Country Guide - VAT in Romania

VAT in Romania - Three Types of Rates

There are three types of VAT rates in Romania:

1. Standard VAT rate,

2. Reduced VAT rates,

3. Zero VAT rate.

How Much is VAT in Romania’s Regions?

Romania is one of the EU Member States without special VAT rates, and there are no particular regions with different Romania VAT rate.

VAT Registration Threshold

The VAT Romania Law, official guidelines, and comments from the competent government bodies contain valuable information about the VAT threshold in Romania and its applicable provisions. 

Resident and non-resident businesses with a permanent establishment in Romania must register for VAT once they exceed the registration threshold of RON 300,000. There is no specific registration threshold for non-resident businesses without a permanent establishment.

The EU VAT Directive introduced the same VAT registration threshold of EUR 10,000 on the EU level for intra-community distance sales of goods and B2C supplies of services, which Romania, as an EU Member States, adopted and implemented. However, no registration threshold is provided for non-EU established suppliers of Electronically Supplied Services.

Types of Taxable Activities in Romania

Any individual or business that independently carries out one or more economic activities, considered taxable under VAT Romania law, is treated as a taxable person.

These economic activities considered taxable are the supply of goods or services in Romania for compensation, the reception of reverse-charge services, the exportation of goods, and the importation of goods.

VAT Registration Process

The registration process for VAT purposes in Romania differs for domestic and foreign EU and non-EU businesses.

Romania VAT Registration for Domestic Businesses

Domestic businesses and individuals, commonly referred to as taxable persons, involved in taxable activities must register for VAT once they exceed Romania's VAT registration threshold of RON 300,000. Domestic taxable persons below this threshold do not need to register but can do so if they want to.

Taxable persons exceeding the registration threshold must submit Form 098 within ten days from the end of the month they reached or exceeded this threshold. With Form 098, local businesses must submit the Trade Register Extract, legalized copies of the directors' ID documents, and other relevant documents.

Romania VAT Registration for Foreign Businesses 

All foreign businesses must register for VAT in Romania if they are engaged in taxable activities, more precisely, before commencing any taxable activity.

Businesses established in another EU Member State do not need to appoint a tax representative to complete the VAT registration process in Romania. Conversely, non-EU companies must appoint a tax representative established in Romania who is also liable for the foreign company's tax-related matters.

Besides this, the documents needed for EU businesses differ slightly from those that non-EU businesses must submit, which include the expected annual sales and revenues.

VAT Returns in Romania

The filing frequency for VAT returns in Romania depends on the annual turnover generated by the VAT-registered persons. In addition to this criterion, another one is important for determining how often VAT returns must be submitted. The second criterion is whether the Intra-Community acquisitions of goods were performed during the previous year.

VAT-registered persons involved in the Intra-Community acquisitions of goods or with annual turnover above EUR 100,000 must submit monthly VAT returns. Those not engaged in such activities or with annual turnover below EUR 100,000 may submit quarterly VAT returns.

Penalties for Failure to File Tax Return

The penalty for failing to file a tax return depends on several factors, such as how often the offense was repeated and whether it was corrected on the offender's initiative or only after receiving a notification from the Tax Authority, as well as on the number of days that have passed since the filing deadline. Once all factors are considered, the penalty can vary from RON 1,000 to RON 5,000. 

Additional penalties between RON 500 and RON 5,000 are defined for non-compliance with deadlines and rules regarding tax registration or cancellation of tax registration.

VAT Rules for Electronically Supplied Services 

Following the harmonized VAT rules at the EU level, Romania implemented the most important rules from the EU VAT Directive into its national legislation. Rules on Electronically Supplied Services (ESS) are also part of the new EU-wide VAT rules and, as such, are also incorporated into Romanian VAR law.

Taxability Rules for ESS:

The EU-wide rules are precise regarding the B2B supply of ESS, B2C supply of ESS, and VAT for distance sales of goods and B2C ESS.

For the B2B supply of ESS, general rules for the place of supply are applied. For the B2C supply of ESS provided by foreign taxable persons, the VAT rate of the consumer's country of residence is applicable.

For VAT on distance sales of goods and B2C ESS, the rules are different for taxable persons below the EU-harmonized threshold of EUR 10,000 and those above this threshold. Taxable persons below the threshold may apply their countries' VAT rates or voluntarily register for OSS and comply with those rules. Taxable persons above the threshold must apply the VAT rate applicable to the consumer's home country, e.g., VAT rate Romania.

How much is VAT in Romania on ESS?

The Romania VAT rate for ESS is 19%.

E-Commerce Rules

Since 2021, the European Union has introduced new rules for e-commerce regulating cross-border sales of goods valued up to EUR 150 from non-EU countries, imposing the deemed suppliers' rules for online platforms, and further expanding the scope of the previously established Mini One Stop Shop (MOSS) to the current One Stop Shop (OSS) system.

In this process of additional regulation of the e-commerce industry in the EU, a third scheme was added to two established with the MOSS so that the current OSS counts three schemes:

• Union Scheme,

• Non-Union Scheme,

• Import Scheme.

VAT EU Reporting

In Romania, taxable persons must submit both EC Sales List (ESL) and Intrastat reports under different conditions.

EC Sales List

Every taxable person providing goods or services to another EU-based business must submit a monthly ESL within 25 days after the end of the previous period. 

Unlike some other EU countries, Romania has no specific threshold for ESL reporting. However, like some other EU countries, a nil ESL return is not required when taxable persons are not engaged in intra-EU transactions.

Romanian Tax Authority may impose a fine similar to late VAT return filing between RON 1,000 and RON 5,000 on taxable persons who do not file ESL on time.

Intrastat 

Intrastat must be reported monthly if the company's annual turnover exceeds the thresholds for arrivals and dispatches, both set at RON 1,000,000. It must be reported starting the first month after exceeding the threshold. 

The deadline for Intrastat is the 15th of the month following the end of the period, which differs from that for VAT returns and ESL filing.

Digital Reporting

Local Businesses

In Romania, there are two types of digital reporting that local businesses must comply with:

1. E-invoicing,

2. Standard Audit File for Tax (SAF-T).

E-invoicing

In 2021, Romania launched the RO e-Invoicing platform (RO e-Factura) for exchanging e-invoices for B2G and B2B transactions. Initially, e-invoicing was mandatory only for B2G transactions, and then, from 2022 to 2024, the Romanian government introduced e-invoicing rules in several phases for B2B transactions.

All invoices related to B2G or B2B transactions must be sent to the RO e-Factura system within five calendar days from the invoice date.

From July 1, 2024, all businesses may voluntarily send invoices related to B2C transactions to the RO-e Factura system. However, it will be mandatory starting in 2025.

Standard Audit File for Tax (SAF-T)

In 2022, the National Tax Authority of Romania (ANAF) issued an official Order to implement the SAF-T system in several phases from 2022 until January 1, 2025. The first taxpayers to fall under the scope of SAF-T were large taxpayers in 2022, followed by medium taxpayers in 2023. From 2025, small taxpayers will be subject to SAF-T requirements. Also, starting in 2025, all newly registered taxpayers must comply with SAF-T rules. 

There are three types of SAF-T declaration, known as form 406: Declaration 406, submitted monthly; Declaration 406 for Fixed Assets, submitted yearly; and Declaration 406  for Inventory, submitted upon the request of the Tax Authority.

Non-Resident Businesses

Non-resident businesses registered for VAT in Romania must follow the same rules and meet the exact requirements regarding e-invoicing and SAF-T as local businesses do.