue that is the subject of the reference file, we formulate the following response:

Legal issue:

Whether the taxpayer’s right to carry forward the balance of the negative VAT amount in the VAT return for the following fiscal periods is time-barred.

Analysis of the legal issue in relation to the interpretations in judicial practice:

In substantiating our opinion, we will start from the observation that both the opinions identified in judicial practice and the opinion of the INM trainer were based strictly on the analysis of national tax legislation (under the old Fiscal Code or the new Fiscal Code), and not on the reading of art. 183 of the VAT Directive (Directive 2006/112/EC) and the associated case law. On the contrary, the opinion that the Faculty of Law presents is based on the natural interpretation, in accordance with the provisions of art. 183 of the VAT Directive, as they were interpreted by the Court of Justice of the European Union.

We will thus note that, according to art. 183 par. (1) of the VAT Directive, “When, for a given tax period, the value of deductions exceeds the value of VAT due, Member States may either make a refund or carry over the excess to the following period, under the conditions that they establish”.

The simple reading of this text allows us to conclude preliminary that in the European legislation specific to the VAT field there is no time limitation on the period for which the VAT surplus can be reported. And where the law does not distinguish, the interpreter should not distinguish either. Therefore, in principle, a taxpayer can carry forward the VAT surplus indefinitely.

In addition, we consider that the issue of the interpretation of art. 183 paragraph. (1) of the VAT Directive and especially the meaning of the notion of “subsequent period” has been analyzed sufficiently clearly, with useful results for the procedure of the present appeal in the interest of the law, in the relevant case law of the Court of Justice of the European Union.

First, by its judgment of 12 May 2011 in Case C-107/10, Enel Maritsa Iztok 3 AD, the Court recalled that, according to settled case-law, the right of taxable persons to deduct from the VAT they owe the VAT which has already been charged on goods and services previously received by them constitutes a fundamental principle of the common system of VAT established by Union legislation (paragraph 31). It follows that the right to deduct is an integral part of the VAT mechanism and, in principle, cannot be limited. In particular, that right is immediately exercisable in respect of all the taxes charged on input transactions (paragraph 32). As regards the possibility, conferred by Article 183 of the VAT Directive, of providing that the excess VAT may be carried forward to the following tax period or refunded, the Court stated that, although the Member States have a certain freedom to determine the conditions for the refund of the excess VAT, those conditions cannot undermine the principle of fiscal neutrality by causing the taxable person to bear, in whole or in part, the burden of that tax. In particular, such conditions must enable the taxable person to recover under appropriate conditions the entire amount of the claim resulting from the excess VAT, which implies that the refund must be made within a reasonable period, by payment in cash or in an equivalent manner and that, in any event, the method of refund adopted does not involve any financial risk for the taxable person (paragraph 33 and the case-law cited there).

Subsequently, in case C-525/11, Mednis SIA, the Court ruled by judgment of 18 October 2012. It was explicitly stated that the postponement of the reimbursement of a VAT surplus for several tax periods subsequent to the one in which this surplus arose is not necessarily incompatible with the first paragraph of Article 183 of Directive 2006/112 (paragraph 25 of the Court’s judgment, with reference to case C-107/10, Enel Maritsa Iztok 3 AD, cited above, but also to case C-274/10, Commission v. Hungary).

In the Romanian case in case C-487/20, Philips Orăștie, the Court of Justice ruled by judgment of 10 February 2022. Paragraph 2 is relevant. 26, where it is stated that it is clear from the case-law of the Court that Article 183 of the VAT Directive cannot be interpreted as necessarily precluding national legislation which provides for methods of refunding excess VAT which combine the two methods of refunding excess VAT provided for in Article 183, namely the carry-over to the following tax period and the refund of that excess, or which provides for its carry-over not to the following tax period but to several tax periods, provided that the limits laid down in Article 252(2) of the VAT Directive are respected.

More recently, extremely important clarifications for the procedure of the present appeal in the interest of the law were provided for by the judgment of the Court of Justice of the European Union of 5 December 2024 in Case C-680/23, Modexel. We quote the relevant paragraphs in full:

(…)

27 The first paragraph of Article 183 of that directive states that, where, for a given tax period, the amount of deductions exceeds the amount of VAT due, Member States may either make a refund or carry over the excess to the following period.

28 In that regard, first, as regards the concept of ‘following period’ in that provision, as the European Commission has stated in its written observations, it is apparent from the use of those terms in the singular that that concept must be understood as referring to the tax period immediately following the tax period in which the amount of deductions exceeds the amount of VAT due. Furthermore, under Article 252 of the VAT Directive, the tax period is determined by each Member State within the limits laid down in paragraph 2 of that article, without it being apparent from that article or from Article 183 of that directive that that period or the succession of tax periods depends on the carrying out by a taxable person of an economic activity during a given tax period or part of a given tax period.

29 However, it is apparent from the case-law of the Court that the postponement of the refund of a VAT surplus for several tax periods subsequent to that in which that surplus arose is not necessarily incompatible with that provision (see, to that effect, judgment of 18 October 2012, Mednis, C-525/11, EU:C:2012:652, paragraph 25 and the case-law cited, and judgment of 10 February 2022, Philips Orăștie, C-487/20, EU:C:2022:92, paragraph 26 and the case-law cited).

30 However, it must be recalled that it is the existence of an economic activity that justifies classification as a taxable person, since the VAT Directive recognises the right to deduct (see, by analogy, judgment of 3 March 2005, Fini H, C-32/03, EU:C:2005:128, paragraph 19). Thus, in order to benefit from that right, the person concerned must, in particular, be a ‘taxable person’ within the meaning of that directive (see, to that effect, judgment of 21 March 2018, Volkswagen, C-533/16, EU:C:2018:204, paragraph 41 and the case-law cited).

31 Under Article 9(1) of the VAT Directive, ‘taxable person’ means any person who independently carries out in any place any economic activity, whatever the purpose or results of that activity. Under Article 213(1) of the VAT Directive, the taxable person must declare the cessation of his economic activity to the tax authority, which must invalidate the VAT identification number allocated to that taxable person, in accordance with Article 23(a) of Regulation No 904/2010.

32 Therefore, an operator who ceases his economic activity also ceases to be a taxable person for VAT purposes. The loss of the status of ‘taxable person’ by an operator as a result of that cessation of activity entails the lack of continuity of the tax periods required by the first paragraph of Article 183 of the VAT Directive, since for that operator there is neither a subsequent period, within the meaning of that provision, nor, assuming that the operator resumes an economic activity, a previous period, since the latter activity will be new.

33 It follows that, although the first paragraph of Article 183 of the VAT Directive allows a VAT surplus to be carried forward to several tax periods following the one in which that surplus was generated, the cessation of the economic activity of the taxable person concerned results in the absence of a subsequent period, within the meaning of the first paragraph of Article 183 of the VAT Directive, into which that surplus may be carried forward.

34 Furthermore, as the Commission points out, giving an economic operator the possibility of carrying forward, after resuming economic activity, a VAT surplus declared upon cessation of the previous activity could encourage abuses and the establishment of artificial arrangements by economic operators. Thus, such an operator who, for whatever reason, has not complied with the time-limit laid down by national legislation for requesting reimbursement of the VAT surplus after cessation of his economic activity could claim to be resuming an economic activity for the principal or exclusive purpose of requesting the carrying forward of that surplus. Such a possibility of carry-over could also be contrary to the principle of legal certainty, since the Court has already stated that the possibility of exercising the right to deduct VAT without any limitation in time would be contrary to that principle, which requires that the tax situation of the taxable person, from the point of view of rights and obligations vis-à-vis the tax authorities, cannot be called into question indefinitely (see, to that effect, judgment of 12 April 2018, Biosafe Indústria de Reciclagens, C-8/17, EU:C:2018:249, paragraph 36 and the case-law cited).

35 In the present case, it is apparent from the order for reference that the fact that Modexel ceased its economic activity had the consequence that it was no longer subject to VAT, a matter which the referring court is, however, responsible for verifying, and that the excess VAT could not be carried forward to a subsequent period, within the meaning of the first paragraph of Article 183 of the VAT Directive, due to the lack of continuity between the tax period corresponding to the month in which that company ceased its activity, namely February 2015, and the tax period corresponding to the month in which that company resumed its activity, namely May 2016.

36 Secondly, as recalled in paragraph 27 of the present judgment, the first paragraph of Article 183 of the VAT Directive nevertheless provides that Member States may either make a refund or carry forward the excess VAT to the following period, under conditions which they lay down.

37 It is apparent from the order for reference that the Portuguese legislation combines, in principle, those two methods of refunding an excess VAT, but that, where an operator ceases all economic activity, he may request the refund of such an excess before the end of a period of 12 months starting from the period in which that excess arose.

38 In that regard, it must be recalled, first, that Article 183 of the VAT Directive must not be interpreted as meaning that refund and carry forward are mutually exclusive (judgment of 12 May 2011, Enel Maritsa Iztok 3, C-107/10, EU:C:2011:298, paragraph 47).

39 Furthermore, it is apparent from the case-law of the Court that, although the Member States have a certain freedom to determine the conditions referred to in Article 183 of the VAT Directive, those conditions cannot undermine the principle of fiscal neutrality by causing the taxable person to bear, in whole or in part, the burden of that tax (judgment of 12 May 2021, technoRent International and Others, C-844/19, EU:C:2021:378, paragraph 37 and the case-law cited).

40 More specifically, the conditions mentioned must enable the taxable person to recover, under appropriate conditions, the entire claim resulting from that excess VAT, which implies that the reimbursement is made, within a reasonable period, by means of a cash payment or an equivalent method and that, in any event, the method of reimbursement adopted does not involve any financial risk for the taxable person (judgment of 12 May 2021, technoRent International and Others, C-844/19, EU:C:2021:378, paragraph 38 and the case-law cited).

41 Furthermore, the procedural autonomy of the Member States in implementing the right to refund of excess VAT provided for in Article 183 of the VAT Directive is limited by the principles of equivalence and effectiveness (see, to that effect, judgment of 10 February 2022, Philips Orăștie, C-487/20, EU:C:2022:92, paragraph 24).

42 Thus, a limitation period, the expiry of which has the effect of penalising a taxpayer who has failed to apply for a VAT refund, causing him to lose his right to that refund, cannot be considered incompatible with the system established by the VAT Directive in so far as, first, that period applies in the same way to similar tax rights based on national law and those based on EU law (principle of equivalence) and, second, it does not make it practically impossible or excessively difficult to exercise the right to a VAT refund (principle of effectiveness) (see, by analogy, judgment of 12 September 2024, NARE BG, C-429/23, EU:C:2024:742, paragraph 52).

43 Although it is for the national court to assess the compatibility of national measures with EU law, the Court may nevertheless provide that court with any guidance which may be useful in resolving the dispute before it (judgment of 14 February 2019, Nestrade, C-562/17, EU:C:2019:115, paragraph 36 and the case-law cited).

44 As regards the principle of equivalence, it must be noted that the Court has no evidence capable of raising doubts as to the conformity with that principle of the legislation at issue in the main proceedings.

45 As regards the principle of effectiveness, it is apparent from the order for reference that, according to the tax authorities, Modexel should have requested the refund of the excess VAT within 12 months of the date on which it ceased its economic activity.

46 In that regard, it is for the referring court to verify the period within which Modexel was required to request the refund of the excess VAT declared on the occasion of the cessation of its activity, the Portuguese Government having indicated in its written observations that the period applicable in the present case was four years. A limitation period of 12 months from the date on which the excess VAT arose, as indicated in the order for reference, does not appear to be capable of making it practically impossible or excessively difficult for a taxable person or former taxable person to exercise his right to the refund of the excess VAT. The same conclusion is all the more valid in the case of a limitation period of four years.

47 In the present case, it is not apparent from the order for reference that Modexel attempted to exercise its right to a refund of the excess VAT declared upon the cessation of its economic activity before the end of that 12-month period and encountered difficulties in doing so. In those circumstances, it must be held that, subject to verification by the referring court, Modexel’s exercise of its right to a refund of VAT did not become practically impossible or excessively difficult.

48 In the light of the foregoing considerations, the answer to the questions referred is that the first paragraph of Article 183 of the VAT Directive must be interpreted as not precluding national legislation which provides that, where a taxable person ceases his economic activity, that taxable person may not carry forward to the following period any excess VAT declared at the time of that cessation of activity and may only recover that amount by requesting a refund within 12 months of the date of cessation of that activity, in so far as the principles of equivalence and effectiveness are observed.

In our opinion, the interpretation of the Court of Justice of the European Union in this Portuguese case is also useful for the discussion in Romania. Thus, the essence of the interpretation is that, in consideration of the principle of fiscal neutrality, a taxable person retains the right to deduct VAT and can exercise it throughout its existence (and, in addition, according to Portuguese tax law, can request the reimbursement of the negative VAT balance for 12 months from the date of cessation of economic activity).

We will thus conclude that in a natural interpretation of art. 183 of the VAT Directive, embraced with arguments from domestic law by the first opinion identified in the judicial practice in Romania, the request for the negative VAT balance can be made including through the last return filed by the taxable person, prior to the cessation of his economic activity.

For these reasons, we consider that the interpretation in the first opinion identified in the judicial practice is correct.

We also refer to the second opinion identified in judicial practice, which erroneously states that there would be an omission by the legislator, who would no longer have provided in art. 303 of the new Fiscal Code a maximum limit of 5 years for the taxpayer’s right to carry forward the negative VAT balance. This is not an omission, the national legislator simply brought the text of the Fiscal Code into line with that of art. 183 of the VAT Directive, which does not provide for any limitation of the type existing illo tempore in our fiscal legislation. The opinion is erroneous because it does not resort to the teleological interpretation, mandatory according to art. 13 paragraph (1) Fiscal Procedure Code and, instead of respecting the undoubted will of the legislator, as it results from the law, it ignores this explicit will. This opinion also wrongly considers the judgment of the Court of Justice of the European Union in case C-8/17, Biosafe, to be relevant, simply ignoring the fact that it does not concern the interpretation of art. 183 of the VAT Directive. We will also add that this opinion is devoid of substance because the successive exercise of the option to carry forward the negative VAT balance is in no way prejudicial to the state since, on the one hand, it records a surplus in the treasury (equivalent to virtual VAT to be refunded) and, on the other hand, it does not pay interest on the virtual VAT to be refunded. In addition, if the state were to consider itself prejudiced from some other perspective, not identified by us, it would always have the possibility to reimburse the taxpayer, ex officio, the negative VAT balance, thus freeing itself from any potential payment obligation.

Finally, a final useful note, which supports the same conclusion even if we ignore the relevant case law of the Court of Justice of the European Union. Regarding VAT refunds, the mechanism provided for both by art. 183 of the VAT Directive and by national tax legislation is that according to which the balance of the negative VAT amount is carried forward, successively, to the return(s) of the following periods. From this perspective, each newly filed VAT return – which means that either additional purchases have been reported compared to the previous return, or that the balance of the negative amount carried forward has been increased or decreased – grants equal rights to the interested parties: on the one hand, from the date of filing the new return, the State, through the National Agency for Fiscal Administration and the subordinated bodies, can verify, within the limits of the limitation period, whether the right to deduct VAT has been correctly exercised; on the other hand, within the same term, the taxpayer retains the right to the reimbursement of the balance of the negative VAT amount. Therefore, from this perspective, the first opinion identified in judicial practice is correct.

Conclusion

In consideration of the above arguments, we propose the following answer:

– In the absence of a contrary legislative provision limiting, at European or national level, the submission of returns with a negative VAT balance, the teleological interpretation made in accordance with art. 13 Fiscal Procedure Code reveals that the balance of the negative VAT amount can be carried forward including through the last return submitted by the taxable person before the cessation of economic activity and the loss of the status of taxable person.

– From the perspective of prescription, given that each new return filed interrupts the prescription period, it can be noted that the prescription period in the Fiscal Procedure Code applies only to identical VAT returns, with the same negative VAT balance, filed successively for all fiscal periods within the prescription period.

This opinion was drafted by Associate Professor Cosmin-Flavius ​​Costaș, head of the Department of Tax Law, at the request of the Director of the Department of Public Law, Associate Professor Daniel Nițu.