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
