Assessee is an unnamed Romanian corporate taxpayer (represented by STOICA & ASOCIAȚII law firm)
The Romanian tax authority issued assessments disallowing the deductibility of a series of intra-group costs comprising RON 21,771,123 in corporate income tax and RON 17,053,335 in VAT (approximately €8 million in total), plus late-payment interest and penalties on the basis that the expenses were fictitious. The authority treated the intra-group services as lacking economic substance, relying in part on formal deficiencies in the supporting documentation as measured against non-tax legislation.
The taxpayer challenged the assessments before the Bucharest Court of Appeal, which annulled them on 10 June 2025 following extensive evidentiary proceedings, including expert testimony from a panel of three court-appointed experts who also held certified tax consultant qualifications. The ANAF contested the ruling before Romania's highest court.
Assessee's Contentions | Revenue's Contentions | Court's Judgment |
|---|---|---|
The supporting documentation already reviewed by the tax authority substantively confirmed the reality of the intra-group services. Formal deficiencies in the documents assessed under non-tax legislation are irrelevant to the question of actual service provision under tax law. The tax authority cannot question the commercial wisdom or opportunity of intra-group services; only their reality is relevant. | The intra-group costs were fictitious and not backed by evidence of actual service delivery. Formal deficiencies in the supporting documents further undermined the taxpayer's position. The expenses were properly disallowed for both corporate tax and VAT purposes, and the inaccuracy penalties were justified. | The ÎCCJ confirmed the Bucharest Court of Appeal judgment in full. The tax authority's disallowance was unlawful, the supporting documents substantively evidenced real service provision. Formal deficiencies under other legislation are irrelevant for tax deductibility purposes. Courts cannot review the commercial opportunity of intra-group services; this falls outside the tax authority's competence. |
Holding -
Romania's Supreme Court (ÎCCJ) confirmed the annulment of the full €8 million assessment. It held that -
1) supporting documents that substantively attest the reality of services cannot be disregarded because of formal deficiencies arising under other (non-tax) legislation;
2) the commercial opportunity or rationale of intra-group services even between related parties falls outside the scope of tax authority review. Only the reality of service delivery is a proper subject of examination.
