Indirect tax - Romania

The main indirect tax in Romania is Value Added Tax (VAT).

The VAT is an indirect tax on the consumption of goods and services and is normally borne by the final consumer. This, in general, is accomplished by imposing VAT on all stages of manufacturing, wholesaling, retailing, etc., but allowing the supplier to offset the tax payable against VAT incurred on its business expenses.

In practice, VAT is charged on goods and services (actual or deemed) supplied by taxpayers in Romania, goods acquired from the European Union (EU) and goods imported into Romania. Only the VAT charged by the suppliers on purchases incurred by the taxpayer for generating output activities allowing the input VAT deduction (e.g. taxable, VAT exempt with credit, supplies of services taxable outside Romania) can be deducted.

Operations that fulfil the following conditions fall within the scope of VAT:

• they represent a supply of goods/services in return for a consideration or an operation treated as such
• the deemed place of supply is in Romania
• they are performed by taxable persons
• they result from economic

Moreover, the import of goods, intra-community acquisitions of goods and operations deemed as intra-community acquisitions of goods are also within the scope of VAT.

VAT on imported goods continues to be paid in customs, except for taxable persons registered for VAT purposes who obtain an import VAT deferment certificate from the customs authorities, who are authorized for customs at domicile or qualify as an authorized economic operator. Furthermore, reverse charge is applicable for the import of the following goods: wood, cereals and technical plants not designed to end consumers, mobile phones, integrated circuit devices, such as microprocessors and central processing units before their integration into end-user products, game consoles, PCs and laptop.

For these, the VAT is not paid in customs, but shown in the VAT return as both input and output VAT (reverse charge mechanism).

The taxable amount for VAT purposes for imported goods is the customs value, to which are added any taxes, commissions and other taxes due outside Romania, as well as those due as a result of the import of goods into Romania, except for VAT to be perceived.

The taxable base contains the ancillary expenses, such as commissions, packing, transport and insurance costs occurring until their first destination of the goods in Romania, if they were not already included in the taxable base, as well as those incurred for the transport to another destination within the Community, if the respective place is known at the moment when the VAT chargeable event occurs. The first place of destination of the goods is the destination indicated in the transport document or in any other document based on which the goods are imported in Romania or, in the absence of such a mention, the first place of unloading the goods in Romania.

The cash accounting scheme for VAT is stipulated by the Romanian VAT legislation and consists in the deferment of the VAT payment until the value of goods or services supplied is cashed in, while the right to deduct the input VAT for the acquisitions performed by the taxpayers applying the VAT cash accounting system is also postponed until the moment when the invoices are paid. Furthermore, the right to deduct the input VAT by the beneficiaries of invoices issued by the taxpayers applying the cash accounting system for VAT is postponed until the payment is performed.

The VAT cash accounting system is optional for the following taxpayers:

• taxpayers registered for VAT purposes in Romania and established in that country which registered in the previous year an annual turnover lower than RON 4,500,000
• taxpayers established in Romania who register for VAT purposes during the calendar year and who opt for application of the VAT cash-in system starting with the date of VAT registration or later, during the year of VAT registration, provided that the turnover does not exceed the amount of RON 4,500,000

By exception, the VAT cash in system does not apply to the following taxpayers:

• taxpayers who are part of a VAT fiscal group
• taxpayers who are not established for VAT purposes in Romania
• taxpayers whose turnover exceeded the aforementioned threshold in the previous year
• taxpayers who register for VAT purposes through the normal procedure during the year and who have exceeded the ceiling of RON 4,500,000 in the previous year or in the current calendar year, computed according to the operations performed during the period in which the person had a valid VAT code

The VAT cash accounting system does not apply for VAT-exempt transactions, for transactions subject to special VAT schemes (e.g. the special schemes for travel agencies, second-hand goods, works of art, antiquity, gold investments), for transactions performed between related parties or for those subject to reverse charge mechanism (i.e. when the beneficiary is the person obliged for paying the VAT).

The taxable person having the seat of economic activity in Romania who carries out or intends to carry out an economic activity involving taxable operations, VAT exempt with credit and /or operations resulting from economic activities for which the place of supply is considered to be abroad, if the VAT

were deductible, if these operations were carried out in Romania, must apply for the VAT registration to the competent tax authority, if during a calendar year he reaches the exemption threshold of RON 300,000 (EUR 88,500).

Foreign taxpayers may register in Romania for VAT purposes without the need to form a local company, known as a non-resident VAT trading. There is no VAT threshold in Romania for the registration of non-resident traders. For businesses incorporated in other countries, but established for VAT purposes in Romania by means of a fixed establishment, a Romanian VAT number must be obtained before the commencement of taxable supplies.

Foreign traders not established for VAT purposes in Romania have an obligation to register for VAT purposes in Romania for:

• supplies of goods or services that are subject to Romanian VAT or are considered VAT exempt with credit (other than transport services and their ancillary services, which are exempt), except for the cases where the person who is liable to pay the tax is the beneficiary of goods or service
• intra-community acquisitions/supplies of goods in/from Romania

Not-established VAT payers may register for VAT purposes in Romania for imports of goods and for transactions with immovable properties for which they chose to apply the taxation regime.

Starting 1 July 2021, the new e-commerce rules were implemented in Romania. The new rules allow taxable persons selling goods online and providing TBEU services to fulfil certain VAT obligations at EU level via a digital online portal (the so-called “One-Stop-Shop” - OSS). EU OSS and non-EU OSS were implemented in Romania.

The place of supply in the case of intra-Community distance sales of goods and for TBEU services shall be in Romania if the following conditions are fulfilled:

• the supplier is established or, if not established, has his permanent domicile or habitual residence in a single EU Member State
• the services are provided to non-taxable persons who are established, have their permanent domicile or their habitual residence in Romania or the goods are dispatched or transported to Romania
• the total value, without VAT, of the operations mentioned above exceed, in the current calendar year and in the previous calendar year, EUR 10,000 (RON 46,337)EU OSS registration could be considered in order to avoid VAT compliance costs in several EU countries.

The place of supply of electronically supplied services supplied to private consumers (B2C) is in the Member State of the consumer. The result of this change is that local VAT is chargeable at the applicable rate in each of the Member States in which electronically supplied services are made (ie where the customer belongs).

To ensure compliance with this rule, suppliers have the choice to either register for VAT in each Member State where their customers reside, or elect to register under the EU VAT One-Stop-Shop (OSS) simplification scheme in a single Member State (where they are established).

The e-commerce EU VAT package was fully implemented in Romania in 2021 (i.e. regarding the minimum threshold of registration of EUR 10,000, the procedure of registration and reporting etc.).

Non-EU suppliers without an establishment in a Member State are free to select a Member State to operate MOSS and become their Member State of Identification.

Non-residents which are established in other EU member states, not established in Romania may register with the relevant fiscal authority either directly or by appointing a fiscal representative. In the case of the direct registration, this person shall declare the address in Romania where all the fiscal registers and documents can be examined. In the case of registration through a fiscal representative, the registration procedures are carried out by the relevant tax authority where the fiscal representative is located.

Non-resident taxpayers established outside the European Union may register for VAT purposes only through appointment of a VAT fiscal representative. The registration procedures are carried out by the relevant tax authority where the fiscal representative is located.

Every taxable person registered for VAT purposes has to submit VAT returns.

As a general rule, the fiscal period for submitting the VAT returns is the calendar month. For taxable persons registered for VAT purposes whose previous year-end turnover did not exceed €100,000 and who did not perform intra-Community acquisitions of goods in the previous year, the fiscal period is the calendar quarter.

For those taxpayers whose fiscal period is the calendar quarter, the fiscal period becomes the calendar month if they perform a taxable intra-Community acquisition of goods in Romania.

Also, the VAT returns must be submitted with the tax authorities by the 25th of the month following the end of the fiscal period (i.e. month/quarter). The payment of the tax must be performed by the same date as the date of submission with the tax authorities.

For not complying with the VAT legal requirements (late payments, incorrect fillings, late submission of returns etc.), taxpayers are subject to penalties such as interest and fines as provided by the Romanian Tax Procedure Code.

The late payments are subject to interest computed by applying a rate of 0.02% for each day of delay, as well as late payment penalties computed by applying 0.01% per day to the overdue tax liabilities.

In case the tax authorities establish differences of VAT by issuing a tax decision following a tax inspection such differences are subject to the interest mentioned above and a penalty for incorrectly declaring the tax liabilities (non-declaring penalty), computed by applying 0.08%/day to the differences established by the tax authorities. The non-declaring penalty is limited to the value of the principal, except for the cases of tax evasion. However, the penalty of delay does not apply to the main VAT obligations for which a non-declaration penalty is due.

For late submission of the tax return (300 Form) there is a fine ranging between RON 500 to RON 1,000 (approximately €101-€202, at an average FX rate of €1= 4.95 RON) for small taxpayers and individuals and from RON 1,000 to RON 5,000 (approximately €202-€ 1,010, at an average FX rate of €1= 4.95 RON)  for middle and large taxpayers.

Taxable persons registered for VAT purposes in Romania should submit a declaration including all taxable supplies/acquisitions of goods/services taking place in Romania (Form 394) by the 30th of the month following the tax period which it relates to, except the deadline for submitting the statement for January which is until 28th/29th February respectively.

The taxable persons should also submit the recapitulative statement (EC Sales List – 390 Form) on a monthly basis, not later than the 25th day of the month following that in which the intra- community supply/acquisition of goods or services has occurred, for all intra-community operations made with taxable persons established in other Member States. The recapitulative statements are to be submitted only for the periods during which a chargeability of the tax occurs (no nil return is required).

The obligation to provide Intrastat statistical data is applicable to all economic operators that simultaneously meet the following conditions:

• are registered for VAT purpose
• are trading goods with other Member States of the EU
• the total annual value of goods traded with other Member States of the EU for each of the two flows, acquisitions and dispatches, respectively, exceeds the annual Intrastat thresholds as approved by the

Companies that exceeded the thresholds established by the National Institute of Statistics for each flow arrivals/dispatches are obliged to prepare and submit Intrastat statement. Companies that in the current year exceed the value of thresholds, will send Intrastat statements starting with the month in which they exceeded the thresholds and for the whole next year.

The statistical thresholds are set separately for each type of movement of goods and may have different values for acquisitions and dispatches of goods. For the year 2022, Intrastat thresholds are:

• for intra-Community dispatches: RON 900,000 (approximately €181,820, at an average FX rate of €1 = 4.95 RON)

• for intra-Community arrivals: RON 900,000 (approximately €181,820, at an average FX rate of €1 = 4.95 RON).

The Intrastat statistical return must be filed on a monthly basis no later than the 15th of the month following the reporting month. Completed forms should include details such as the trade classification of the goods, quantities, shipping costs, countries of departure and arrival, Incoterms delivery condition, etc.

Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.

Failure to register for VAT purposes

If an entity has the obligation to register for VAT purposes in Romania and does not comply with this requirement, the competent tax authority shall register that entity ex officio unless the entity presents a high fiscal risk. If the entity performs taxable supplies and it is in VAT payable position (ie the output VAT for its taxable transactions is higher than the input VAT for its purchases), late payment interest and penalties will be applied.

Failure to submit/correctly declare the EC sales and acquisitions and 394 Form (i.e. list of domestic transactions)

Late submission of recapitulative statements (390 Forms) will impose a penalty between RON 1,000 and RON 5,000 (approximately €202 – €1,010, at an average FX rate of €1 = 4.95 RON).

For incorrect and incomplete filling of the recapitulative statements (390 Forms), the tax authorities will impose a penalty between RON 500 and RON 1,500 (approximately €101-€303, at an average FX rate of €1= 4.95 RON).

Non-compliance with the requirement of filing the Form 394 regarding sales and acquisitions performed on Romanian territory within the legal deadline is sanctioned with fines ranging from RON 2,000 to RON 3,500 (approximately €404-€707, at an average FX rate of €1= 4.95 RON) for small taxpayers and individuals and from RON 12,000 to RON 14,000 (approximately €2,424-€2,828, at an average FX rate of €1= 4.95 RON  for middle and large taxpayers.

Fraud

Moreover, the following tax offences are considered criminal offences:

• tax evasion is committed if a taxpayer intentionally gives incorrect or incomplete information to the tax authorities or if one withholds information necessary to calculate the correct tax liability
• evasion of import duties (including import VAT).

Taxable persons not registered and who do not have the obligation to register for VAT purposes in Romania may request a VAT reimbursement from Romania based on the refund request transmitted electronically to the authorities from the Member State where they are registered, no later than 30th of September of the year following the reimbursement period.

The settlement period is of four months from the date when the request is received by the Romanian authorities, with the possibility of the authorities extending the deadline if they require further information.

Taxable persons established outside the EU also have the right to claim a VAT refund from Romania, based on reciprocity agreements signed with Romania by their country of origin.

The mandatory information that must be included on an invoice is in line with the provisions of the EU VAT Directive 112/2006 on this matter, as follows:

• a sequential number, according to one or more series, that uniquely identifies the invoice
• date when the invoice is issued
• date when the goods/services were supplied or the date when the advance was cashed, if the latter date differs from the date when the invoice was issued
• name, address and VAT ID number or, on a case-by-case basis, the tax number of the taxable person issuing the invoice
• name of the supplier not established in Romania which appointed a tax representative, as well as the name, address and VAT ID number of such tax representative; the name and address of the beneficiary of goods/services, as well as the VAT ID number or the tax number of the beneficiary, in case the beneficiary is a taxable person or a non-taxable legal entity
• name of the beneficiary not established in Romania which appointed a tax representative, as well as the name, address and VAT ID number of the tax representative
• name and quantity of goods supplied, the name of the services supplied, as well as the relevant details for defining the goods, in case of intra-Community supplies of new transport means
• taxable base of goods and services or, on a case-by-case basis, the invoiced advances, for each tax rate, exemption or non-taxable operation, the unit price, excluding VAT, as well as the discounts and other price reductions, in cases where they are not included in the unit price
• the applicable VAT rate and the output VAT amount, in the Romanian local currency – RON, depending on the applicable VAT rate
• in case the invoice is issued by the beneficiary on the account and on behalf of the supplier, the mention ‘self-invoice’
• in cases where no VAT is due, the indication of the relevant article from the Tax Code/EU Directive 2006/112/EU or any other mention showing that the respective supply of goods/ services is VAT-exempt or subject to the reverse charge mechanism
• in cases where the client is the person liable to pay the VAT, the mention ‘reverse charge’
• in case the special regime for travel agencies is applicable, the mention ‘the margin scheme – travel agents’
• if one of the special regimes for second-hand goods, works of art, collector’s items and antiques is applicable, one of the mentions ‘the margin scheme – second-hand goods’, ‘the margin scheme – works of art’, ‘the margin scheme – collector’s items and antiques’, as the case may However, in case the special scheme for farmers is applied, it is recommended to include on the invoice the mention:”special scheme for farmers”, as well
• in case the VAT chargeability occurs at the cashing date for whole or partial counter-value of the supply of goods/ services, the mention ‘cash accounting for VAT’
• a reference to prior invoices or documents issued, in case more than one invoice or document is issued for the same.

As of 1 January 2013, new rules regarding the invoicing procedure have been introduced establishing equal treatment for hard copy or electronic invoices meeting the same requirements. Therefore, any hard copy or electronic document is considered an original invoice if it meets the minimum mandatory requirements concerning the content of the invoice.

An electronic invoice is defined under the Romanian VAT legislation as any invoice, containing all the elements required by domestic VAT provisions, that is issued and received in electronic format. The type of the electronic format for the invoice is up to the company decision (e.g. xml, pdf, etc.).

According to the Romanian VAT legislation, the manner in which authenticity, integrity and legibility are guaranteed is, in principle, decided at the level of the taxable persons.

Thus, the authenticity of origin, the integrity of the content and the legibility may be guaranteed through management controls only, which set audit trails ensuring a direct connection between a transaction, the corresponding invoice and other documents issued in connection with that transaction. Besides management controls, the authenticity of origin and the integrity of the content could be guaranteed by means of an electronic signature or by using of Electronic Data Interchange system.

The use of the electronic invoice is subject to the acceptance of the recipient. Acceptance may take the following forms: (i) a written agreement, received from the recipient; (ii) an implicit agreement of the recipient consisting in proceeding to the processing or the payment of the electronic invoice. Moreover, the recipient’s acceptance also represents a confirmation that it has the necessary technical resources to receive electronic invoices, as well as the capacity to ensure the authenticity of origin, integrity of the content and legibility of the invoice.

At the moment, RO E-factura program was implemented by the Romanian Ministry of Finance and became optional in B2B and B2G relations between taxpayers. This allows the sending of electronic invoices between the supplier and the beneficiary through a specific platform.

Starting 1st of February 2022, the VAT claimed for reimbursement through VAT returns is reimbursed with a subsequent tax inspection, with a few exceptions, as follows:

• in the case of large and medium-sized taxpayers, the VAT refund shall be made with advance tax inspection if:
  • the taxpayer has recorded in the tax record deeds that are sanctioned as crimes;
  • the central tax authority, on the basis of the information held, finds that there is a risk of undue reimbursement;
  • the voluntary liquidation procedure has been initiated for the respective taxpayer or the insolvency procedure has been opened, except for those for which a reorganization plan has been confirmed.
• in the case of taxpayers other than large and medium-sized ones, the refund of VAT shall be made with advance tax inspection if:
  • the taxpayer has recorded in the tax record deeds that are sanctioned as crimes
  • the central tax authority, on the basis of the information held, finds that there is a risk of undue reimbursement
  • the voluntary liquidation procedure has been initiated for the respective taxpayer or the insolvency procedure has been opened, except for those for which a reorganization plan has been confirmed, under the conditions of the special law
  • the taxpayer submits the first statement with negative VAT amount with reimbursement option, after registration for VAT purposes
  • the balance of the negative VAT amount requested for refund comes from a number of periods longer than the number of reporting periods used in a 12-month period.

The Standard Audit File for Tax (SAF-T) was implemented in Romania.

The obligation to submit the Standard Audit File for Tax through the Informative Statement D406 becomes effective for each category of taxpayers, as follows:

• for the taxpayers included in the category of large taxpayers as of 1st of January 2022, who were part of this category in 2021, the obligation to submit the Informative Statement D406 begins on 1st of January 2022, which is the reference date for large taxpayers
• for the taxpayers included in the category of large taxpayers on as of 1st of January 2022, who were not part of this category in 2021, the obligation to submit the Informative Statement D406 begins on 1st of July 2022, which is the reference date for new large taxpayers
• for the medium-sized taxpayers included in this category as of 31st of December 2021, the obligation to submit the Informative Statement D406 begins on 1st of January 2023, which is the reference date for the medium-sized taxpayers
• for the small taxpayers included in this category as of 31st of December 2021, the obligation to submit the Informative Statement D406 begins on 1st of January 2025, which is the reference date for the small taxpayers
• for taxpayers new registered/ framed after the reference date for each category, the obligation to submit Informative Statement D406 starts from the effective date of registration, the first submission of Informative Declaration D406 will be on the last day of the month following the reporting period, after the reference date for the category in which they were registered/classified.

For the non-resident taxpayers, there has not been established a reference date for submitting the 406 Form and the tax authorities will bring clarifications in the future. Most probably, the non-resident taxpayers will have the same reference date for submission as the small taxpayers.

Furthermore, the tax authorities introduced a grace period for taxpayers who are required to submit Informative Statement D406, as follows:

• 6 months for the first reporting, respectively 5 months for the second reporting, 4 months for the third reporting, 3 months for the fourth reporting, 2 months for the fifth reporting, for the taxpayers who have the obligation to submit the SAF-T file on a monthly basis
• 3 months for the first reporting, for taxpayers who have the obligation to submit the SAF-T file quarterly.

The grace period is computed starting from the last day of the reporting period for which it is granted, when the obligation of submission becomes effective for the respective taxpayer.

At the moment, RO E-factura program was implemented by the Romanian Ministry of Finance and became optional in B2B and B2G relations between taxpayers. This allows the sending of electronic invoices between the supplier and the beneficiary through a specific platform.