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Romania VAT recovery by foreign energy traders gets green light

  • VAT
  • 09 February 2014 | Richard Asquith

Romania VAT recovery by foreign energy traders gets green light

The European Court of Justice (ECJ) has ruled that foreign energy traders are entitled to recover input VAT incurred through the EU’s 8th Directive.  This follows Romania withdrawing the requirement for VAT registrations on energy traders last year.

ECJ opens way to 8th Directive VAT recovery

The case under review concerned the large German energy conglomerate, E.ON.  The Romanian court of appeal had referred to the ECJ a decision as to whether foreign energy companies were entitled to reclaim the Romanian VAT they are charged by local suppliers by domestic companies.

This issue had become acute for E.ON and other major electricity resellers as they faced large, unrecoverable Romanian VAT bills since the country had withdrawn the option to VAT register in September 2013.  Instead, supplies should be made under the VAT reverse charge mechanism.

The court found that non-resident EU traders of electricity were entitled to use the 8th Directive reclaims based on the EU VAT Directive.  This ruling should also extend to non-EU companies, although they may struggle to obtain a trading license from the Romanian authorities.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.