Affecting both domestic and foreign businesses, a number of actions triggers the obligation to register for VAT in Romania. To provide a basic overview, our Romanian experts prepared a comprehensive eBook on value-added tax. Find out more about VAT rates, registration of taxable persons, communication with local tax authorities, compliance and VAT return filing, VAT refund to EU member states or third countries and penalties.
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Basic and reduced VAT rates
The basic VAT rate in Romania is 19%, but a reduced rate of 9% applies to the food and beverage industry, medical treatments and prosthesis, accommodation and others. An extra-reduced 5% rate applies to supplies of social housing under certain conditions and to schoolbooks, newspapers, magazines, admission fees to castles, museums, sport events and cinemas, among others.
Export within and outside the European Union
The supply of goods to other EU member states are exempt from VAT. In order to apply this exemption, the buyer should be registered for VAT purposes in the other EU member state while the transport of goods to the other EU member state should be justified with a set of required documents.
Starting January 1, 2020, such back-up documentation was aligned at the level of the European Union, therefore such documents required by the tax authorities should be the same in each and every EU Member State.
Deliveries of goods outside the EU are being considered as exports for which the same VAT exemption would apply. In order to apply such exemption, back-up documentation would be required function of the statute of the party involved in the transaction (i.e. supplier or beneficiary).
The taxable amount to which would apply the relevant quota of VAT equals the total consideration obtained or to be obtained for a supply, including any excise duties or other taxes and fees.
VAT registration of domestic taxable persons
Voluntary and obligatory registration
In Romania, voluntary registration for VAT is possible and may be performed by any taxable person with the headquarter of the economic activity in Romania and currently conducts or intends to carry out economic activity falling within the scope of VAT
Regarding the mandatory VAT registration, a threshold of EUR 88,500 annual turnover is provided.
The application for VAT registration is made within 10 days from the end of the month in which this threshold is reached or exceeded.
Group registration for taxable entities
Group registration for VAT is available for entities in Romania under certain conditions.
Other specifications of the VAT registration
According to the legislation in force, Romanian tax authorities have the right to register ex officio for VAT purposes those taxable persons that register an annual turnover of at least EUR 88,500 and have not requested the registration as per the law.
Besides the mandatory registration, Romanian taxable persons would have to register for VAT purposes before performing intra-Community transactions, under certain conditions, for the purposes of service delivery to other EU member states, or for the purposes of acquiring goods or services from other EU member states. The registration must be done in advance.
VAT registration of foreign taxable persons
Definition of foreign taxable persons
Foreign persons are taxable person whose seat, place of business or fixed establishment is located outside Romania.
Obligatory registration for foreign taxable persons
Before starting an activity that is subject to VAT, any foreign taxable person should register for VAT purposes in Romania.
In case of distance sale activity, the threshold for VAT registration is of EUR 35,000.
Communication with authorities
Local statutory representation for VAT
In Romania, local representation by a tax advisor is not mandatory.
Only Romanian language may be used for communication with the tax authorities.
Communication with authorities
A taxable person may communicate with the tax authorities in electronic format, through the virtual space of the taxpayer, or on the online platform of the tax authority. However, the electronic communication requires a certified electronic signature.
VAT compliance and return filing
Tax period and deadline for VAT return filing
In Romania, the standard fiscal period is the calendar month.
For taxable persons whose previous year-end turnover is lower than EUR 100,000 and did not perform intra-community transactions, the fiscal period is the calendar quarter.
The VAT return should be filed no later than 25th day following the respective tax period.
EC sales list and other documents
The EC list shall be filed until the 25th day following the respective tax period. In addition, the informative return for domestic transactions should be provided as well.
VAT refund to EU member states
Minimum amount and applicable period
If the VAT refund request concerns a period of less than one calendar year, but greater than 3 months, the amount of VAT for which the refund is requested may not be less than the RON equivalent of EUR 400.
However, if the request refers to a period of one calendar year or the remaining period of the calendar year, the amount of VAT may not be less than the RON equivalent of EUR 50.
The period for which the VAT is refunded may be maximum one calendar year and minimum 3 calendar months. Refund requests may, however, concern a period of less than 3 months if this is the period remaining until the end of the calendar year.
Deadline and place of filing for VAT refund
The request for refund should be transmitted electronically at the latest by September 30 of the calendar year following the refund period. The request should be filed at the local tax authority of the foreign taxable person.
Refund for foreign taxable persons
The VAT refund is possible for foreign taxable person if certain conditions are met.
VAT refund to third countries
VAT refund conditions
The VAT refund is possible concerning third countries if certain conditions are met.
Minimum amount and applicable period for VAT refund
VAT refunds to third countries are subject to the same rules as refunds to EU member states.
Nevertheless, another mandatory condition is that between Romania and that third party to be concluded a specific mutual agreement.
Deadline and place of filing for VAT refund
The request for VAT refund should be submitted by September 30 of the subsequent calendar year following the refund period. The request should be submitted to the registry office of the tax authorities or by post. The deadline for issuing the decision is 6 months starting from the date the tax authority has received the entire documentation.
Penalties for VAT non-compliance
The penalties for non-compliance may be the following:
- Fines between approx. EUR 200 and EUR 1,000
- Interest for late payment 7,3 % p.a.
- Penalties for late payment 3,7 % p.a.
- Penalties for non-declaration 29,2 % p.a.
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