|VAT Rate on Digital Services||VAT on Cross-Border Electronically Supplied Services||Digital Reporting Requirements for Foreign Sellers Providing Electronically Supplied Services|
VAT on Cross-Border Digital Services in Romania
Digital Services in the European Union(EU) are often referred to as electronically supplied services (ESS). Romania applies the harmonized EU VAT rules for ESS.
- For B2B supplies of such services, the general place of supply rule for services has to be taken into consideration.
- For B2C supplies, the EU ESS rules should apply to foreign companies selling to Romanian consumers (B2C).
Under the EU’s B2C ESS rules, until the sales value reaches EUR 10,000 (including distance sales of goods), the seller can charge VAT where it is resident. Once the sales exceed the threshold, the seller should register for VAT in Romania, or it can choose to account for the VAT under the EU’s One Stop Shop (OSS) regime.
VAT Rate: 19% VAT rate is typically applied to the sale of affected electronically supplied services (ESS).
Electronically Supplied Services (ESS) in Scope
Electronically supplied services include services that are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.
The following are examples of electronically supplied services:
- Website supply, web-hosting, distance maintenance of programs and equipment
- Supply of software and updating thereof
- Supply of images, text, and information and making available databases
- Supply of music, films, and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific, and entertainment broadcasts and events
- Supply of distance teaching
Communication via email between the service provider and its customer does not qualify as ESS.
Determining the Location of the Romanian Consumer
If a service provider provides electronically supplied services to a non-taxable person (B2C), the place of supply is where:
- The customer is established or,
- In the absence of an establishment, at the place where he has his permanent domicile or habitual residence.
If the service provider provides electronically supplied services:
- through a landline connection, the recipient is considered to be at the landline location;
- via mobile networks, the country code of the SIM card determines the location;
- for which the use of a decoder or similar device or a satellite card is required and for which a landline connection is not used, it is assumed that the place of supply is where the said decoder or similar device is located or if that place is not known, where the satellite card is sent for use;
- in other cases, it is assumed that the place of supply is in the place identified as such by the provider by means of two non-contradictory elements of evidence.
If a service provider provides telecommunications services, broadcasting or television services, or electronically supplied services in a place such as a telephone booth, a wireless internet access point (wi-fi hot spot), an internet café, a restaurant, or the lobby of a hotel, and the customer receives such service physically at the place, it is assumed that the place of supply is in that place.
VAT Registration for Foreign Companies
Foreign companies should apply to register for VAT with the local tax authorities when the applicable thresholds are breached. Applications are processed by the local tax authorities. Foreign companies can avoid VAT registration in Romania by using OSS after exceeding the registration threshold. The OSS simplifies the declaration of B2C sales of goods and services in the EU. It allows businesses to register electronically in one Member State and file a single VAT return for all eligible sales of goods and services across all Member States where the taxpayer has an obligation to report and remit.
- VAT registration threshold for intra-EU distance selling of goods and B2C telecommunications, broadcasting & electronic services (TBE): EUR 10,000 (net) per calendar year
- VAT registration threshold for non-resident, non-EU based suppliers of electronically supplied services (ESS): No registration threshold
- Fiscal representatives: Mandatory only for non-EU established businesses
- Foreign companies can avoid VAT registration in Romania by using the EU OSS.
VAT Returns and payment of taxes
VAT returns for non-residents
If registered, businesses should collect and remit taxes to the Romanian Tax Authority using Form 300 (VAT Return Form).
Romania does not provide simplified returns for non-resident companies. Instead, they can use the EU OSS return to remit taxes via another EU Member State and avoid VAT registration in Romania.
|VAT Return Name||OSS|
|Filing Deadline||Q1: 30 April, Q2: 31 July, Q3: 31 October, Q4: 31 January|
|Payment Deadline||Same as the filing deadline|
|Payment Currency||Euro in general. However, Member States who have not adopted the euro may require payment in their national currencies.|
|Language||Romanian or English|
|Fiscal Representative||Non-EU established businesses may be required to appoint a fiscal representative|
|Input Tax Recovery||Not allowed in the OSS return. VAT should be deducted via the domestic VAT returns or by way of using the special scheme for foreign VAT recovery.|
|Record Storage||10 years; location can be chosen by the taxpayer|
Digital Reporting Requirements for Cross-Border Digital Services
There are currently no digital reporting requirements for sales of cross-border digital services in Romania.