You may find below the most notable VAT topics in the first half of 2020 in Romania:
1. Postponement of payments of fiscal obligations (including VAT) until 25th October. Extension of VAT refund with subsequent control until 25th October.
For all the fiscal obligations due starting from 21st March and not paid until 25th October 2020:
• There will be no late payment penalties computed.
• These will not be regarded as outstanding liabilities, thus that they cannot be subject to enforcement
Also, the procedure of VAT refund with subsequent control is extended until 25th October.
2. Changes in VAT exemption instructions
Order no. 2148/2020 released on 17 July 2020 concerns guidance for accessing the exemptions from VAT for:
– Export of goods and the supply of services related to exportation
– Intra-Community supplies of goods
The above-mentioned Order (which brings updates to Order 103/2016) chiefly aligns the Romanian instructions for VAT exemptions with the (1) EU Quick Fixes on VAT (Directives and Regulations already in force) and with (2) the recent case law of the Court of Justice of European Union (“ECJ”) on VAT exemptions for exports and services related to exports:
• The Romanian legislator established the documents required in order to prove that the transport of goods (related to an intra-EU supply of goods) took place. Also, the Order mentions some examples of situations which do not fall within the presumption provided by article 45a of Regulation 282/2011 (e.g. lack of proof of that the carrier and the customer are not related parties), case in which the transport of goods from Romania to another Member State is justified according to the provisions of this Order.
• The Order clarifies the application of VAT exemptions in the case of services related to the export of goods (pursuant to ECJ decision in case C-288/16 LC). Thus, the VAT exemption for services directly connected with the export of goods (such as transport services) does not apply to a supply of services relating to an exportation of goods where those services are not provided (invoiced) directly to the consignor or the consignee of those goods (e.g. where the transport is invoiced by the carrier to a shipping house and the latter invoices the consignor, only the shipping house is deemed as carrying out services directly linked to exportation).
• In addition, clarifications are provided on the justification for the VAT exemption (for export of goods) applicable to suppliers which do not / cannot have the status of exporter for customs purposes (the supplier is not designated as exporter for customs purposes – he was not mentioned at box 2 of the export customs declaration). As long as the substance conditions for accessing the VAT exemption for export of goods are met, the exporter (for VAT purposes) claiming the VAT exemption should be mentioned at box 44 of the export customs declaration (if it is not mentioned at box 2).
3. Temporary VAT exemption for protective masks and medical ventilators used for setting up the rescEU reserve
Until 1 October 2020, the following operations with protective masks and medical ventilators are VAT exempt with right to deduct input VAT:
1. Deliveries made to public institutions responsible for setting up the rescEU reserve
2. Import and intra-Community acquisitions made by public institutions responsible for setting up the rescEU reserve
4. ECJ case C-430/19 – Right to deduct VAT cannot be refused if other evidence than the invoice is missing
On 4 June 2020, the ECJ gave its judgment in the Romanian case C‑430/19 CF SRL. The case deals with the question if tax authorities can refuse the deduction of input VAT due to an allegedly inadequate behavior of its suppliers. Also, the taxpayer did not have any underlying documents other than the invoices received from the suppliers.
Main conclusions:
In order to deduct the VAT:
• if the only evidence confirming the actual nature of the transaction is an invoice and
• the suspicions of the tax authorities are unsubstantiated
• the company remains the right to deduct VAT;
As a general rule, the buyer is not bound to assess whether the supplier has the goods and means to supply them.
5. Adjustments of VAT in case of bankrupt debtors
The ECJ published this year the decision in case C-149/19 SCT regarding the interpretation of Article 90 of the VAT Directive. This article concerns the reduction of the VAT paid by the creditor to the tax authority in case the receivable remained unpaid.
The request for preliminary ruling did not come from Romania (but from Slovenia), yet, the implications thereof are interesting due to Romanian authorities’ practice with regard to bankruptcy VAT adjustments.
The most notable outcome is that the ECJ ruled that Article 90 cannot be interpreted as preventing VAT correction in case the receivable had not been registered in the insolvency proceedings.
Previous newsletters regarding the above topics:
Postponement of payments of fiscal obligations until 25th October. Extension of VAT refund with subsequent control until 25th October
Changes in VAT exemption instructions
Temporary VAT exemption for protective masks and medical ventilators used for setting up the rescEU reserve
ECJ case C-430/19 – Right to deduct VAT cannot be refused if other evidence than the invoice is missing
Adjustments of VAT in case of bankrupt debtors
Contribution by Madalin Ispas – Soter&Partners
