VAT registration for supply of electronic services

Article written by Florin Gherghel, Tax Manager Ensight Finance

Romania has implemented the EU provisions regarding electronically supplied services, namely services delivered over the internet or via an electronic network and rendered in an essentially automated fashion involving minimal human intervention.

As a general rule, in the case of electronically supplied services by EU companies to Romanian non-taxable persons (e.g. individuals), the place of supply is the place where the customer is established and the supplier could be required to register for VAT in Romania.

Nevertheless, the services will be considered rendered from the country where the supplier is established (no VAT registration is required in Romania), if the following conditions are fulfilled cumulatively:

  • the supplier is established in a single EU member state;
  • the services are rendered to non-taxable persons established in any other EU member state, except the state of the supplier;
  • the total value of the rendered services, without VAT, does not exceed EUR 10,000 (RON 46,337) in the calendar year and did not exceed EUR 10,000 in the previous calendar year either.

If the value of the supplied services exceeds the EUR 10,000 threshold, the place of supply of these services will become the country where the customer is established from the moment the threshold is exceeded, and the supplier could be required to register for VAT in Romania.

Irrespective of the above, if the EU supplier is registered as a supplier of electronically supplied services in its country, the EU supplier is no longer required to register for VAT purposes in Romania for the supply of such services to Romanian non-taxable persons.

Supply of e-books – VAT implications

The supply of the digitalised content of books is considered an electronically supplied service and, consequently, such supply represents a service and not a delivery of goods from a Romanian point of view.

Consequently, the reduced VAT rate of 5% (applicable in general to the supply of books) is not applicable and, therefore, the regular 19% VAT rate is applicable to the supply of e-books by Romanian suppliers to Romanian entities.

Online communication with tax authorities

Almost all tax returns (submitted monthly / quarterly / yearly) must be submitted online, and an electronic signature must be obtained for this.

A company can also have access to its private virtual space in order to check the status of submitted tax returns and paid taxes. Thus a company can obtain online certificates attesting that it does not have outstanding tax liabilities (such certificates are useful, for example, when a company takes part in a bidding process).

Financial statements can also be submitted online using the same electronic signature.

Besides the online submission of tax returns, official communication with the tax authorities can only be performed by submitting various requests directly to the registration office of the tax authorities or by post.

The tax authorities do not have access to the accounting systems of the companies or to the invoices issued by the companies.

The article is part of the WTS CEE Tax Bridge #2/2019 edition, which can be read here: https://wtsklient.hu/wp-content/uploads/2019/10/wts-cee-tax-bridge-201902.pdf