PPP Research Center

 Romanian Public-Private Partnership Law Review

No. 6 / 2013

TABLE OF CONTENTS: 

Limitations to the acquisition by the state of special rights in a project company
by Simona Gherghina, Ph.D., Lecturer, Faculty of Law, University of Bucharest

The future of PPPs under the new European economic governance
by Ion Ghizdeanu, PhD, Professor, President of the National Commission of Prognosis, Researcher, NIER, Romanian Academy

Conditions and limitations of the right of public entities to deduct VAT
by Daniel Anghel, Tax Partner and Bianca Vlad, Senior Manager Tax Services, PricewaterhouseCoopers Romania

New perspectives for the public investment prioritization
by Monica Rațiu, PhD, Lecturer, Faculty of Law, University of Bucharest

 

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Limitations to the acquisition by the state of special rights in a project company

Simona Gherghina, PhD
Lecturer
Faculty of Law
University of Bucharest

Abstract:

The acquisition by the public partner of a minority stake in a project company within a public-private partnership requires consideration of both the limitations applicable under the national law and those specific to the EU law. This contribution builds on the relevant jurisprudence of the European Court of Justice and emphasises the limitations applicable to such acquisition. In exercising any special rights corresponding to a minority shareholding in a company having in majority private capital, the state must undertake objective, precise and stable criteria, that are announced upon the acquisition of the special rights. Such criteria for the exercise of the special rights should allow for both the adoption of the decisions that are necessary for the protection of the indicated national interest and an effective control by the courts of law of the proportionality of the decisions made by the state as result of the exercise of such rights compared to the public interest that is protected.

Keywords: project company, free movement of capital, golden share, special rights, minority shareholder.

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The future of PPPs under the new European economic governance

Ion Ghizdeanu, PhD
Professor
President of the National Commission of Prognosis
Researcher, NIER, Romanian Academy

Abstract:

The European Commission continues to be actively involved in stimulating the use of the public-private partnership. In July 2012, in full sovereign debt crisis and concomitant with implementing the Fiscal Treaty, the European Commission published “New public - private partnerships for research in the manufacturing, construction and automotive sectors”1, a real guideline for expanding PPPs in this area, having as deadline the final year of Europe Strategy 2020. The advantage is the fact that PPPs allow for public development projects with private financing. It seems that PPPs are responding in this way to the new economic development needs in order to achieve sustainable growth without public loans and budgetary deficits. However, risk-taking by public authorities, and government guarantees may reflect in macroeconomic stability indicators. Also, even private borrowing for investment projects, including those undertaken by the public - private partnership is a component of system of monitoring indicators of macroeconomic imbalances. This paper aims to detail directly the main interferences between public - private partnership and macroeconomic stability, so that the advantages of this method of investment multiplier to not be limited by the requirements of the new European economic governance.

Keywords: public-private partnership (PPP), macroeconomic stability, budgetary deficit, mediumterm budgetary objective, monitoring macroeconomic imbalances, government guarantees.


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Conditions and limitations of the right of public entities to deduct VAT

Daniel Anghel, Tax Partner
PricewaterhouseCoopers Romania
Bianca Vlad, Senior Manager Tax Services
PricewaterhouseCoopers Romania

 Abstract:

The association between a public partner and a private partner for the execution of a project which may have lucrative purposes has the potential to raise certain issues from a fiscal perspective for the public partner, in particular in the VAT deduction field. In the following, we aim to analyse the particular situation in which the public partner is a local administration. Starting from this scenario, we shall detail to what extent the public partner may be considered a taxable person and if, during the joint development of a project with a private partner, the local administration will have the right to deduct the VAT related to the amounts paid by the private partner as consideration for operation services which the latter carries out. As a general rule, we underline that we shall refer in the following to the extended concept of public private partnership, and not only to the public private partnership in the institutionalised form. Moreover, we start on the assumption that, from a VAT legislation perspective, the leader of the association will be the public institution. The fiscal treatment of the public partner may be a powerful catalyst for initiating public-private partnership projects, if it is allowed to proceed to the deduction of the VAT paid during a PPP project. In this regard, the fiscal legislation seems to help us to conclude that, as far as the public partner does not act as a public entity exercising public power, but merely as a simple player on a competitive market, it has the right to deduct VAT.

Keywords: public-private partnership, VAT, right to deduct VAT, taxable person, local administration.

 

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New perspectives for the public investment prioritization

Monica Rațiu, PhD
Lecturer
Faculty of Law
University of Bucharest

Abstract:

Over the past 5 years, the public expenditure in Romania has been influenced, on the one hand, by the effects of the economic downturn on the size of the public funds, as reflected in the gross domestic product and, on the other hand, by the constraints affecting the public finance owing to the rules regarding the limitation of public deficit and public debt1. Taking into account that between these constraining limits, the efficient public fund management, enabling the completion of investment projects in the process of implementation, as well as the implementation of those investment projects, of obvious utility and, at the same time, specific likelihood of being funded without affecting the public deficit and public debt targets, are based on a strict oversight, the legislative framework had to be amended. The new legal regulations were based on the commitments towards the International Monetary Fund and, in the course of the measure-implementation stage, also involved the specialized assistance of the World Bank. The aim of this article is to clarify the scope of the rules for the prioritization of public investments and the effective procedures enabling the implementation of new projects.

Keywords: investments, public investments, public investment prioritization, public-private partnership, lease.

 

 

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