S.C. X S.R.L. is engaged in ‘Retail trade via mail order houses or via Internet’, according to CAEN code 4791.
Period covered: 01.03.2021 – 30.04.2022.
The main findings of the tax inspection authorities were:
The difference of x lei comes from:
A) the non-deductibility of VAT in the amount of x lei, entered in duplicate invoices or not related to the audited company;
b) the VAT adjustment of x lei relating to the stock of non-compliant goods;
c) the non-deductibility of VAT in the amount of x lei, entered on invoices issued by suppliers of equipment for investment in virtual currency.
The audited company made investments in hardware equipment such as ‘storage (HDD), graphics processing (video card), radio antennas and related components’ both from imports and intra-Community purchases and from the domestic market, which are used in ‘cryptocurrency mining’ activity.
Thus, at the moment, national legislation harmonised with EU law assimilates the ‘crypto’ activity with the financial banking activity of currency trading, which is a tax-exempt activity. As a result, the company is not entitled to deduct VAT on invoices for purchases of hardware equipment such as ‘storage (HDD), graphics processing (video card), radio antennas and related components’, both from imports and intra-Community purchases and from the domestic market, which are used for cryptocurrency mining activity.
It follows from the case law of the Court of Justice of the European Union that the right to deduct VAT may be exercised if ‘there is a direct and immediate link between the taxable transactions of the taxable person, which presupposes that the amounts spent on the acquisition of the goods and services concerned form part of the constituent elements of the price of the taxable transactions downstream, which give rise to the right of deduction, or in exceptional cases, even in the absence of a direct and immediate link, if the cost of the goods/services in question forms part of the taxable person’s overheads and as such constitutes a constituent element of the price of the goods and services he supplies’.
Therefore, in order for a person to be able to exercise the right to deduct value added tax on purchases, the cost of the purchases must be included as a constituent element of the price of the taxable output transaction.
Consequently, with regard to the purchase of cryptocurrency mining equipment, which is not included in the scope of VAT, the audited company is not entitled to deduct VAT on the purchases made for these operations, and additional VAT in the total amount of x lei is thus established.
Source: ANAF