Non-constitutionality of certain provisions of Emergency Ordinance no. 77/2011 regarding the set-up of a contribution for financing some expenses in the health system

(Decision no. 39 published in the Official Gazette no. 100 / 20 February 2013)

The subject of the non-constitutionality exception raised refers in principle to the computation methodology of the claw-back tax, as regulated by art. 31, para. (5) of Emergency Ordinance no. 77/2011 (‘EO 77/2011’), that provides that it is computed considering the value added tax (‘VAT’) as well, thus being a ‘’tax on tax’’.

Thus, the Constitutional Court admitted that the application of the claw-back tax to another tax (i.e. VAT) is against the general accepted fiscal principles, according to which taxes and charges apply on the taxable amounts (revenues or goods) and not on the other taxes.

In conclusion, the Constitutional Court admitted the provision ‘that also includes the value added tax’ as being non-constitutional.

By  Venkatesh Srinivasan, Partner – Head of Tax, Ernst & Young 

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