ECJ VAT C-496/25 (Lin III) – Questions – EU law may override national limits in VAT fraud prosecutions

The ECJ released the facts and questions in the case C-496/25 (Lin III).

Relevant EU regulations

On the basis of Article 267 TFEU, the referring court is seeking an interpretation of Articles 2 and 4(2) and (3) TEU, Articles 2(2) and 325(1) TFEU, Articles 1(1) and 2 of the PIF Convention, and Articles 20, 49(1), 52(3) and 53 of the Charter of Fundamental Rights of the European Union.

Facts and background

VAT Fraud Conspiracy: The case involves a Romanian network of companies accused of simulating fictitious transactions to fraudulently claim VAT refunds totaling over RON 7.2 million.
National Acquittal: Romanian courts acquitted the defendants, ruling that criminal liability was time-barred under national law, despite evidence of conspiracy to commit VAT fraud.
EU Law Conflict: The case raises whether such conspiracies — even if not completed — fall under EU obligations to protect financial interests (Article 325 TFEU and the PIF Convention).
Limitation Periods & Lex Mitior: Romania’s legal framework prioritizes the retroactive application of more lenient criminal laws and prohibits mixing provisions from different laws (“lex tertia”), potentially clashing with EU requirements.
Preliminary Questions to ECJ: The Romanian High Court seeks guidance on whether national courts must disapply domestic limitation rules and constitutional principles to ensure effective enforcement of EU VAT fraud protections.

Questions

Summary

Does a conspiracy to commit VAT fraud qualify as fraud affecting EU financial interests under Article 325 TFEU and the PIF Convention—even if the fraud wasn’t completed?
Must national courts disapply national standards on limitation periods and lex mitior if they conflict with EU law, especially post-Lin judgment (C-107/23 PPU)?

Questions

(1) When interpreting Article 325 TFEU and Articles 1(1) and 2(1) of the Convention drawn up on the basis of Article K.3 of the Treaty on European Union on the protection of the European Communities’ financial interests (‘the PIF Convention’), can a conspiracy involving several persons for the purpose of committing VAT fraud be regarded as fraud or other illegal activities affecting the financial interests of the European Union, regardless of whether the fraud constituting the purpose of the conspiracy is actually committed?
(2) If the answer to the previous question is in the affirmative, should the provisions of Articles 2 and 4(2) and (3) TEU, Articles 2(2) and 325(1) TFEU and Article 2(1) of the PIF Convention, as interpreted by the judgment of the Court [of 24 July 2023, Lin, C-107/23 PPU, EU:C:2023:606; ‘the Lin judgment’], [and] Articles 20, 49(1), 52(3) and 53 of the Charter of Fundamental Rights of the European Union [‘the Charter’] be interpreted as meaning that, in criminal
proceedings concerning offences relating to VAT and related offences, the national court must disapply the national standard of protection relating to the principle of the retroactive application of the more lenient criminal law (lex mitior), as this emerges from the binding case-law of the highest court of that Member State, according to which standard procedural acts taking place before the national legislative provision governing the causes of interruption of the limitation periods for criminal liability was invalidated do not have the effect of interrupting a limitation period, where:
- a. the disapplication of that national standard is incompatible with the prohibition on applying lex tertia – a principle of constitutional rank;
- b. in application of that national case-law, it can be considered that the general limitation period for criminal liability had expired before the [Lin] judgment was delivered;
- c. the disapplication, on the basis of EU law, of that national standard results in a level of protection of the fundamental rights enshrined in the Charter that is not equivalent or comparable to the protection guaranteed by Article 7 of the European Convention on Human Rights [‘the ECHR’];
- d. national law does not lay down specific criteria to be applied by the court of the Member State to assess, at a preliminary stage, the systemic risk of impunity arising from the application of that national standard in cases of serious fraud affecting the financial interests of the European Union?

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