The HCCJ establishes that, within the meaning of Article 73, paragraph 23 of Government Ordinance no. 99/2000, the phrase “illicitly obtained income” refers to the gross income obtained from the commercial activity carried out between the date of suspension of the commercial activity and the moment of finding the contravention. How is the VAT confiscation measure applied?
Recently, the Official Gazette published the reasoning of Decision (HP) no. 116 of 9 December 2024 issued by the High Court of Cassation and Justice (Panel for the Resolution of Questions of Law)[1] – HCCJ Decision – by which the supreme court established the following:
“In the interpretation and application of the provisions of Art. 73 item 23 of the Government Ordinance no. 99/2000 on the sale of market products and services, republished, with subsequent amendments and completions, the phrase “illicitly realized income” refers to the gross income obtained from the commercial activity carried out between the date of suspension of the commercial activity and the moment of finding the contravention.”
The HCCJ decision comes in the context in which the complementary measure of confiscation provided for in Article 73 item 23 of Government Ordinance no. 99/2000 on the marketing of market products and services (GO no. 99/2000) has been frequently applied in practice by the competent authorities in recent years after the same article had experienced a long period of lethargy, being applied quite exceptionally.
Moreover, it is precisely this long period of lethargy in the application of the legal text that has determined, implicitly, the admissibility of the request to notify the HCCJ based on the provisions of Art. 519 of the Civil Procedure Code – which provide, among other conditions of admissibility, that the question of law whose resolution is requested is a new one (“With regard to the requirement of novelty, the analysis of the content of Article 519 of the Code of Civil Procedure reveals that it can also refer to an older legal text, but whose frequent application became current long after its entry into force” – see paragraph 89 of the HCCJ Decision).
The reasoning of the supreme court that adopted this decision is a clear and rigorous one, the HCCJ analysing among other things both the letter and the spirit of the regulation, including in relation to the jurisprudence of the constitutional court, and the purpose/finality of the rule and reaching the conclusion that the notion of illicitly earned income of Art. 73 item 23 of GO no. 99/2000 refers to the gross income achieved (from the commercial activity carried out between the date of suspension of the commercial activity and the moment of finding the contravention).
The difficulty encountered in practice is the application of Article 73 item 23 of GO no. 99/2000 regarding VAT, the working hypotheses being the following: the application of the rule in the situation where the economic operator in question (i) has transferred VAT to the Ministry of Finance, respectively (ii) has not yet transferred VAT, but has highlighted it in the tax invoices.
The supreme court could not provide a ruling in principle on this issue as well, because “the courts’ referrals do not contain sufficient elements”, in the sense that it does not highlight which of the two working hypotheses are relevant in the files that claimed the notification (see paragraph 113 HCCJ Decision).
However, the HCCJ Decision also contains considerations on this issue: the supreme court rightly held that VAT will be subject to confiscation pursuant to Article 72 item 23 of GO no. 99/2000 only if it has not yet been transferred to the Ministry of Finance (see paragraph 113 HCCJ Decision). A contrary interpretation could not be accepted either, because it would mean that sanction applied to the economic operator is doubled being obliged to pay the amount of VAT already paid to the competent bodies and which is no longer in his patrimony (a situation that obviously cannot be considered a confiscation of illicit income).
These considerations of the HCCJ cannot be considered decision-making or decisive (and, therefore, are not binding) since the solution in the operative part is not based on them, the court not being vested with this issue. This thesis is also confirmed by the concrete way in which the HCCJ expressed the considerations in question, using expressions such as “could be concluded”, “would mean”, “would be found”.
From our point of view, the considerations in question of the HCCJ, without being mandatory in the sense of the law, include the correct solution of the application of the confiscation measure with regard to VAT, and the future practice of the competent authorities should capitalize on the solution advanced by the supreme court.
Of course, as these considerations are not mandatory, the application of the confiscation measure with regard to VAT is at the discretion of the competent authorities and the practice that may develop after the HCCJ Decision is of particular interest.
[1] The decision is available in full at the following link.
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