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Romania comes under the EU VAT regime, and is part of the European Union single market economy. VAT Directives are issued by the EU which lay out the principles of the VAT regime to be adopted by the member states. These Directives take precedent over the local legislation.
Romanian VAT law
Romanian VAT law is administered through the Romanian Ministry of Finance.
Romanian VAT registration
Foreign companies may register in Romania for VAT without the need to form a local company; this is known as non-resident VAT trading. There is no VAT threshold in Romania for the registration of non-resident traders; a VAT number must be in place before the commencement of taxable supplies.
There are strict rules on the situations where a registration is permitted. Common scenarios which require a Romanian VAT registration include:
- importing/exporting goods into/out of Romania
- acquiring goods/services from other EU states into Romania
- organising live events, conferences, etc, in Romania
- holding goods in a warehouse in Romania as stock for resale
- 'supply and install' services
- distance selling to private individuals in Romania, e.g. internet retailing.
Romanian VAT compliance
There are detailed rules controlling the recording and processing of Romanian transactions. These include guidelines on:
- Romanian invoice requirements
- use of the 'reverse charge' procedure
- foreign currency reporting and translation
- correcting errors from prior returns
- credit notes and corrections
- what accounting records must be maintained.
Romanian VAT rates
The VAT rates / percentages and related taxable operations are summarised below.
||Description and related taxable operations
Standard rate and applies to all VAT taxable operations
Reduced rate and apply to following taxable operations:
- entrances to castles, museums, monuments, zoos, fairs, exhibitions
- delivery of books, newspapers, magazines, school manuals (except those materials exclusively made for advertising purposes)
- delivery of medical prostheses and related accessories
- hotel accommodation services.
|VAT exempt, with no right to deduct VAT
In general, public interest facilities or public interest businesses. VAT pro-rata calculation should be performed for these transactions. Examples include:
- medical treatment
- social, cultural and sport assistance made by public institutions
- certain radio and TV broadcasting, except for advertising airing
- leasing real estate properties (with certain particularities and exceptions)
- financial and banking services
- insurance and re-insurance activities
|VAT exempt with the right to deduct VAT
Activities related to exports from Romania outside EU or services rendered to non-resident entities outside EU, for which the VAT territoriality rules are indicating that the taxable operation is in the country of the beneficiary.
Activities related to deliveries from Romania to EU countries or services rendered to non-resident entities from EU countries, for which the VAT territoriality rules are indicating that the taxable operations is in the country of the beneficiary (VAT reverse charge mechanism and rules shall apply).
Deadlines for tax reports
The submission deadlines of the tax reports are presented below:
- Monthly / (quarterly) VAT return 300 return
- Monthly Intrastat return
- Monthly summary of EU deliveries and acquisitions - 390 return (VIES)
- Monthly / quarterly statement regarding acquisitions / supplies of goods performed on Romanian territory - 394 return
- By the 25th day of the following month/ quarter
- By the 15th day of the following month
- By the 25th of the following month/quarter
- By the 25th day of the following month/ quarter.
Please note that VAT returns are submitted quarterly only if the annual turnover is below EUR 100,000 and only if no EU acquisitions have been performed during the year.
Intra-community operators’ register
If the company performs EU transactions (either purchases or sales or both), it needs to get registered in the special register for companies performing EU transactions.
If the company imports goods in Romania it needs to obtain an EORI number from the customs authorities.
Romanian VAT returns
Companies with a Romanian VAT number must submit periodic returns detailing all taxable supplies (sales) and inputs (costs).VAT returns are generally submitted by non-resident traders in Romania monthly or quarterly by the 25th of the month following the reporting month-end or quarter-end.
Romanian fiscal representative
While it is not necessary to appoint a fiscal representative in Romania for EU businesses wishing to VAT register in Romania, it is necessary to have an agent based in Romania who can act for the company and where the Romanian tax authority can, if required, communicate, conduct tax inspections, and examine invoices and book records.
It is, however, a requirement that non-EU businesses appoint a fiscal representative.
Romanian recapitulative report and Intrastat
In addition to VAT returns in Romania, companies may be required to submit additional statistical information.
The Romanian EC sales list, which is part of the recapitulative report, must be completed and submitted monthly by the 25th of the month following to account for intra-community despatches of goods and services. The recapitulative report also includes a reporting requirement for acquisitions (receipt of goods and services received from other EU states).
For goods only, if certain thresholds are exceeded - either for despatches or arrivals - an Intrastat report must be completed and submitted to the Romanian statistical office. The report must be submitted monthly by the 15th of the month following the reporting month.
Romanian VAT refunds
The VAT to be recovered can be requested for refund through the VAT return.
- Please bear in mind the following when looking at VAT reimbursement: The Romanian tax authorities reimburse the VAT requested by the taxpayers after an audit performed over the documents and transactions of the company
- In accordance with the legislation in force, the tax authorities should resolve the VAT request within 45 days from the date when the request is submitted (i.e. the VAT return is submitted)
- During the VAT audit performed by the tax authorities the following documents should be available:
- original invoices (both purchases and sales)
- agreements concluded with all third parties (both purchases and sales)
- disclosures of the services rendered by suppliers, acceptance forms for the services from suppliers; this is also applicable for ICO transactions
- disclosures of the services rendered to customers
- transfer price file – this request has been recently introduced in the VAT audits even though it is not related to VAT.
Moreover, the Romanian tax authorities may request Romanian translations of documents which are issued in a foreign language (invoices, agreements, disclosures to invoices).
In case the above information and documents are not available, the tax inspectors can reject VAT deducted by the company.
If a foreign company is providing taxable supplies in Romania but is unable to obtain a Romanian VAT number, or is incurring Romanian VAT on local goods or services, then Romanian VAT may be recovered through the VAT return and after a tax audit.
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