The reduced rate of the
value-added tax is to equal 9% and is to apply to the base of taxation for the following
supplies of services and/or deliveries of goods:
a) right to admission to
castles, museums, memorial houses, historical monuments, architectural and archeological
monuments, zoos, botanical gardens, fairs, exhibitions;
b) delivery of books,
newspapers and magazines, school manuals, with the exception of those intended exclusively
for publicity;
c) deliveries of prostheses of
any type and accessories to them, with the exception of dental prostheses;
d) deliveries of orthopedic
products;
e) medicines for human use and
veterinarian use;
f) accommodations within the
hotel sector or within sectors with a similar function, including the rental of land
prepared for camping.
Starting to the Romanian
accesion time (1st of January 2007), a New
Fiscal Code will enter into force (for
detailed information see Law 343/2006):
The Romania’s
accession to European Union will bring relevant modifications in the value added tax
field, due mainly to the abolishment of custom borders between the member states and also
due to the need for applying in this field similar rules to as in the other member
states.
Introduced
in Romania since 1993, the value added tax has been elaborated on the principles of the
Sixth Council Directive of EEC which regulated the VAT in the member states, but without
being followed properly, because at that time Romania was not a candidate country to the
European Union. After 2001, when Romania started the negotiations with European Union
regarding tax field, it was opened the Chapter 10 from the Position Paper, through which Romania
committed to transpose into the national legislation the provisions of European
directives, respectively:
Sixth
Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member
States relating to turnover taxes - Common system of value added tax: a common base of
calculation. All the directives which modified the 6th Directive were also
taken into consideration in order to transpose them into the national VAT legislation
Eighth
Council Directive 79/1072/EEC of 6 December 1979 on the harmonization of the laws of the
Member States relating to turnover taxes - Arrangements for the refund of value added tax
to taxable persons not established in the territory of the country;
Thirteenth
Council Directive 86/560/EEC of 17 November 1986 on the harmonization of the laws of the
Member States relating to turnover taxes - Arrangements for the refund of value added tax
to taxable persons not established in Community territory;
Council
Directive 83/181/EEC of 28 March 1983 determining the scope of Article 14 (1) (d) of
Directive 77/388/EEC as regards exemption from value added tax on the final importation of
certain goods;
Council
Directive 69/169/EEC of 28 May 1969 on the harmonisation of provisions laid down by Law,
Regulation or Administrative Action relating to exemption from turnover tax and excise
duty on imports in international travel.
As a
principle, the European directives shall be transposed into the national legislation and
the European regulations will be applied as such from the date of accession. In the VAT
field, all the European directives were transposed in the VAT law project which modified
the 6th Title of the Fiscal Code. From the date of accession, the current VAT
legislation will be abrogated and replaced by the VAT legislation harmonized with the
Community Acquis.
An important
change, which will affect all the taxable persons who are currently registered for VAT
purposes, will be the abolishment of custom borders between Romania and the other Member States
of the European Union. The abolishment of custom borders will have as effect the
elimination of custom control for good’s movement between these states.
The notions
of export and import in relation with the other member states will disappear and will be
replaced with new notions, such as intra-community supply of goods (instead of export) and
intra-community acquisition (instead of import). Any dispatch of goods from Romania into
another member state, even in the lack of a commercial transaction, will be treated as a
transfer of goods or a non-transfer, which are new notions in our legislation and specific
only for the relations between member states. Currently, due to the fact that Romania is
not a member state yet, any movement of goods from other country to Romania or from Romania
to other country is regulated by custom legislation, as imports, exports or goods which
are under one of the customs duty suspension regimes. In general, the goods which are
placed in present under one of the customs duty suspension regimes will be treated as
non-transfers after the accession.
Pursuant to
the abolition of custom borders, the control of movement of goods between the member
states will be realized through the medium of the electronic system VIES (VAT Information
Exchange System). Within the European Union, there are a lot of regulations which
stipulate the conditions in which the member states will exchange information and also the
multilateral controls in order to avoid fiscal fraud in the field of VAT.
All member
states settle in their national VAT legislation the obligation of submitting quarterly
recapitulative statements for the intra-community supply of goods. Additionally, the
Romanian legislation stipulates the obligation of submitting recapitulative statements for
the intra-community acquisitions. The information from the recapitulative statements are
transferred in VIES and thus the member states are able to verify the transactions that
are realized. For example, when an intra-community acquisition is reported in Romania, it
will be possible to verify the supplier, which has reported the intra-community supply,
respectively if he has a valid number for the VAT purposes attributed in his member state
and if the transaction is declared in the respective member state.
Due to the
newness of these operations, it is necessary that all the economic operators which in
present realize imports, exports, operations consisting of work on movable goods placed
under the inward processing regime, or other operations which involve the movement of
goods between Romania and another member state, have to know the all the documents that
have to be make, the date when the chargeability of tax occurs, the statements that
have to be submitted, and especially the rules for the intra-community operations. These
rules are very important because only by knowing them, it will be possible to apply the
VAT exemption of for an intra-community supply of goods. For the intra-community
acquisitions, the economic operators registered for VAT purposes, will not effectively pay
VAT, as they will apply the reverse charge mechanism, respectively they will pay VAT
through the VAT return.
Besides
regular operations regarding intra-community supplies and intra-community acquisitions,
the Romanian VAT legislation will provide special arrangements for the goods that are
object of consignment contracts, the goods put at the disposal of the client (call of
stock), the goods transmitted for verifying the conformity, for trial, for tests,
triangulation – that imply economic operators from three different member states,
goods placed under VAT warehouses arrangements, for which will be applied simplification
measures settled by order of public finances minister.
As regards
services, there will also be significant modifications in the VAT area. The new
legislation will provide a new notion, the intra-community transport of goods, for which
will be applied different rules from those applied for the international transport of
goods between member states and third countries. Therefore, the international transport of
goods afferent of an import or export of goods will remain VAT exempted, while the
intra-community transport of goods is not VAT exempted, but, if the client provide the
carrier with a valid VAT registration number from another member state than Romania, from
where the transport begins, the client will pay the tax from his country and the Romanian
carrier will invoice without VAT. Mutually, when a Romanian economic operator contracts a
transport with a carrier from another member state, he has to communicate his VAT
identification number from Romania, owing the afferent tax in Romania, but he will not
effectively pay the tax because he will apply the reverse tax mechanism, respectively he
will pay VAT through the VAT return. As regards the other services, they will also have
different rules when the client or the supplier is established in another member state.
Very important in this context is the communication of the registration number for the VAT
purposes, which in most cases leads to the invoicing without VAT by the supplier of
services and applying the reverse tax mechanism by the client from the another member
state, if he is registered for VAT purposes.
From the
date of accession, the utilization of fiscal invoices with special regime will not
be mandatory, due to the fact that by abolishing of custom borders, the goods will
circulate accompanied by invoices issued by every member state, which have to be accepted
in the state of intra-community acquisition, irrespective of their forms, if they respect
the minimal information settled by the 6th Directive. Also, in the 6th
Title of the Fiscal Code, there were implemented the provisions regarding the electronic
invoicing, that are mandatory from the date of Romania’s accession to the European
Union. Of course, the economic operators who will have in their stock printed fiscal
invoices at the end of 2006, they will have the possibility to use them after the date of
accession until they will complete them. The economic operators will also have the
possibility to customize their invoices, but they are not obliged to do this.
The VAT law
project also stipulates the implementation of new special schemes, such as: special scheme
for investment gold, special scheme for second-hand goods, works of art,
collectors’ items and antiques, special scheme for non-established taxable persons
supplying electronic services to non-taxable persons.
In the real
estate sector, the legislative modifications will be significant:
the
leasing with immovable goods will be VAT exempted (with option for taxation);
the supply
of immovable goods which are not considered new and of lands which are not considered
building lands, will be VAT exempted, but the exemption will be followed by the obligation
of adjustment of the deduction right exercised for the respective immovable good. The
conditions in which a construction is not considered new are settled in the norms for the
application of the harmonized VAT low;
the
changing of initial destination of the immovable good, respectively the utilization of
immobile good within a sector which gives the right of deduction in a different measure
from the initial deduction, will be followed by the adjustment of deduction right within
an adjustment period, which in Romania has been established to 20 years;
there have
been established specific transitory rules for this sector, because currently Romania does
not apply the system of VAT adjustment unless in case of rental of immobile goods in VAT
exemption regime.
After the
accession, the applying of simplification measures will continue for those who will opt
for taxing the real estate operations, which in present is known as reverse change.
From the
date of accession there will be eliminated a lot of VAT exemptions, unconformable with
community acquis. Some of the most important are the elimination of exemption from VAT
for: research-development activities, the commission for commodities exchange, the income
obtained by the securities companies for the administration and lodgement of the stocks,
bonds, operations financed from grant funds given by foreign governments and international
organizations, veterinary medical caring. Besides eliminated exemption from VAT, it has
been included in the harmonized legislation a series of obligatory VAT exemptions, such
as: the exemption of public postal services, the exemption for the deliveries to the
National Bank of Romania, the exemption for the immobile goods leasing operations, the
exemption for lands, excepting those which are constructional, the exemption for buildings
which are not new.
The
harmonized legislation in VAT domain is the legal base for the creation of the
inter-promptness regarding the information exchange in the VAT field with member countries
of European Union. This exchange of information is necessary because, after the date of
adhesion, pursuant the disestablishing of custom barriers, the movement of the goods
between the member countries is not submitted to the custom control. Also, the legislation
regarding the harmonized VAT is the legal base for calculation of the Romanian
contribution to the Community Budget, value added tax being one of the most important
resources of the calculation base of this contribution.