Abstract

Declaring a taxpayer as inactive is a procedure founded on expressly stipulated law conditions and it has both individual effects and effects on the relation established between an inactive taxpayer and an active one. The primary effect, which is the cause for all of the others, is the ex officio cancellation of the VAT registration. This marks the loss of the taxpayer’s right to deduct the VAT using the “downstream VAT – upstream VAT” mechanism, becoming just a final consumer. The active taxpayer engaging in commercial transactions with an inactive taxpayer cannot deduct expenses, nor the VAT, as these operations are based on a document that is not issued in accordance with the legal provisions.