The company formation in Romania doesn’t automatically trigger the VAT registration of the SRL. This means that the right to deduct or to collect VAT, to do intracommunity transactions doesn’t exits from immediately after the company was released from the Trade Register. Therefore, one of the possibilities will be the EU VAT identification number.
Below we will explain what must be done, to be able to render services to companies from EU, to acquire services from other countries than Romania and to acquire goods from other European Union countries.
Provision of services to another European Union company based on EU VAT number
First step would be for our team to obtain after registration the EU VAT number Romania, which is a special registration according to article 317 para. (1) lit. c) of the Romanian Fiscal Code
The EU VAT number Romania registration is a special one, completely separated of the VAT entrepreneur (VAT number Romania) one, which happens at the Fiscal Administration. This will generate an additional number then the ‘CUI’ – Unique Registration Number of the company from the Trade Register.
This EU VAT number Romania will be valid on https://ec.europa.eu/taxation_customs/vies/ and must be highlighted on all the services invoices which will be issued to your European business partners. Based on this EU VAT identification number your company can have commercial contracts for any type of services with another EU registered company.
Monthly we will have to declare these invoices in the intracommunity declaration, which in Romania is know as 390, while in other countries may be know as Intrastate form.
Some key steps to remember about the EU VAT number Romania:
- Only in the case of provision of services this VIES number will not trigger additional charges in Romania; acquisition of goods and services, we will detail its at the next points. Please be aware that if you use the VIES registration for acquisitions the points 2 or 3 must be respected
- Until reaching 300.000 RON threshold for total incomes, which will trigger the company to became mandatory a VAT entrepreneur, this number will be used for billing and not the Trade Register one (for EU customers)
- For non-EU or Romanian customers, the ‘CUI’ (Trade Register) number will be the one used for billing and maintained on all the invoices
Intracommunity acquisitions of services based on EU VAT number Romania
For intra-community acquisitions, the company must be registered for VAT purposes (VAT number Romania), according to the provisions of art. 317 para. (1) lit. c) of the Romanian Fiscal Code (same provision as for point 1).
Because the company is not registered for VAT purposes (please see the VAT registration section), according to art. 316 of the Romanian Fiscal Code, the acquisition of services from EU, will trigger the following fiscal obligations:
- to tax the service received from EU company, in Romania;
- to pay to the state budget the amount of VAT resulting from the application of the 19% VAT rate on the tax base calculated according to point ‘i’, until the 25th of the month following the issuance of the invoice by the EU supplier;
- to report the operation using the special VAT registration code (see point 1), through the form code 390 VIES called “Recapitulative statement regarding intra-community supplies / acquisitions / services”
- to report the service purchased through the VAT return code 301 “Special value added tax return”. The reporting must be filled, until the 25th of the month following the issuance of the invoice by the EU supplier. Also, until this term, the VAT payment will be made to the state budget. The VAT code used, in this case, all the registration code for special purpose VAT according to art. 317 of the Fiscal Code.
So, as we can see in the steps above, even if the company has the EU VAT number Romania, mentioned at point 1, which will trigger the company to be valid via VIES site, that doesn’t mean that the services acquisition will be exempt from VAT.
This is happening because the SRL Romania company is not registered as VAT entrepreneur and therefore the reverse charge mechanism cannot be applied. So, the transaction cannot be treated as an intracommunity one, and VAT must be declared and paid in Romania even if your company is not a VAT payer.
Intracommunity acquisitions of goods based on EU VAT number Romania
The acquisition of goods from an EU supplier will follow all the steps describes above for the services, after the threshold of 10.000 euro is exceeded.
Important aspects to consider about the threshold:
- the threshold of 10,000 euros is calculated according to the NBR exchange rate from the date of Romania’s integration to the EU, so that will be RON 34,000
- if the threshold of 10,000 euro is exceeded then, the company is obliged to register for special VAT purposes and to pay VAT in Romania (see point 1 and 2)
- the EU VAT identification number Romania will have to be done before the supplier, from which the goods are purchased, will issue the invoice, practically before the threshold of 10,000 euros is exceeded
- the threshold for intra-Community acquisitions consists of the total (net) value, excluding VAT, due or paid in the Member State from which the goods are dispatched or transported
Therefore, in short, the intracommunity acquisition of goods can be done without the EU VAT identification number Romania and any other declarations, with paying regular VAT in the origin country, up to 10.000 euro.