VAT registration for supply of electronic services

Article written by Florin Gherghel, Tax Manager Ensight Finance

Romania has implemented the EU provisions regardingelectronically supplied services, namely services delivered over the internetor via an electronic network and rendered in an essentially automated fashion involvingminimal human intervention.

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

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

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

If the value of the supplied services exceeds the EUR10,000 threshold, the place of supply of these services will become thecountry 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 registeredas a supplier of electronically supplied services in its country, the EUsupplier is no longer required to register for VAT purposes in Romania for thesupply of such services to Romanian non-taxable persons.

Supplyof e-books – VAT implications

The supply of the digitalised content of books isconsidered an electronically supplied service and, consequently, such supplyrepresents 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 byRomanian suppliers to Romanian entities.

Onlinecommunication with tax authorities

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

A company can also have access to its private virtualspace in order to check the status of submitted tax returns and paid taxes.Thus a company can obtain online certificates attesting that it does nothave 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 usingthe same electronic signature.

Besides the online submission of tax returns, officialcommunication with the tax authorities can only be performed by submittingvarious requests directly to the registration office of the tax authorities or bypost.

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

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