VAT discount Conditions. VAT adjustment for non-use of goods. Conditions

CONTENCIOS ADMINISTRATIV ŞI FISCAL

Abstract

Taxable persons are entitled to deduct VAT on their purchases of goods and services only if two cumulative conditions are met, namely that the purchases of goods and services are for use in their taxable transactions and are based on invoices which must contain all the information required for the right of deduction.

In verifying the fulfilment of the first condition, the evidentiary prerequisite is the existence of these operations, their actual nature, because after establishing this fact, the taxable nature of the operation can be assessed.

Such an interpretation is also in line with the case law of the Court of Justice of the European Union on this matter. In this regard, the Court of Justice of the European Union has held in its case-law that the existence of a direct and immediate link between a given input transaction and one or more output transactions giving rise to a right to deduct VAT is, in principle, necessary for the right to deduct input VAT to be recognised for the taxable person and for the scope of such a right to be determined

b) According to Article 149 para. (4) para. (4) letter a) item 1 of the old Tax Code, the adjustment of the deductible tax occurs when the capital good is used by the taxable person, in whole or in part, for purposes other than economic activities.

According to art.149 paragraph (2) letter b) of the old Fiscal Code, in the case of acquisition of immovable property the adjustment period is 20 years. Also according to Art.149 paragraph (5) letter a) of the old Fiscal Code "for the cases referred to in para. (4) (a), the adjustment shall be made within the adjustment period referred to in para. (2). The adjustment of the deduction is made in the tax period in which the event giving rise to the adjustment occurs and is made for the whole of the tax relating to the remaining period of the adjustment period, including the year in which the change of use occurs. Transitional rules shall be laid down by rules for the situation where the adjustment provided for in paragraph (4) letter a) for one-fifth or, where appropriate, one-twentieth of the tax originally deducted".

Therefore, when on the basis of objective elements it can be concluded that the capital good for which the right of deduction has been exercised is used for activities other than the economic operations of the taxable person, the adjustment of the deductible tax for the whole period of 20 years will take place