EY Romania has successfully assisted SMS Group GmbH in proceedings before the Court of Justice of the European Union (‘CJEU’), obtaining the invalidation of the erroneous practice of the Romanian tax authorities to approve the refund of VAT paid for an import of goods only upon proof of their "subsequent circuit".
The case which is currently pending before the High Court of Justice of Romania (‘ICCJ’), refers to a VAT refund request submitted by the non-resident company SMS group GmbH with respect to an import of goods in Romania. Taking into consideration that at the moment of import, the contract by which the goods were sold was not fully executed, the Romanian tax authorities (the ‘RTA’) rejected the refund request for VAT paid for the import, arguing that the non-resident company did not provide documents proving the subsequent circuit of goods and the final beneficiary.
As such, EY Romania assisted the client before the Romanian courts and requested ICCJ to refer to the CJEU a request for a preliminary ruling, in order to clarify whether the decision of the tax authorities is against the European legislation, taking into consideration the provisions of Articles 2-5 from the 8th VAT Directive, in connection with Article 17 paragraph (2) and paragraph (3) letter (a) from the 6th VAT Directive. After analyzing the case and the preliminary questions, CJEU concluded last month that:
‘Eighth Council Directive 79/1072/EEC of 6 December 1979 on the harmonisation of the laws of the Member States relating to turnover taxes — Arrangements for the refund of value added tax to taxable persons not established in the territory of the country, read in conjunction with Article 170 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, must be interpreted as precluding a refusal by a Member State to refund the value added tax paid on the importation of goods to a taxable person who is not established on its territory in circumstances such as those in the main proceedings where, at the time of importation, the performance of the contract in connection with which the taxable person purchased and imported those goods was suspended, the transaction for which they were intended to be used was in the end not carried out, and the taxable person did not provide proof of their subsequent movements.’
Given the above, EY Romania has contributed to the case law of CJEU, thus amending the domestic legislation by obtaining this landmark decision in matters related to the right to VAT refund for non-resident taxpayers. About EY
EY is one of the biggest professional services firm globally, with 250,000 employees in more than 700 offices from 150 countries and revenues of around USD 31,4 billion in the fiscal year that ended on 30 June 2017. In Romania, EY has been one of the leaders of the professional services market ever since its set up, in 1992. The 770 employees from Romania and Moldova provide integrated audit, tax assistance, transaction assistance and business advisory services to multinational and local companies. We have offices in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. EY Romania affiliated in 2014 to the only worldwide competition dedicated to entrepreneurship, EY Entrepreneur of the Year. For more information, please visit our website: www.ey.com