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Insights Value Added Tax (VAT) Guidelines: Romania

Value Added Tax (VAT) Guidelines: Romania

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last updated 11 March 2024

 

 

This country summary is part of the comprehensive Focus on VAT Fellows: International Value Added Tax (VAT) Guidelines »



1. VAT Scope, VAT Rates and VAT Exemptions

Usually, the following operations are taxable in Romania:
  • Supplies of goods or services performed in Romania, with payment, by a taxable person;
  • imports with their place in Romania;
  • (intra-Community) acquisitions of goods for which the place is considered to be in Romania;
  • exchange of goods and services; they are assimilated to supplies of goods or services. 
 
The VAT rates are the standard rate of 19 percent since 2017. The standard rate applies to all supplies of goods and services (including imports) that do not qualify for an exemption or are not subject to a reduced VAT rate. 
 
As of 1 January 2024, Romania applies two reduced VAT rates, as follows:
  • 9 percent reduced VAT rate applies to a wide array of goods and services that are deemed essential and others;
  • 5 percent reduced VAT rate applies mainly to supply of books, magazines, journals (in both print and digital form), access to castles, museums, historical/architectural/archaeological monuments, zoos, botanical gardens, as well as to supply of wood for heating and also wood byproducts such as wood pellets and wood briquettes used for heating, supply of thermal agent for consumers during the cold season (with certain limitations) etc.
  

VAT Exemptions

There are some rules for VAT exemptions. These are qualified as VAT exemptions with VAT deduction right and VAT exemption without VAT deduction right. The following type of transactions are exempt from VAT:
  • Supplies exempt of VAT without credit (i.e., supplier does not have the right to deduct related input VAT): medical care, welfare and educational activities carried out by licensed suppliers, religious services and ancillary supply of goods, public postal services, radio and TV activities (others than commercial), insurance services, rental/leasing of immovable goods, supply of old buildings, etc. Some financial and banking services are also exempt from VAT (e.g. those related to granting and administering loans), while others are subject to 19 percent VAT (like factoring).
  • Supplies exempt with credit (i.e., supplier has the right to deduct related input VAT): international sales such as export of goods, intra-Community supply of goods, international transport of passengers, supply of goods that are placed under a suspensive customs regime, supply of goods to a bonded warehouse, etc., as well some local supplies of goods and services such as construction/rehabilitation/modernization of hospital units in the public network, as well as construction/rehabilitation/modernization services for hospital units provided to non-profit entities if they are intended for hospital units owned and operated by non-profit entities, supply of medical equipment and other articles normally used in the medical field or by people with disabilities.

  

2. VAT registration and simplifications

It is mandatory for companies to apply for VAT registration in Romania before starting their activities (except for small Romanian companies that choose to apply the small enterprising special exemption regimen). Fines may apply if the application for registration is submitted late and retroactive VAT registration in not available in Romania.
  
  • Taxable persons incorporated in Romania have the obligation to apply for VAT registration only after exceeding the threshold of RON 300,000 in annual turnover (i.e., small enterprises special VAT exemption regimen threshold), but they may opt to register for VAT even before reaching this threshold. Companies covered by the small enterprises VAT exemption regime must still obtain a special VAT registration number if undertaking intra-Community transactions, such as intra-Community supplies of goods or services, as well as intra-Community acquisitions of goods.
  • Fixed establishments in Romania of non-resident companies must apply for VAT registration before carrying activities such as receiving services for which it is the person obliged to report and pay VAT under reverse charge, supplying intra-Community services or goods from the fixed establishment in Romania, carrying out intra-Community acquisitions of goods in Romania, etc.
  • Non-resident taxable persons not established for VAT in Romania must apply for VAT registration in Romania only if they carry our activities that trigger a VAT registration in Romania like intra-Community acquisition of goods in Romania, intra-Community supplies of goods dispatched from Romania, exports, local sales to clients not registered for VAT in Romania, etc. Non-resident companies have the option to register for VAT for imports and other local supplies which are exempt under general rule but may be taxed by option (such as building rentals).
  • All EU non-resident companies may appoint a tax representative in Romania to help with their VAT registration and monthly/quarterly compliance, while non-EU companies are obliged to appoint a tax representative (which is jointly liable with the company for the payment of VAT in Romania) otherwise their registration is not approved. Only taxable persons headquartered and registered for VAT in Romania may act as tax representatives for VAT purposes.
  
There are some simplification rules to avoid a registration for VAT purposes in Romania. These VAT simplifications are: 
  • Intra-Community Triangulations – Romania has imbedded in its national legislation the simplification measures for triangular operations provided under Article 141 of the EU VAT Directive since 2007 and also implemented the quick fixes introduced for chain transactions by EU Directive 2018/1910 in 2020.
  • Call-off stock and consignment stock arrangements have been covered by a simplification in Romania since 1 January 2016 and more recently they have been amended to align with the quick fixes introduced for chain transactions by EU Directive 2018/1910 in 2020.
  • Romania also implemented the optional extended reverse charge mechanism provided under Article 194 of the VAT Directive. For supply of goods with place of supply Romania, the VAT is due by the beneficiary under reverse charge if the beneficiary is identified for Romanian VAT purposes, but the supplier is neither established nor registered for VAT purposes in Romania.
  • Domestic reverse charge – this is a mechanism aimed at certain industries with high risk of VAT fraud. Under this mechanism, the VAT is due by the beneficiary under reverse charge in all cases where both the supplier and the customer are registered for VAT purposes in Romania, for supplies of certain types of goods, such as: certain recyclable waste materials (ferrous and non-ferrous materials and their alloys, paper, cardboard, textiles, cables, rubber, plastic, glass) and partly processed recyclable waste materials, raw wood, cereals and industrial crops not destined for final consumption, immovable property (land and buildings), mobile phones, laptops, tablet PCs, game consoles and devices with integrated circuits (if their value per invoice exceeds RON 22,500), green certificates, investment gold, natural gas and electricity supplied to traders. The domestic reverse charge mechanism is set to apply until 31 December 2026.
 
The registration for VAT purposes through a fiscal representative may be requested by a taxable person not established in Romania. The companies located in the EU which have to register for VAT in Romania, have the possibility to name an authorized fiscal representative to fulfil their VAT obligations. For the companies outside EU the appointment of a fiscal representative to fulfil their VAT obligations is mandatory. 
 
Rödl & Partner in Romania also provides VAT compliance/declaration services for foreign companies which are obliged to register for VAT in Romania as well as VAT advisory and accounting/e-Invoicing services.

   

3. Declaration requirements and penalty regime

All taxable persons with a valid VAT number in Romania are obliged to submit periodically a set of VAT declarations and informative reports in Romania. As a rule, VAT returns and informative reports are submitted on a monthly basis, but quarterly reporting is available for companies with annual turnover under EUR 100,000 if they do not carry out intra-Community acquisitions in Romania.
 
  • Intrastat report – companies must report for Intrastat only if their arrivals and/or dispatches flows exceed the annual threshold of RON 1,000,000. The report is submitted monthly, in electronic form, by the 15th of the month following the one when the goods arrived in Romania or were dispatched from Romania. 
  • VAT return – must be filled periodically (monthly or quarterly) by the 25th of the month following the month/quarter in which the transactions were carried out. The VAT return is submitted online on a dedicated platform (e-guvernare).
  • EC Sales List (VIES) – is a report that includes all intra-Community supplies/acquisitions carried out in the reporting period in Romania. The deadline for submission is by the 25th of the month following the one in which such intra-Community transactions were carried out. The report is submitted online on a dedicated platform (e-guvernare).
  • Local list of invoices (394) – is an informative declaration on the local supplies and acquisitions carried out in Romania in the reporting period and must be submitted by the 30th of the month following the month/quarter in which the transactions were carried out. The report is submitted online on a dedicated platform (e-guvernare).
  • RO e-Factura – starting 1 January 2024, for all B2B transactions with place of supply in Romania, companies registered for VAT in Romania must upload their invoices on the RO e-Factura platform. Invoices must be converted to a specific XML format that is accepted by the platform and uploaded within 5 working days from the date of issuance. Exports and intra-Community supplies exempt from VAT are excluded from e-invoicing reporting. For companies established for VAT purposes in Romania, this reporting obligation no longer applies after 30 June 2024, when the new e-invoicing rules are enforced (companies established for VAT in Romania must issues their B2B and B2G invoices exclusively through the RO e-Factura platform). 
  • VAT payment – the deadline for paying VAT to the Romanian authorities is by the 25th of the month following the reporting month/quarter when the transactions were carried out. By exception, in the month of December, the deadline to pay the VAT is 21 December.
   

4. VAT recovery

Companies with a valid Romanian VAT ID number may apply for VAT refunds simply by checking a box in their VAT return. First time refunds are usually granted further to a tax audit of the documents for the period subject to the refund, while subsequent refunds may be granted subject to a future tax audit, depending on the risk rating attributed by the tax authorities. 
 
Companies not established and not registered for VAT purposes in Romania may apply for refund of the VAT related to their acquisitions of goods and services in Romania by submitting an electronic claim in their country of residence, in the format and within the time limits provided by EU VAT Directive 2008/9.
 
For non-resident companies established outside the EU, which are neither established nor registered for VAT purposes in Romania, recovery of their input VAT incurred in Romania is only possible if a reciprocity agreement exists between Romania and their respective country. In order to apply for VAT refund in Romania, eligible companies must appoint a tax representative in Romania, who will submit a claim on their behalf, in the format provided under Romanian law and within the time limits provided by the 13th EU VAT Directive.

  

5. Invoicing

Invoices may be issued in any language and currency, but VAT amounts should also be stated in the national currency. 
 
Minimum elements that should be included on an invoice are: 
  • invoice date, date when supplies of goods/services were supplied (if different from invoice date):
  • a sequential number, which uniquely identifies the invoice;
  • name, full address and VAT identification numbers of both supplier and beneficiary;
  • name of the tax representative, if either supplier or beneficiary is registered in Romania via a tax representative;
  • quantity and nature of the goods supplied; 
  • the taxable amount per rate or exemption, the unit price exclusive of VAT and any discounts or rebates if they are not included in the price per unit; 
  • the VAT rate applied; 
  • payable VAT amount in RON;
  • if invoice is issued by the beneficiary the mention “self-billing invoice” must be included;
  • In the case of an exemption or where the customer is liable for payment of VAT, a reference to the applicable provision of the EU VAT Directive/national law;
  • a reference to previously issued invoices in case of cancellations, if a special regime is applicable, a mention of that regime.
 
Until 30 June 2024, invoices may be issued in any format. 
 

E-Invoices – Starting 1 July 2024

For all B2B transactions with the place of supply in Romania, taxable persons established for VAT purposes in Romania must issue invoices only via the Romanian e-invoicing platform (RO e-Factura), as this is the only valid form of invoice accepted under Romanian law for this category of suppliers. Invoices are validated and “stamped” by the system and then sent automatically to the client. Non-resident companies not established for VAT in Romania are not required to issue invoices on the platform, but they are obliged to upload the invoices on the platform as part of their VAT reporting duties in Romania. 
 
We note that e-invoicing has been mandatory for certain limited categories of supplies in Romania since 2022.

  

6. Others

There are special VAT regimes in Romania, e.g. for travel services or distance selling. 
 
Further, under the conditions and within the limits provided by law, a group of taxable persons established in Romania which are independent from the legal point of view, but are in close relationship with each other from the organizational, financial and economic point of view, may choose to form a unique fiscal group. 
 
A specific VAT cash accounting system is foreseen in Romania. This scheme may be applied only by Romanian companies with an annual turnover lower than RON 4,500,000. Companies applying the cash accounting VAT scheme owe the output VAT on their transactions to the state budget only when payment is received from the client; at the same time, customers of such companies can only deduct related input VAT when they pay the invoices to such suppliers. The scheme is not available for members of VAT groups and neither for non-resident companies registered for VAT in Romania (irrespective whether they are established via a fixed establishment in Romania or not). However, non-resident companies registered for VAT in Romania may be impacted by the cash accounting scheme when receiving invoices from suppliers applying this cash VAT accounting system – in such cases the right to deduct input VAT related to acquisitions of goods/services from these suppliers is deferred for the month when the payment of the invoice is made. For partial payments, the amount paid is considered to include VAT and VAT is deducted proportionally.

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