Comments on T-233/25: EGC Subcontractor cannot revise VAT base in the event of debt not paid by the client

Mokoryte (T-233/25) – Judgment – Subcontractor – Developer insolvent – Contractor assigns claim against the developer – whether taxpayer able to make adjustment under Article 90 – no – taxpayer loss

The subcontractor (Mokoryte) sought to reduce its VAT taxable amount under Article 90(1) after the developer became insolvent. This was after the contractor, who was the direct recipient of Mokoryte’s services, assigned its claim against the insolvent developer to Mokoryte.
The Court ruled that Mokoryte was not entitled to the adjustment because the entire debt owed by the contractor to Mokoryte was deemed settled through a partial payment and the assignment of the claim. Therefore, there was no basis for Mokoryte, as the subcontractor, to reduce its taxable amount.
The Court indicated that if anyone was entitled to a VAT adjustment under Article 90(1) due to the developer’s insolvency, it would be the contractor, as the direct supplier to the insolvent developer, and not the subcontractor.

Source KPMG

Mokoryte SRL, a subcontractor, was denied the ability to adjust its VAT taxable amount despite acquiring a claim by assignment from its contractor, Modern Bau SRL, against an insolvent main client, CBC Development Design SRL.
Mokoryte sought a VAT refund by issuing cancellation invoices in 2021, but Romanian tax authorities argued that only Modern Bau, as the direct recipient of Mokoryte’s services, could claim such a revision.
The General Court ruled that Mokoryte could not adjust the VAT taxable amount because it was not directly involved in the transaction between the main client (CBC) and the contractor (Modern Bau) to which the assigned claim related.

Source Taxlive

Comments on EGC T-397/25: Justified revision of VAT deduction of leased commercial building after transfer of business – VATupdate