Romania has served a Canadian mining company with a $8.6m back taxes bill days after the company filed a $4.4bn compensation claim over a stalled project in the country. Gabriel Resources tried for more than 18 years to get necessary permits for an opencast mine to extract Europe’s largest gold deposits from beneath the village of Roșia Montană in the Apuseni mountains.

But the project was halted in 2013 after tens of thousands of demonstrators took to the streets for three weeks of mass protests. The government withdrew its support in 2014 and in 2017 submitted the village and its surrounding area for inclusion on Unesco’s World Heritage list, effectively killing off the mine.

Late last month, Gabriel Resources announced that it would sue Romania at a World Bank tribunal for $4.4bn in alleged losses, alleging multiple breaches of international investment treaties. If its case is successful, the payout would be worth around 2% of the country’s projected GDP for 2017.

Days later, Romania announced the outstanding tax bill for VAT related to the purchase of goods and services between 2011 and 2016, and warned that the company could also be liable for millions more in interest and penalties.

Gabriel Resources said it viewed the actions of the Romanian authorities as “plainly retaliatory” and said the timing was “not a coincidence”. In a press statement, CEO Jonathan Henry said that the tax bill had been launched in order to “frustrate the company’s pursuit of its international arbitration case against Romania”.

The village of Roșia Montană sits on an estimated 314 tonnes of gold and the project would have been Europe’s biggest gold mines. The mine faced sustained opposition from environmental and civil society groups.

Opening it would have involved heavy use of cyanide and would have turned a nearby valley into a tailings dam holding up to 250 million tons of cyanide-laced waste from the gold leaching. It would also have destroyed four mountain peaks, nearby villages, and a series of 1,900-year-old Roman mining galleries.

“It was a big environmental threat,” said Tudor Bradatan, a founding member of Mining Watch Romania. “The sheer size of the project was way too big, and the planned use of cyanide created lots of environmental issues. And just visually it was an environmental disaster,” he added.

Bradatan said that, until recently, successive Romanian governments had been favourably disposed to Gabriel Resources. “It felt for a long time like it was untouchable. Perhaps this tax is just a sign some authorities are working in Romania.”

A spokesperson for the Romania tax agency did not respond to a request for comment.