On the 19th of October 2017, by the Decision passed in the Case C-101/16 – Paper Consult SRL against Romania, the European Court of Justice (ECJ), has mainly decided that the national provisions contained nowadays by Art. 11. par. (7) of Law no. 227/2015 regulating the Fiscal Code is partially incompatible with Directive 2006/112/CE of the Council from November 28th 2006, regarding the joint VAT system.
Taking into consideration the principles of direct effect and supremacy of the European Law in relation to the national one, it is obvious that the legal provision concerning the fiscal treatment of the acquisitions from suppliers or service providers that have been declared inactive, contained by Art.11. par.(7) of the Fiscal Code, becomes inapplicable in its current form.
The immediate effect of the ECJ Decision in Case C-101/16-Paper Consult SRL against Romania consists of the fact that the VAT deduction right in the context of a purchase from an inactively declared taxpayer will no longer be refused by the authorities, unless a fraud or a loss of tax revenues is proven that is generated by that operation.