The Executive made this decision fearing it might lose EU funds for several operational projects in the field of transport and might be forced to annul contracts. The rationale behind this decision is that some EU funds would go into VAT refunds instead of being allocated to actual works in the sector. Thus, the Government has drafted a normative act whereby the VAT will again be considered as non-eligible cost for projects within the Transport Sector Operational Program.
In November 2011, the then-Government decided the VAT for EU-funded projects will be considered eligible cost to be compensated from community funds starting 2012, but only for contracts signed after January 1, 2012, and some programs could be excluded from VAT eligibility. European Affairs Minister Leonard Orban at that time said such exceptions may be introduced in the case of operational projects in the field of transport.
The Transport Sector Operational Program is financed from the Cohesion Fund, which targets the construction of highways and the rehabilitation of railway infrastructure on Pan-European Corridor IV, and from the European Regional Development Fund (ERDF), which targets the rehabilitation of national roads and port infrastructure.