Right to deduct VAT. Fictitious economic operation

DREPTUL CONTENCIOSULUI ADMINISTRATIV ŞI FISCAL

Abstract

There is tax evasion not only when this is committed by the taxable person, but also when a taxable person knew or should have known that, by the operation under consideration, it participated in an operation involved in a VAT-related fraud, committed by the supplier or by another operator which interfered in the supply chain upstream or downstream. The VAT-related fraud shall not be supported by the findings of the first instance court and of the tax body, according to which the appellant-plaintiff has not concluded any agreements with its direct suppliers for the purchase of wood and wood panel houses. The deliberate agreements of the parties are reflected in the invoices issued, being deemed as supporting documents underpinning the records in the accounts of the suppliers and of the buyer, representing means of evidence related to the operations carried out. Therefore, invoices shall prove the existence of the consensual sale-purchase agreements of wood and wood panel houses, however, the fact that the parties have not drafted any instrumentum lacks legal relevance. The tax body has neither invoked, nor demonstrated that the appellant knew or should have known that its direct suppliers did not operate at their registered office or evaded inspections. Furthermore, in accordance with the appellant’s allegations, the inactivity of its direct supplier occurred after the date on which the appellant had purchased the house from the respective supplier which met the requirements regarding the VAT attribute as at that date. As far as the direct suppliers were economic operators with an adequate tax behaviour at the time when the appellant performed the purchases of wood and wood panels houses, and the operations were recorded in the tax records declared in due time, and the respondent neither invoked, nor proved that the appellant knew or should have known that, by the operation under consideration, it participated in an operation involved in a VAT-related fraud, committed by the supplier or by another operator which interfered in the supply chain upstream, the denial of the appellant’s right to deduct VAT did not appear to be justified.