Ruling [CJEU] ¦ Serious VAT Fraud Starts at EUR 50 000 and Romania's Limitation Escape Route Stays Closed

Lin II: the Court of Justice restates its line on serious VAT fraud and limitation

In a Grand Chamber judgment of 16 July 2026 in Case C-280/25 [Lin II], the Court of Justice of the European Union answered two questions that matter for the prosecution of fraud against the EU budget. First, where national law sets no threshold, fraud affecting the Union’s financial interests is “serious” as soon as the total amount involved exceeds EUR 50 000, regardless of how much of the loss actually fell on the EU budget. Second, Romanian courts must continue to disapply a 2022 ruling of the country’s supreme court that retroactively stripped procedural acts of their effect of interrupting limitation periods, even where national constitutional principles and that court’s later binding decisions point the other way. Only cases already closed by a genuinely final judgment are spared.

Fictitious invoices and an expired limitation period

The defendant, the director of two companies, was prosecuted for knowingly supplying a third party with twelve invoices for fictitious purchases between May 2012 and January 2014. The damage to the Romanian state budget was around EUR 59 300, of which roughly EUR 36 100 was evaded VAT. In March 2024, the Oradea Court of Appeal closed the proceedings, finding that the limitation period for criminal liability had expired. The prosecutor appealed to the High Court of Cassation and Justice (ICCJ), which referred questions to the Court of Justice.

Behind the case lies a long-running Romanian dispute about limitation. In 2018 and 2022, the Romanian Constitutional Court found the provision governing the interruption of limitation periods unconstitutional, leaving a period of almost four years, from June 2018 to May 2022, in which no procedural act could interrupt limitation. In Decision No 67/2022, the ICCJ then held that, under the principle of retroactive application of the more lenient criminal law (lex mitior), that “no interruption” regime could be applied retroactively, which meant that procedural acts taken even before June 2018 lost their interrupting effect.

Bastian Schwind-Wagner _Follow

"Limitation rules are where large fraud cases are quietly won or lost, and this judgment shuts a door that had opened very wide in Romania. The Grand Chamber confirms that a national supreme court cannot use the more-lenient-law principle to wipe out years of interrupted limitation periods for serious fraud against the EU budget, and that a final national court cannot simply refuse to follow the Court of Justice.

The EUR 50 000 threshold matters well beyond Romania. It is calculated on the total damage caused, not just the share that would have reached the EU budget, which makes most organised VAT fraud schemes serious by default, and with that, firmly within the predicate offences that compliance teams need to recognise in the money flowing through their accounts."

The 2023 judgment in Lin and the Romanian pushback

In its July 2023 judgment in Lin (C-107/23 PPU), the Court of Justice drew a distinction. Romanian courts could keep applying the Constitutional Court’s decisions, because they rest on the foreseeability and precision of criminal law, which EU law also protects, even though they created a systemic risk of impunity. But they had to disapply the ICCJ’s Decision No 67/2022 in cases of serious fraud against the EU’s financial interests, because it greatly increased that risk without any comparable justification.

Several ICCJ panels then refused to follow Lin. In Decision No 37/2024, the ICCJ held that applying it would fall short of the protection under Article 7 of the European Convention on Human Rights and would require courts to assess a “systemic risk of impunity” without legal criteria. In Decision No 16/2024, it relied on the constitutional prohibition of lex tertia, the rule that courts must apply one criminal law as a whole and may not combine provisions of successive laws. Both decisions are binding on all Romanian courts. Another ICCJ panel, hearing the prosecutor’s appeal, asked the Court of Justice how to proceed.

Serious fraud: a EUR 50 000 threshold based on total damage

On the first question, the Court looked to Article 2(1) of the 1995 Convention on the protection of the European Communities’ financial interests (the PFI Convention), which applied to the facts because Directive (EU) 2017/1371 replaced it only from July 2019. The Convention requires effective, proportionate and dissuasive criminal penalties for fraud against the EU budget, including custodial sentences at least for serious fraud, and lets Member States set the threshold for “serious” at no more than EUR 50 000.

VAT fraud falls within that scope because it reduces the EU’s own resources, which are calculated by applying a uniform rate to harmonised VAT bases. The Court held that any fraud above EUR 50 000 is necessarily serious, and that the threshold is met when the total damage exceeds EUR 50 000, not the share lost to the EU budget. Three reasons supported that reading. The Convention’s EUR 4 000 floor for minor fraud also refers to the total amount. The EU’s share of VAT revenue is almost impossible to quantify early in criminal proceedings, since it depends on harmonised assessment bases and gross national income. And offenders could not foresee, when committing the fraud, whether the EU’s share would cross the threshold. On that basis the fraud in this case, at about EUR 59 300 in total, was serious. Attempted fraud counts in the same way if the intended damage would have exceeded EUR 50 000.

Lex mitior does not cover limitation rules

On the second question, the Grand Chamber confirmed Lin and rejected each objection raised by the ICCJ. Under the last sentence of Article 49(1) of the Charter, the principle of the more lenient criminal law applies to provisions that define offences and penalties, not to rules on how limitation periods are calculated. That matches the case-law of the European Court of Human Rights, which treats limitation rules as procedural. Romania’s broader national standard, which extends lex mitior to limitation rules, goes beyond EU and ECHR guarantees and can be applied only where it does not compromise the primacy, unity and effectiveness of EU law. Decision No 67/2022 failed that test because it extended the period without any possibility of interruption by at least 51 months on top of the roughly 47 months already created by the Constitutional Court, and could in principle cover all serious fraud committed since Romania’s accession.

Disapplying Decision No 67/2022 does not force courts to create lex tertia. Courts can still calculate limitation under the 1968 Code for older offences, under the 2009 Code for the period from February 2014 to June 2018, under the “no interruption” regime for June 2018 to May 2022 and under the amended rule after May 2022. The resulting difference in treatment between fraud affecting the EU budget and other fraud is justified by the specific scope of Article 325 TFEU. Nor do Romanian courts need national criteria to assess the systemic risk of impunity: the Court itself found that risk in Lin, and that finding is binding.

Final judgments stay closed, open cases do not

The Court drew one firm limit. EU law does not require a court decision with the authority of res judicata, which has already found the limitation period expired under Decision No 67/2022, to be reopened, unless national procedural law allows reopening in comparable domestic situations. Whether a decision is final is assessed autonomously: a decision that can still be challenged by an ordinary appeal within a fixed time limit, even one national law calls extraordinary, is not final until that remedy is exhausted or the deadline passes. The Oradea decision in this case did not appear to be final in that sense.

For all other pending proceedings, Romanian courts must disapply Decision No 67/2022 even if, under that decision, limitation would have expired before Lin was delivered in 2023. This does not “reactivate” expired liability in breach of Article 49 of the Charter or Article 7 ECHR. Article 325 TFEU and Article 2(1) of the PFI Convention were part of Romanian law from accession and from 2008 respectively, before any serious EU fraud could have become time-barred, and their effect on limitation rules was foreseeable from the Court’s earlier case-law, including Taricco and Euro Box Promotion. Professional operators subject to VAT are expected to take particular care in assessing such legal risks, and no legitimate expectation can arise from national practice that breaches clear EU law.

A pointed message to national supreme courts

The judgment also contains a sharp passage on judicial cooperation. A court of last instance that doubts the compatibility of a Court of Justice ruling with the ECHR or with national constitutional principles must refer the matter to Luxembourg; it may not decide on its own not to follow the ruling. By adopting Decisions No 37/2024 and No 16/2024 without making a reference, the ICCJ breached its obligations under Article 267 TFEU and created legal uncertainty by obliging lower courts to adopt an interpretation manifestly incompatible with Lin.

Why it matters for fraud and money laundering controls

VAT fraud through fictitious invoices, missing trader schemes and carousel structures is among the most significant sources of illicit proceeds affecting the EU budget, and serious tax crimes are recognised predicate offences for money laundering. A clear EUR 50 000 threshold based on total damage means that most organised VAT schemes qualify as serious fraud under EU law, with the requirement of effective criminal penalties that follows, regardless of how the loss is split between national and EU budgets.

The ruling also strengthens the hand of prosecutors, including the European Public Prosecutor’s Office in cases within its competence, against national limitation rules that would otherwise let complex fraud cases expire. For banks and other obliged entities, the practical point is simple: suspicious activity linked to fictitious invoicing or VAT carousel patterns is not a historical matter just because the underlying conduct is several years old. Proceedings may still be very much alive, and the proceeds remain relevant for reporting, freezing and confiscation.

Dive deeper

• CURIA ¦ Case C-280/25 [Lin II], Judgment of the Court (Grand Chamber) of 16 July 2026 ¦ Link