ÎCCJ decision: The accumulated negative balance of VAT can be carried forward, without being prescribed. Implications for taxpayers
The High Court of Cassation and Justice (ICCJ) unifies the judicial practice and, at the same time, brings a clarification on the way of understanding the VAT mechanism, with direct implications in the activity of taxpayers and fiscal bodies, through the RIL decision no. 6/2026, the motivation of which was published in the Official Gazette no. 443 of May 26, 2026.
The clarification aims the right of taxpayers to carry forward the negative balance of VAT in subsequent tax periods which, by virtue of the rulings of the High Court, is not subject to prescription. This right is distinct from the right to reimbursement, which remains subject to prescription, the two rights having different legal nature.
In order to fully understand the effects of the ICCJ Decision, it is necessary to analyze the fundamental distinction that the court makes between two notions specific to the VAT mechanism that may seem similar, but which are legally and fiscally distinct, respectively: the option to carry forward the accumulated negative VAT balance and the option to request the reimbursement of this balance.
The ÎCCJ established that only the VAT refund generates at the time of its request by expressing the refund option a claim right in favor of the taxpayer in the application of fiscal procedural rules. Therefore, it is subject to the statute of limitations applicable to fiscal claims. Conversely, the carryover of the negative balance does not give rise to a distinct claim, but this represents, in the application of the Court's rulings, a simple technical regularization operation within the VAT determination mechanism.
The carryover effect does not generate a tax debt to be reimbursed from the state budget, nor does it create a correlative obligation for the tax authority. It involves the integration of the negative balance of VAT in the subsequent statements, where it is “regularized” with the VAT collected from the following fiscal periods, if applicable. Each regularization between the balance of the carried forward VAT to be refunded and the VAT collected gives rise to a new balance, the amounts contributing to this balance being depersonalized by the fiscal period in which they occurred. As a result, in these situations it is practically impossible to determine the zero moment at which a VAT balance to be refunded was first generated. So, carry-forward appears as an inherent component of the deduction mechanism, which operates on the basis of successive adjustments and continuity between tax periods.
From this perspective, the ICCJ rejects the applicability of the rules regarding the prescription of the right to request the restitution of fiscal claims on the carry-over mechanism and adjustments on the carried-over VAT balance. The provisions of the Fiscal Procedure Code, which establish a 5-year limitation period for restitution, are thus applicable exclusively to debt claims and cannot be extended, by analogy, to the fiscal regularization operation carried out as a result of the carryover of the negative VAT balance. The ICCJ concludes, thus, that in the absence of an express legal provision limiting the carryover of the negative balance in time, the correct interpretation is that of the imprescriptibility of this right.
Moreover, the ICCJ expressly emphasizes that the only limitation of the carryover mechanism is related to the cessation of economic activity and, implicitly, to the loss of the status of taxable person. As long as the taxpayer exists and carries out taxable operations, the carryover mechanism must continue, ensuring the continuity of fiscal periods and the achievement of successive regularizations.
At the same time, the court's reasoning is based on the principles of European law, especially on the principle of VAT neutrality. The jurisprudence of the Court of Justice of the European Union enshrines the fact that VAT must not represent an economic burden for taxable persons, the system being built so that they can fully recover the tax related to the economic activities carried out. In this context, a possible limitation in time of the possibility of carrying forward the negative balance could lead to the definitive loss of a legitimate surplus of VAT, which would contravene this fundamental principle.
The reasoning of the ICCJ states that the provisions of the Fiscal Code that impose a deadline for exercising the right of deduction, namely 5 years from the date of the operation, with certain exceptions regarding possible corrections made as a result of the fiscal inspection – a procedure that interrupts the fiscal prescription, cannot be automatically applied to create the same limitation regarding the carryover of the VAT balance to be reimbursed accumulated in successive fiscal periods. Thus, the institution of those provisions otherwise aligned with the lines drawn by CJEU jurisprudence seeks to impose a deadline until which the right of deduction can be exercised, respectively in a different fiscal period than the one in which the purchase was made, in the situation where the taxable person did not meet all the conditions and formalities that would allow him to exercise the deduction (e.g. he did not have the invoice issued according to the legal provisions). Therefore, the exercise of a right of deduction for purchases in another fiscal period must be carried out in relation to the time when the respective purchase was made, the corrective invoice was issued according to the legal provisions, which gives a reasonable possibility for the taxpayer and tax body to trace the moment that triggered a right of deduction relative to the time of the effective exercise of this right.
However, the same cannot be said about the carryover of the accumulated VAT balance to be reimbursed. Being subject to adjustments from the VAT return with VAT amounts to be collected recorded, it is not possible to determine an initial moment of the accumulation of the amount for which, in the end, a refund option would be exercised or, on the contrary, the carryover continues for future adjustments in the VAT return.
The implications of the ICCJ Decision are significant
First of allthis eliminates the risk that tax authorities will invoke the statute of limitations to refuse to use a negative balance of VAT carried forward from previous periods. In other words, the interpretation of the fiscal authorities that required the regularization of the VAT amounts deducted from fiscal periods older than 5 years found in the VAT return and in the composition of a carried-over VAT refund balance proves not to be in accordance with the provisions of the Fiscal Code, as they were interpreted by the ICCJ Decision.
Secondlytaxpayers benefit from increased flexibility in the administration of VAT flows, having the possibility to use the historical negative balance accumulated through the regularization mechanism within the statement, without being obliged to resort to the reimbursement procedure as long as there are periodic regularizations in the statement, nor to “renounce” VAT amounts deducted older than 5 years by removing them from the statement.
Thirdlysince the right to report the negative balance of VAT must be understood distinctly from the right to reimbursement, the latter remaining subject to the 5-year statute of limitations, taxpayers must base their tax options strategically considering the fact that the carryover allows an unlimited time use of the accumulated VAT to be reimbursed, while the reimbursement involves the capitalization of a right of claim within a determined time interval, i.e. without the intervention of those regularizations that depersonalize the accumulated balance.
ICCJ decision no. 6/2026 enshrines an essential interpretation for the functioning of the VAT system in Romania, establishing clearly and mandatory that the carryover of the negative balance represents a component of the fiscal mechanism, and not a patrimonial right subject to prescription. This solution strengthens legal predictability, aligns national practice with European standards and offers taxpayers an efficient tool for managing VAT balances, based on the principle of continuity and fiscal neutrality.
Article signed by Adina Vizoli, PwC Romania Partner and Mihai Boian, Partner of D&B David and Baias
Article supported by PwC Romania
