How does a VAT group work in Romania?

Conditions

VAT grouping is allowed under Romanian VAT law. Under the rules currently in effect, a minimum of two taxable persons may form a fiscal group if all the  members meet the following conditions:
• They are established in Romania
• They do not belong to another fiscal group
• They use the same tax period
• Their capital is held directly or indirectly in a proportion of more than 50% by the same shareholders

The VAT grouping in Romania is allowed between taxable persons established in Romania, independent from a juridical point of view and who are in a close link from a financial, economic and organizational point of view. A close link from a financial, economic and organizational point of view is considered to be there if the taxable persons involved have capital owned directly or indirectly of more than 50% by the same associates.

Taxable transactions

Transactions between the members of the group fall within the scope of VAT.

Joint liability

All members of a VAT group in Romania are jointly and severally liable for VAT debts and penalties.

Minimum period

The minimum time period required for the duration of a VAT group is two years.

Reporting

• VAT grouping is allowed only for VAT reporting (for consolidation purposes).
• Members of a VAT group each calculate and file their own VAT returns with tax authorities. he group representative submits both individual and consolidated VAT returns.
• The VAT payable and refundable positions of all members must be compensated before remitting VAT to the state budget.
• Being part of a VAT group only benefits cash-flow, as the representative is responsible for remitting or requesting VAT refunds.

Excluded from a VAT group

Holding companies. In Romania, a pure holding company cannot be a member of a VAT group.

The legislation does not mention the case of pure holding companies. However, a pure holding would not be VAT registered, as it would not perform economic activities.

Sources

• EY Worldwide VAT, GST and Sales Tax Guide 2023
• Globallawexperts
• PwC Tax Summaries
• VAT Country guides on Romania

See also 

• EU VAT Directive 2006/112/EC explained: Art. 11 – VAT Grouping
• ECJ Cases on VAT Grouping (Art. 11)
• ECJ Cases – Focus on Supplies of services between Head Office and its Branch, whereby one of the parties is part of a VAT Group

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