Romanian firm confirms the correctness of the VAT tax treatment
Taxhouse reports that it has successfully assisted the Romanian branch of one of the largest construction companies in Europe in settling a complex tax dispute with the Romanian tax authorities.
The decision of the tax authorities to reject the Romanian VAT deduction right has been argued based on a misinterpretation of the concept of fixed establishment, from a VAT perspective in conjunction with the specific rules regarding the VAT deduction right that can be exercised by a branch / fixed establishment.
The team successfully assisted by confirming the correctness of the VAT tax treatment applied by the Branch. Read the full article from our Romanian team below…
Taxhouse has successfully assisted one of the largest construction companies in a complex VAT tax dispute.
After a period of almost six years elapsed since the issuance by the Romanian tax authorities of the tax assessment decision, which generated the tax dispute, the Romanian Branch of one of the largest European construction companies obtains an important victory before the Romanian tax authorities, in a complex tax dispute in the field of VAT.
The success in the Court was obtained by the Taxhouse team, which assisted the Company during the tax audit and in the subsequent phases at the level of the Bucharest Court of Appeal and the Romanian Supreme Court, as well during the preparation of judicial fiscal expertise, which as practical experience has shown, it is one of the most important evidence for a tax dispute in the Romanian courts.
The Taxhouse team involved in this project was coordinated by Cristian Radulescu, Partner and Vlad Dimitriu, Senior Manager, who have accumulated extensive experience in judicial expertise area.
In brief, following a tax inspection carried out at the level of Romanian Branch of one of the largest construction companies in Europe, the tax authorities denied the Romanian VAT deduction right for the Branch in connection with the acquisition in Romania of equipment related to a project undertaken by the parent company outside the European Union (Republic of Moldova) and in connection with certain advance payments performed by the Branch related to services provided by a local company on an infrastructure project carried out in Romania.
The decision of the tax authorities to reject the Romanian VAT deduction right has been argued based on the misinterpretation of the concept of fixed establishment, from a VAT perspective in conjunction with the specific rules regarding the VAT deduction right that can be exercised by a branch / fixed establishment.
Even if from a technical point of view, by reference to the provisions of the national and European VAT legislation, as well as to the jurisprudence of the Court of Justice of the European Union, the Branch has clearly proved that it has applied the correct tax treatment from a VAT perspective, the Romanian tax authorities maintained their position and refused the VAT deduction right at the moment of solving of the administrative appeal filed by the Branch.
Subsequently, in front of the Bucharest Court of Appeal, Taxhouse team successfully assisted by confirming the correctness of the VAT tax treatment applied by the Branch. In this case, the evidence with the judicial tax expertise was used, which concluded on the full exercise of the VAT deduction right at the level of the Branch, by reference to the provisions applicable to the concept of fixed establishment in the national / European VAT legislation. as well as of jurisprudence of the Court of Justice of the European Union.
Finally, the positive solution of the Bucharest Court of Appeal was recently confirmed by the Romanian Supreme Court, which remains final in the appeals.
We remind you that the Taxhouse team can guide you throughout the tax inspections and subsequent phases, facilitating this process, by direct representation before the Romanian tax authorities, in order to ensure a fair conduct of this process. Our team members also have a high level of expertise in conducting accounting and / or tax expertise in administrative, criminal or commercial litigation, successfully assisting various multinational and local companies.
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