Your company buys goods from a Romanian supplier. The invoice is correct, the goods entered the warehouse, payment was made through the bank, everything is recorded and transmitted through e-Factura. Two years later you receive a tax assessment decision (decizie de impunere) refusing your VAT deduction. The reason has nothing to do with you: your supplier's supplier, a company you have never seen, collected VAT and disappeared without paying it. The inspection's conclusion: „the company inspected should have known that, through its purchase, it was taking part in a transaction involved in VAT fraud”.
This is the central scenario of the analysis: not that of the person who builds the scheme, but of the one caught in the chain. And it is all the more frequent the greater the pressure on collection: according to the 2025 edition of the European Commission's report on the VAT gap, Romania had in 2023 a compliance gap of around 30% of the VAT theoretically due, approximately 9.2 billion euros, and the highest percentage in the European Union.
The mechanism exploits a peculiarity of the European VAT system: on an intra-Community acquisition, the buyer does not actually pay VAT to the supplier. A supply from one member state to another is exempt at the supplier's end, under Article 294(2)(a) of the Tax Code, and the buyer applies the reverse charge, recording output VAT and input VAT simultaneously in the return, with zero financial effect. From that moment, the goods sit in Romania „clean of VAT”.
The cumulative effect on collection is described in the analysis on the VAT collection gap.
The conduit company, a firm, often from another member state, that makes the exempt intra-Community supply into Romania. The point where the goods enter the circuit.
The missing trader, the Romanian company that makes the intra-Community acquisition at no VAT cost, then sells the goods on the domestic market with VAT, collects this VAT from the Romanian customer… and never pays it over to the state. The company is abandoned, and the director is nowhere to be found, or is a nominee with no assets.
The company that buys from the buffer company, deducts the VAT shown on the invoice and often also reclaims it from the state, reselling the goods intra-Community (an exempt supply) or domestically.
The gain from the fraud is exactly the VAT collected by the buffer company and not paid over: it allows the goods to be sold below the market price and still leave a profit, which is why abnormally small margins are such a strong warning sign. The name „carousel” comes from the variant where the same goods return to the starting point and go round the circuit several times.
Between the buffer company and the broker, several intermediate companies, buffers, are frequently interposed, whose sole role is to lengthen the chain and break the visible link between the party who collected the VAT without paying it and the one who deducts it. This is typically where honest companies appear. A buffer usually knows nothing: it buys and sells real goods, with a normal mark-up. Its role in the scheme is simply to exist.
On goods of high value and small volume: electronics, processors, phones, copper cable, second-hand cars, coffee, textiles.
Cross-invoicing between companies controlled by the same persons, to generate expenses and deductible VAT with no economic substance. In the second-hand car case being worked on by ANAF and the DNA, the National Anti-Corruption Directorate, in 2026, with an estimated loss of over 90 million lei, the mechanism described publicly includes bringing into the circuit goods with no real economic use, precisely in order to manufacture expenses.
The hardest to challenge evidentially: consultancy, marketing or IT leave no physical trace, there is no transport, warehouse or weighbridge. The service can only be proved through documents and witnesses.
Emission certificates, electricity, natural gas, transferable instantly, have allowed carousels of European scale. In response, the legislature extended the reverse charge to these categories, as a simplification measure under Article 331 of the Tax Code, applicable to these transactions until 31 December 2026: where no VAT is invoiced, there is no VAT to evade.
Digitalisation has radically changed the capacity for detection. ANAF no longer needs to come to your company to see an anomaly.
Mandatory in B2B relationships and transmitted within 5 working days at most of the issue date, a time limit applicable from 1 January 2026. The tax authority sees both ends of every transaction, almost in real time, and can reconstruct the entire chain without requesting a single document.
It exposes the accounting detail: accounts, business partners, stock, movements. What cannot be seen in the invoice can be seen in the file.
It cross-checks the intra-Community acquisitions declared in Romania against the supplies declared by the partner in the other member state. Mismatches stand out immediately.
It automatically cross-references e-Factura with the VAT return, Declarația 394 (D394), SAF-T and the tax history, generating the selection for inspection.
The risk indicators are predictable: newly set up companies with turnover disproportionate to their age and capital; shared registered offices; nominee directors holding multiple mandates; abnormally small or negative margins; sudden changes of business activity; circular payments; a lack of logistical capacity, no warehouse, employees or means of transport.
Note: Legea nr. 126/2024 introduced a new offence at Article 9(1)(h) of Legea nr. 241/2005: using the RO e-Factura system in bad faith to create the appearance of lawfulness for fictitious transactions, or to conceal the real transactional flow of the goods or services. At the same time, point (c) was amended to expressly cover recording expenses with no real transaction in the electronic invoice. The system that protects you through traceability is, at the same time, the main source of evidence in a criminal case; see also the analysis on e-Factura and SAF-T as evidence in a criminal case. What you have transmitted can no longer be „corrected” afterwards without leaving a trace.
This is where the real stakes lie. The state cannot pursue the party who has disappeared, so it turns towards the one who has assets and can be found: you. The tool is the refusal of the right to deduct, on the ground that you „knew or should have known”. The construction is not unlawful in itself, it comes straight from the case law of the Court of Justice of the European Union (CJEU). The problem is that, in practice, it is frequently applied beyond the limits that the same Court has set.
Cases C-439/04 and C-440/04, the birth certificate of the test. The deduction can be refused if it is established, on the basis of objective factors, that the taxable person knew or should have known that, through its purchase, it was taking part in a transaction involved in VAT fraud. Conversely, a person who did not know and could not have known cannot be penalised.
Cases C-80/11 and C-142/11, the essential limit. The tax authority cannot generally impose on the taxable person a duty to check whether the issuer of the invoice held the goods, was in a position to supply them, and had met its own obligations to declare and pay VAT. Those checks are for the authority to carry out.
Case C-18/13: the fact that the supplier did not have the necessary staff and means is not, by itself, sufficient; the court must verify, again on the basis of objective factors, that the recipient had knowledge.
Case C-537/22, the judgment of 11 January 2024, the contemporary reaffirmation. The tax authority must determine precisely the constituent elements of the fraud, prove the fraudulent conduct and demonstrate the taxable person's active involvement, or the fact that it knew or should have known, without presumptions or assumptions. It does not need to identify every actor, but the burden of proof remains entirely on it.
This has to be said honestly, because a serious analysis does not sell illusions: in the same Global Ink Trade judgment, the Court confirmed that the refusal of the deduction can be based on the taxpayer's lack of diligence, provided that the requirements imposed are not excessive and do not shift onto him checks that are not his to make. The CJEU's case law is not an absolute shield, but a standard of proof; its practical value lies in what precisely cannot be demanded of the taxpayer. How it is actually invoked, in the analysis on invoking European Union law in a tax dispute.
What „should have known” actually means. It does not mean „could have found out by digging deep enough”. The correct standard concerns concrete indications, available to you at the time of the transaction, that would have raised the suspicion of a reasonable trader: a price with no economic explanation, a request to pay a third party, goods delivered from somewhere other than the invoicing supplier, transport documents that do not match the actual route. A fact you could not have known, for instance, that a supplier three links away had not paid its VAT, cannot form the basis for the refusal.
The defence against the refusal of the deduction is built before the inspection. Not because the law requires generalised checks from you, we have just shown that it does not, but because a well-prepared partner file is the evidence that dismantles the „you should have known” argument.
A valid tax code, VAT registration, ANAF's lists of inactive taxpayers and taxpayers with tax risk, and, for intra-Community partners, validation of the VAT number in VIES.
The trade registry (registrul comerțului), insolvency, litigation, the shareholding structure, the beneficial owner. Public, quick checks, with a fixed date if you save them.
A company set up three months ago proposing transactions worth millions deserves an explanation. Ask for it and record it.
A real registered office, a warehouse, employees, means of transport. If you go on site, take photographs.
If the offer is significantly below market, ask why and keep the answer in writing. Document the e-mails, the offers, the signed contract, the contact person and their authority to act.
Pay by bank transfer, into the account of the invoicing company; requests to pay third parties, in cash, or through unusual set-offs are serious warning signs. Keep the CMR consignment notes, delivery notes, waybills, weighing tickets, goods-received records, and photographs taken at unloading.
All of this is gathered into a partner file, with a fixed date. Undocumented diligence, in front of an inspection, does not exist. And the file has a second benefit, often decisive: it shows the absence of intent, the element that separates a tax dispute from a criminal case. What exactly can be demanded of you, in the analysis on the documents ANAF can request.
The refusal of the deduction is a tax problem. It becomes a criminal one once knowledge appears. The difference between a good-faith recipient and a participant in the offence does not lie in the position in the chain, but in what can be proved that he knew.
The typical classifications: the tax evasion offences under Article 9 of Legea nr. 241/2005, in particular point (c), recording expenses with no real transaction, or fictitious transactions (3 to 10 years' imprisonment); Article 8, wrongfully obtaining refunds or reimbursements (3 to 10 years), and association for the purpose of committing this act, under Article 8(2), is punishable by 5 to 15 years. To these are added the thresholds of 500,000 and 1,000,000 euros and the increase in sentencing limits, in the form given by Legea nr. 126/2024: above 500,000 euros, the limits are increased by 3 years; above 1,000,000 euros, by 5 years.
Jurisdiction. Tax evasion cases with a loss of more than 10,000,000 lei fall to the DNA, the National Anti-Corruption Directorate; where the act is classified as an organised criminal group, a structure of three or more people, set up over a period of time and acting in a coordinated way, jurisdiction falls to DIICOT, the Directorate for Investigating Organised Crime and Terrorism, and the charge is doubled with the offence of setting up an organised criminal group (Article 367 of the Criminal Code). How the investigation unfolds, in the analysis on the criminal investigation in tax evasion cases.
For the buffer company, the concrete risk is being treated from the outset as a knowing link, on the basis of its position in the scheme, exactly the presumption the CJEU prohibits.
In a carousel case, an effective defence does not argue theory, it reconstructs reality.
Expert evidence on inflows and outflows, stock, warehouse capacity, matching quantities against the transport documents. If the goods existed and moved, the theory of a fictitious transaction weakens.
CMR consignment notes, GPS, tachographs, invoices from carriers, witnesses: drivers, warehouse keepers, security guards.
Bank statements showing a normal commercial flow, not a circular one. The absence of cash returning to you is strong evidence of good faith.
The partner file, from the date of the transaction, not reconstructed afterwards. See also evidence in tax litigation.
Refusing the deduction at one link does not mean the state lost that amount several times over along the chain. Counting the same amount twice, against several companies in the circuit, is a frequent and challengeable error.
Now mandatory in tax evasion cases, with the suspect or defendant entitled to take part, Article 10(2) of Legea nr. 241/2005, in the form given by Legea nr. 126/2024. The details, in the defence in a tax evasion case.
No. The CJEU's case law, Mahagében and Dávid, reaffirmed in Global Ink Trade, establishes that the tax authority cannot generally impose on the taxpayer checks that are for the authority itself to carry out. You are not answerable for the tax conduct of companies you have had no dealings with. The reasonable checks concern your direct partner.
The inactivity of a supplier is treated severely under Romanian law: Article 11 of the Tax Code, still in force in 2026, refuses the deduction of expenses and VAT for purchases from taxpayers declared inactive. The CJEU's case law has held, however, that the deduction cannot be refused automatically and definitively where the substantive conditions are met, the transaction actually took place, and the authority does not prove the fraud and your knowledge of it. This is contestable ground, not a lost cause. See also challenging a tax assessment decision.
These are two separate planes. Payment can trigger the grounds for non-punishment or sentence reduction under Article 10 of Legea nr. 241/2005, conditional on thresholds, increase percentages and the stage the case has reached. But it can also be read as an implicit admission of the debt, with consequences for the tax appeal. The decision is taken after analysing both files, never as a reflex.
Do not give statements and do not file „reconstructed” documents. Request and review the entire inspection file, including the documents on which the finding about the upstream suppliers is based, and check whether the tax authority actually proved the fraud and your knowledge, or merely described the chain. The time limits for challenging it run strictly.
Informative material, updated on 18 July 2026. It does not constitute legal or tax advice; individual situations must be assessed on their own facts. Every person is presumed innocent until a conviction becomes final.
If the matter involves a criminal complaint or an open file, the related analyses are grouped under economic criminal law. For how such charges are handled, see defence in tax evasion cases.
Time limits run from the date of communication. A first conversation clarifies what is being alleged, what you need to substantiate and how the defence is built, before an estimate becomes a tax assessment decision.