ECJ C-182/20 (Administraţia Judeţeană a Finanţelor Publice Suceava and Others) – Judgment – Input VAT deduction prior to insolvency proceedings

On June 3, 2021, the ECJ issued its decision in the case C-182/20 (Administraţia Judeţeană a Finanţelor Publice Suceava and Others).


Article in the EU VAT Directive

Articles 168 and 185 to 189 of the EU VAT Directive 2006/112/EC

Article 168
In so far as the goods and services are used for the purposes of the taxed transactions of a taxable person, the taxable person shall be entitled, in the Member State in which he carries out these transactions, to deduct the following from the VAT which he is liable to pay:
(a) the VAT due or paid in that Member State in respect of supplies to him of goods or services, carried out or to be carried out by another taxable person;
(b) the VAT due in respect of transactions treated as supplies of goods or services pursuant to Article 18 (a)and Article 27;
(c) the VAT due in respect of intra-Community acquisitions of goods pursuant to Article 2(1)(b)(i);
(d) the VAT due on transactions treated as intra-Community acquisitions in accordance with Articles 21 and 22;
(e) the VAT due or paid in respect of the importation of goods into that Member State.

Article 185
1. Adjustment shall, in particular, be made where, after the VAT return is made, some change occurs in the factors used to determine the amount to be deducted, for example where purchases are cancelled or price reductions are obtained.
2. By way of derogation from paragraph 1, no adjustment shall be made in the case of transactions remaining totally or partially unpaid or in the case of destruction, loss or theft of property duly proved or confirmed, or in the case of goods reserved for the purpose of making gifts of small value or of giving samples, as referred to in Article 16.
However, in the case of transactions remaining totally or partially unpaid or in the case of theft, Member States may require adjustment to be made.

Article 186
Member States shall lay down the detailed rules for applying Articles 184 and 185.

Article 187
1. In the case of capital goods, adjustment shall be spread over five years including that in which the goods were acquired or manufactured. Member States may, however, base the adjustment on a period of five full years starting from the time at which the goods are first used. In the case of immovable property acquired as capital goods, the adjustment period may be extended up to 20 years.
2. The annual adjustment shall be made only in respect of one-fifth of the VAT charged on the capital goods, or, if the adjustment period has been extended, in respect of the corresponding fraction thereof.

The adjustment referred to in the first subparagraph shall be made on the basis of the variations in the deduction entitlement in subsequent years in relation to that for the year in which the goods were acquired, manufactured or, where applicable, used for the first time.

Article 188
1. If supplied during the adjustment period, capital goods shall be treated as if they had been applied to an economic activity of the taxable person up until expiry of the adjustment period.
The economic activity shall be presumed to be fully taxed in cases where the supply of the capital goods is taxed.
The economic activity shall be presumed to be fully exempt in cases where the supply of the capital goods is exempt.
2. The adjustment provided for in paragraph 1 shall be made only once in respect of all the time covered by the adjustment period that remains to run. However, where the supply of capital goods is exempt, Member States may waive the requirement for adjustment in so far as the purchaser is a taxable person using the capital goods in question solely for transactions in respect of which VAT is deductible.

Article 189
For the purposes of applying Articles 187 and 188, Member States may take the following measures:
(a) define the concept of capital goods;
(b) specify the amount of the VAT which is to be taken into consideration for adjustment;
(c) adopt any measures needed to ensure that adjustment does not give rise to any unjustified advantage;
(d) permit administrative simplifications.


Application submitted by BE, a company which has been declared insolvent, and DT, a partner and administrator thereof, seeking revision of the judgment delivered in appeal proceedings by the Curtea de Apel Suceava (Court of Appeal, Suceava, Romania), by which that court upheld the decision of the tax authorities (Administrația Județeană a Finanțelor Publice Suceava) (District Directorate of Public Finances, Suceava, Romania) and the Direcția Generală Regională a Finanțelor Publice Iași (Regional Directorate General of Public Finances, Iași, Romania)) to adjust value added tax (VAT) in favour of the State, by refusing to deduct VAT on taxable transactions prior to the initiation of insolvency proceedings in relation to that company.


Do Directive 2006/112/EC 1 and the principles of fiscal neutrality, the right to deduct VAT and fiscal certainty preclude, in circumstances such as those in the main proceedings, national legislation which requires, once insolvency proceedings in respect of an economic operator have been initiated, automatically and without further checks, adjustment of VAT, by refusing to allow the economic operator to deduct VAT on taxable transactions that occurred prior to the declaration of insolvency and ordering the operator to pay the deductible VAT? Does the principle of proportionality preclude, in circumstances such as those in the main proceedings, such provisions of national law, given the economic consequences for the economic operator and the definitive nature of such an adjustment?

AG Opinion

No opinion given.


Articles 184 to 186 of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax must be interpreted as meaning that they preclude a regulation or a national practice according to which the opening of bankruptcy proceedings with regard to an economic operator, involving the liquidation of its assets for the benefit of its creditors, automatically entails the obligation for this operator to regularize the tax deductions on the added value that he has made for goods and services acquired prior to his bankruptcy, when the opening of such a procedure is not likely to prevent the economic activity of the said operator , within the meaning of Article 9 of that directive, be pursued,in particular for the purposes of the liquidation of the company concerned.






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