Challenging decisions ordering the repayment of aid or subsidies (including State aid, APIA subsidies, COVID schemes): what you can do when you are asked to pay the money back

These decisions are not just simple administrative “letters” but typically budgetary debt titles or administrative acts with major economic impact, issued on the basis of complex EU and national rules. They are usually triggered by findings of “irregularities”, “ineligibilities” or “breaches of scheme conditions”.

The aim of this article is to explain, in accessible language, what you can do when you are asked to pay the money back: what the legal framework is, which remedies you have, what deadlines you must observe, which defence strategies exist and how such cases look in practice. We will refer to the relevant legislation (national and European) and case-law, providing as many links to official sources as possible so every reader can verify the information.

1. What kind of aid and subsidies can be subject to recovery decisions

The notion of “recovery decision” covers in practice several categories of aid and subsidies:

• State aid and de minimis aid (national or local schemes, tax facilities, investment grants, sectoral aid), mainly regulated by Government Emergency Ordinance (GEO) no. 77/2014 on national procedures in the field of State aid and the recovery mechanism approved by Order no. 324/2016 of the Ministry of Finance.
• Agricultural subsidies and APIA direct payments, managed by APIA under payment schemes and support measures financed from FEGA/FEADR and the national budget.
• Aid and grants financed from European funds (rural development, human resources, competitiveness, regional programmes etc.), to which the general rules in GEO no. 66/2011 on the prevention, finding and sanctioning of irregularities in obtaining and using EU funds and the EU financial regulations apply.
• Special COVID schemes – for example micro-grants and working capital grants regulated by GEO no. 130/2020, or the HORECA scheme established by GEO no. 224/2020, with implementation procedures laid down in secondary legislation (ministerial orders, guidelines published by the Ministry of Economy, Ministry of Finance, etc.).

Depending on the source of funding and the legal regime, the act by which repayment is requested can be:

• an administrative act establishing an irregularity and a budgetary debt (typical under GEO no. 66/2011);
• a decision to stop/recover State aid or de minimis aid (for example based on the mechanism described on the Ministry of Finance’s page “Mecanism de recuperare”);
• an APIA decision rejecting, reducing or recovering a payment, by reference to EU regulations and APIA guidelines (see the scheme presentation on APIA’s website);
• a tax debt title or administrative tax act, challengeable under the Tax Procedure Code and specific legislation.

Whatever the name, the important point is that we are dealing with an administrative or tax act which can usually be challenged first through an administrative remedy and then in court.

2. The legal framework: from EU law to Romanian legislation

2.1. EU State aid law and the obligation to recover

At EU level, the legal basis is found in Articles 107–109 of the Treaty on the Functioning of the European Union (TFEU), complemented by Regulation (EU) 2015/1589 and the Commission Notice on the recovery of unlawful and incompatible State aid. The Court of Justice of the European Union (CJEU) has consistently held that when the Commission finds aid to be incompatible, the Member State is obliged to recover it “without delay”, including interest, using national procedures as long as they do not make recovery practically impossible (see case C-24/95 Alcan and subsequent case-law).

The 2019 Commission Notice explains in detail the role of Member States and how recovery decisions must be implemented, including the obligation to correctly calculate recovery interest according to EU methods, under the supervision of the Commission and, as the case may be, of the Court of Justice.
See: Commission Notice on the recovery of State aid.

2.2. GEO no. 77/2014 and the national State aid recovery mechanism

At national level, the general framework for State aid is set by GEO no. 77/2014 on national procedures in the field of State aid. It regulates:

• how State aid is notified and authorised;
• the role of the Competition Council and of granting authorities (ministries, managing authorities, etc.);
• procedures in case State aid has to be stopped or recovered.

The concrete procedures for stopping and recovering State aid or de minimis aid are detailed in Order no. 324/2016 of the Ministry of Finance, approving methodological rules on the recovery mechanism. The Ministry describes this mechanism on its page “Mecanism de recuperare”, also indicating the relevant EU acts (Regulation 2015/1589, the implementing regulation, etc.).

2.3. GEO no. 66/2011 – irregularities in EU funds and budgetary debts

For European funds (and related national co-financing) GEO no. 66/2011 is central in the area of “irregularities” and recovery of sums deemed ineligible.

This GEO defines, among others:

• the notion of irregularity (any breach of law, regularity or conformity that harms or may harm the EU budget or the national budget);
• which bodies can find irregularities (managing authorities, intermediate bodies, control bodies etc.);
• how financial corrections are calculated and how the budgetary debt is established in the beneficiary’s name;
• which administrative remedies the beneficiary has against the acts establishing the debt;
• how the debt titles are sent to the tax authorities for enforcement.

The updated text of GEO no. 66/2011 is available on the Legislative Portal (legislatie.just.ro) and in consolidated versions (for example the PDF published on fonduri-patrimoniu.ro).

2.4. COVID schemes: GEO no. 130/2020 and GEO no. 224/2020

For special schemes adopted in the COVID-19 context:

• GEO no. 130/2020 regulated micro-grants, working capital grants and investment grants granted to SMEs from non-reimbursable external funds under the Operational Programme Competitiveness 2014–2020. The consolidated version of the ordinance can be consulted in PDF on the ADR Centru website (ADR Centru) and is analysed in specialist articles (for example on infotva.manager.ro).
• GEO no. 224/2020 established the State aid scheme for the tourism and HORECA sectors, with grants of up to 20% of turnover drop, as per the text published in the Official Gazette and available on the ANAF website (PDF GEO 224/2020) and analysed, for example, on legeaz.net or on tax-specialised sites (fiscalitatea.ro).

Implementation procedures (including how objections are filed) have been detailed in ministerial orders and procedures published, for example, on infotva.manager.ro or fonduri-structurale.ro.

2.5. Administrative and tax litigation and case-law

Challenging recovery decisions ultimately relies on the general rules in Law no. 554/2004 on administrative litigation and, in some cases, on the Tax Procedure Code (Law no. 207/2015), when the act is an administrative tax act.

Relevant case-law can be found at national level – for instance on portals such as jurisprudenta.com or legeaz.net – ICCJ decisions – and at EU level, on CURIA and EUR-Lex.

3. What does a recovery decision look like in practice

Although wording varies from one institution to another (APIA, ministries, managing authorities, Ministry of Finance, ANAF, etc.), a recovery decision typically contains the following elements:

• identification data of the beneficiary (individual or legal entity);
• legal basis: references to the aid scheme, the grant agreement, the relevant GEO/Act, EU regulations and any Commission decisions;
• a brief description of the irregularities found (non-compliance with eligibility criteria, breach of post-implementation obligations, missing documents, errors in the application etc.);
• how the amount to be recovered is calculated (financial corrections, percentages applied to eligible amounts, partial or total exclusions, APIA sanction grids etc.);
• mentions on interest or late-payment penalties where applicable;
• indication of remedies: the time limit and authority to which an objection or administrative appeal must be submitted, and sometimes a mention of the right to go to court.

Before reacting, it is crucial to carefully read both the reasoning section (why irregularities are deemed to exist) and the “Remedy” or “Appeal” section, where deadlines and challenge procedures are usually specified.

4. First step: a calm analysis of the situation and documents

Any recovery decision has a strong emotional impact: feelings of panic, anger or helplessness are natural. From a legal standpoint, however, the first step is pragmatic: a calm analysis of the documents and timeline.

In practice, this checklist is useful:

1. Confirm the date of communication: keep the envelope, acknowledgment of receipt or proof of electronic transmission (e-mail/portal). Most deadlines (15, 30 or 45 days) run from the date of communication, and proof can be crucial in court, especially when tardiness is alleged.
2. Request full access to the file: if you do not already have all documents, you can formally ask the authority to provide access to the file underlying the decision, including inspection reports, findings, calculation sheets, on-the-spot check reports etc. The right to access information and your own file is recognised by administrative and sectoral laws.
3. Identify the exact “irregularity” and period: sometimes only specific expenditures or specific years/campaigns are targeted (e.g. a particular APIA campaign, a certain year of eligibility for the grant). In other cases the whole aid is recovered. Understanding the precise scope of the decision is crucial for an effective defence.
4. Check the legal provisions cited in the decision: GEO 66/2011, GEO 77/2014, the aid scheme, the grant contract, EU regulations, GEO 130/2020, GEO 224/2020 etc. The official links above allow you to read the current versions.
5. Consult a lawyer or specialised consultant: for high-stake cases (significant sums, risk of insolvency, potential criminal exposure) it is wise to seek the assistance of a professional experienced in EU funds, State aid or administrative-tax litigation.

5. Administrative challenge: objection, preliminary complaint, administrative appeal

In most situations, before you can go to court you will have to exhaust at least one administrative remedy. Terminology varies (“objection”, “preliminary complaint”, “administrative appeal”), but the logic is the same: you ask the issuing authority or its hierarchical superior to review and revoke or amend its own act.

5.1. General deadlines and warnings

In classic administrative litigation, Article 7 of Law no. 554/2004 generally grants 30 days from the date you became aware of the act to lodge a preliminary complaint. In tax matters, the Tax Procedure Code usually sets a 45-day deadline for administrative appeals against tax acts (Articles 268 et seq. of Law no. 207/2015, as explained for example on fiscalitatea.ro).

However, in the area of EU funds and special schemes sector-specific acts may provide different deadlines. For example:

• some decisions recovering subsidies or aid indicate a 15-day deadline for filing an objection (there are cases on legeaz.net where courts discuss such situations);
• GEO 66/2011 provides its own procedures for challenging acts establishing budgetary debts, with specific time limits, which must be read together with the Administrative Litigation Law;
• COVID schemes (GEO 130/2020) and their implementation procedures specify the way and deadlines to submit objections, including through electronic platforms, as presented on fonduri-structurale.ro.

Practical conclusion: never assume the deadline is “automatically” 30 or 45 days. Read the “Remedy” section carefully and, if in doubt, act as quickly as possible.

5.2. Challenging APIA decisions

Farmers who receive a decision rejecting a payment application, imposing penalties or recovering an APIA subsidy usually have the right to file an administrative objection within the time limit indicated in the decision (often 30 days, but this may vary by scheme and campaign).

In APIA practice, the objection is generally in writing and should include:

• identification data of the farmer and the holding;
• number and date of the challenged decision;
• facts and legal grounds supporting the claim that the decision is unlawful or unfounded (for example measurement errors, misinterpretation of eligibility criteria, inconsistencies in IT systems);
• supporting documents (maps, photos, ownership or lease documents, certificates from local authorities, etc.).

There are many practical articles explaining how to challenge APIA sanctions (for example sfat-avocat.ro – APIA sanctions or templates published on modelacte.ro), but the safest references remain the official instructions and information published by APIA itself.

5.3. Challenging decisions under COVID schemes and other State aid schemes

For micro-grants, working capital and investment grants, GEO 130/2020 and the implementing orders laid down specific objection procedures – including via online platforms and relatively short deadlines. The Ministry of Economy has published detailed instructions on how to file objections, echoed by portals such as fonduri-structurale.ro and by templates used in practice.

The HORECA scheme under GEO 224/2020 also has specific implementation and challenge procedures, detailed in secondary legislation and explanatory materials (for example on infotva.manager.ro and in the explanatory memorandum published on the Government’s website under “note de fundamentare”).

The basic rule remains the same: comply with the deadline and formal requirements (online or paper filing, qualified or handwritten signature, annexed documents).

6. Court action: administrative and tax litigation

If, after the administrative stage, the authority upholds the recovery decision (or fails to answer), you can file a court action seeking annulment of the act and, where possible, compensation (interest, costs, loss of opportunity, etc.).

6.1. Legal basis: Administrative Litigation Law and Tax Procedure Code

Article 1 of Law no. 554/2004 provides that any person injured by an administrative act may address the court to request:

• annulment of the act;
• recognition of the claimed right or legitimate interest;
• an order for the authority to issue the requested administrative act;
• damages.

In principle, actions must be brought within six months from the date of receiving the answer to the preliminary complaint or from the expiry of the legal reply deadline (Article 11 of Law no. 554/2004). For administrative tax acts (debt titles, tax assessment decisions) the Tax Procedure Code contains its own rules, but ultimately administrative and tax courts will decide.

6.2. What you can actually ask the court to do

In a court case against a decision ordering the repayment of aid or subsidies you can typically ask for:

• annulment of the recovery decision (in full or in part);
• annulment of irregularity findings (inspection reports, findings, minutes etc.), if they qualify as separate administrative acts;
• annulment of the budgetary debt title and of interest/penalties calculated under GEO 66/2011 or the State aid recovery mechanism;
• an order for the authority to recalculate sums or recognise the eligibility of certain expenditures;
• damages, where you can prove additional prejudice caused by the unlawful act (for example wrongful enforcement, blocked investments).

National courts may also submit preliminary questions to the CJEU when the interpretation of EU law (State aid, EU funds) is essential to the dispute, under Article 267 TFEU.

6.3. Suspension of the recovery decision

A crucial aspect is whether you can suspend enforcement of the recovery decision until the court decides the merits. Law no. 554/2004 provides in Articles 14 and 15 mechanisms for requesting suspension of an administrative act, including tax or budgetary debt titles. In practice:

• you can file a provisional suspension request (before filing the main annulment action) – a suspension until the annulment action is decided;
• you can seek suspension together with the main action, if you can show a prima facie case and imminent harm.

In the area of State aid and EU funds, continuing to pay amounts considered unlawful by the Commission may place the State in a difficult position vis-à-vis the EU, so national courts must strike a balance between protecting public budgets and safeguarding bona fide beneficiaries’ rights. CJEU case-law on interim measures in State aid recovery cases (for example decisions on requests to suspend recovery decisions – see documentation on CURIA) can serve as inspiration for national courts.

7. Defence strategies: what types of arguments may work

Each case is different and defence strategies must be tailored to specific facts. Nonetheless, a few recurring types of arguments appear in practice.

7.1. Lawfulness and factual basis of irregularity findings

Under GEO 66/2011 and EU fund rules, an “irregularity” must be proven with documents and described clearly in the irregularity report. It is not enough to state generically “ineligible expenditures”; the decision must explain why they are ineligible (missing documents, breaches of procurement rules, exceeding thresholds etc.).

Courts will examine:

• whether the authority followed due process (including the beneficiary’s right to be heard);
• whether percentages for financial corrections comply with Commission guidelines and correction tables (for example guidance on procurement-related corrections);
• whether there is a real correspondence between the irregularity and the sanction (proportionality).

7.2. Interpretation of eligibility criteria and post-implementation obligations

Many schemes (de minimis aid, COVID grants, APIA subsidies) require beneficiaries to comply with eligibility criteria and post-implementation obligations (maintaining investments, preserving jobs, using funds as intended etc.). Authorities sometimes interpret these conditions very strictly or even retroactively.

In court you may raise arguments such as:

• unclear clauses in the applicant’s guide or contract, interpreted solely against the beneficiary;
• changes in the authority’s interpretation (for example situations considered eligible at grant approval but deemed ineligible later, without legislative changes);
• remedial measures undertaken and accepted by the authority (for example voluntary corrections, clarifications).

7.3. Good faith, legal certainty and legitimate expectations

Although EU case-law on State aid is strict (recovery of incompatible aid is almost automatic and good faith is rarely accepted as a defence), in national disputes over EU funds and APIA subsidies principles such as:

• beneficiary’s good faith (compliance with known rules at application time, investments of own resources);
• legal certainty (old decisions, previously confirmed by checks, used as a basis for long-term business planning);
• legitimate expectations created by the authority (official communications, previous favourable interpretations, signed and executed contracts)

may play a role in assessing proportionality and in shaping the outcome.

Commission Notices on State aid recovery and CJEU cases (such as C-24/95 Alcan, case C-588/21 and others dealing with national rules on recovery) emphasise that proportionality and legal certainty must be respected, without undermining the obligation to recover incompatible aid.

7.4. Limitation periods and time limits for recovery

Another defence line concerns limitation of the right to establish or recover the budgetary debt. GEO 66/2011 and the Tax Procedure Code contain rules on the time limits within which authorities can issue debt titles and enforce them. EU State aid law also has limitation periods (generally 10 years under Regulation 2015/1589).

Courts will examine whether, between the grant of aid and the recovery decision, the authority exercised its rights within the allowed time and whether any interruptions of limitation are duly justified.

8. Practical examples: from an APIA farmer to a COVID grant beneficiary

8.1. APIA farmer and overlapping parcels

A farmer declares a certain plot of land in the Single Payment Application and requests a subsidy. A remote sensing check finds an overlap with another farmer’s parcel, and APIA decides to reduce payments and recover sums for past years.

The defence may include:

• challenging the parcel identification (errors in GIS systems);
• submitting property/use documents (lease contracts, land registry excerpts, certificates from local authorities);
• invoking conflicting instructions from APIA or procedural changes between campaigns.

Specialist articles and APIA guides on subsidies (for example the “complete APIA subsidies guide”) can help understand applicable rules.

8.2. COVID micro-grant beneficiary and reinterpretation of eligibility

A micro-enterprise received a EUR 2,000 micro-grant under GEO 130/2020. Two years later, following ex-post checks, the authority decides that the company was “in difficulty” on 31.12.2019 or did not meet some financial criteria and issues a recovery decision.

The beneficiary may argue, among other things:

• that at the time of grant approval the same authority checked and confirmed eligibility based on the same documents (principle of legitimate expectations);
• that there was no legislative change between the grant and the control, suggesting an internal shift in interpretation, not an actual breach by the beneficiary;
• that conditions introduced later in secondary legislation (orders, procedures) cannot retroactively affect approved grants.

8.3. EU-funded investment and financial correction for procurement

A company implements an EU co-funded project. A managing authority audit finds irregularities in procurement (lack of transparency, restrictive criteria etc.) and applies a 25% financial correction on the contract value.

In court, the following may be analysed:

• whether the irregularities actually affected competition and the budget;
• whether the correction percentage was chosen in line with Commission correction grids;
• whether the beneficiary had a real opportunity to remedy issues before correction was applied.

9. Practical checklist: what to do when you receive a recovery decision

The practical summary of this article can be condensed into the following checklist:

1. Do not ignore the envelope or electronic notice. Challenge deadlines run from the date of communication. Open immediately and note the date.
2. Read the decision carefully. Identify the legal basis, the irregularities, the amount to be recovered, interest and – crucially – the “Remedy/Appeal” section.
3. Check the legal texts. Use the Legislative Portal for GEO 66/2011, GEO 77/2014, GEO 130/2020, GEO 224/2020, Law 554/2004 and the Tax Procedure Code. Check sector-specific procedures (APIA, ministries).
4. Request full access to the file. Ask in writing for all documents underlying the decision (reports, minutes, internal notes).
5. Consult a specialist. Discuss with a lawyer or consultant in EU funds/State aid to assess your chances and build a strategy.
6. File the administrative objection/appeal within the deadline: set out factual and legal arguments, attach documents and explicitly request revocation or amendment of the act.
7. Prepare for court. If the response is negative or missing, note the date and prepare a court action and, where appropriate, an application to suspend enforcement.
8. Document your good faith. Keep all e-mails, clarifications and communications with the authority. They can be crucial in court.