Starting with 3 February 2020, the text of EU VAT Directive 2018/1910 regarding quick fixes for consignment stocks, intra-community deliveries of goods was finally implemented in the Romanian Fiscal Code, without additional remarks or conditions. In our article we describe the details and also review other VAT changes in Romania.
The three short legislative acts (the so-called quick fixes) fixing four specific issues adopted related to the new European VAT system were adopted by the Council of the European Union on 4 December 2018. The goal of the quick fixes is to solve problems arising in trade between EU member states, thus, Member States had/have to transpose the new rules into their law.
In case of intra-community deliveries of goods, the supplier in Romania needs specific documents in order to sustain the VAT exemption of the issued invoices.
VAT changes in Romania related to transport by or on behalf of the supplier
In case of transport by or on behalf of the supplier, the supplier should be in possession of:
- two documents specific to the type of transport (signed CMR, bill of lading, invoice from the carrier, air bill etc.), issued by two independent entities (unrelated), different from seller or buyer,
or
- one document from those listed above and one of the following documents: insurance policy for the transported goods, bank documents attesting the transport payment, minutes of receipt of the goods, issued by a depositary from the Member State of destination, official documents issued by a public authority, such as a notary, attesting the arrival of the goods in the Member State of destination. These documents have to be issued by two independent entities (unrelated), different from seller or buyer.
VAT changes in Romania related to transport by or on behalf of the buyer
In case of transport by or on behalf of the buyer the buyer sends to the supplier by 10th of the next month following the delivery, a written statement mentioning that the goods have been transported by him, or by a third party on his behalf with all the details related to dispatched goods (for example state of dispatch, quantity and nature of the goods, date of issuance of the statement, name and address of the buyer, date and place of arrival of the goods, in the case of delivery of means of transport, the identification number of the means of transport and the identification of the person who received the goods on behalf of the buyer).
In case of transport by or on behalf of the buyer furthermore the supplier should be in possession of:
- two documents specific to the type of transport (signed CMR, bill of lading, invoice from the carrier, air bill etc.), issued by two independent entities (unrelated), different from seller or buyer,
or
- one document of ones listed above and one of the following documents: insurance policy for the transported goods, bank documents attesting the transport payment, minutes of receipt of the goods, issued by a depositary from the Member State of destination, official documents issued by a public authority, such as a notary, attesting the arrival of the goods in the Member State of destination. These documents have to be issued by two independent entities (unrelated), different from seller or buyer.
In case the above documents are not obtained, the tax authorities will charge VAT for the respective intra-community deliveries during a fiscal audit, together with fines, interest, penalties.
There are practical aspects of these VAT changes in Romania, which are not clarified yet and we hope that specific guidelines would be provided.
Annulment of split VAT regime
Apart from the implementation of quick fixes, there are also other recent VAT changes in Romania. The most important of them is that from 1 February 2020, the split VAT mechanism is no longer applicable. Under this procedure, the customer had to pay the invoices received from a supplier observing such mechanism in two separate bank accounts: the net amount in the current bank account of the supplier and the VAT amount in a special VAT bank account of the supplier.
Obviously, these rules generated more administrative and compliance work for all taxpayers.
If you would like to know more about the implementation of quick fixes or other VAT changes in Romania, please visit the homepage of Ensight, the exclusive representative of WTS Global in Romania.
