European and International Taxation EU Tax Harmonization – VAT in Member States The case of Romania Jean Monnet Module: Managing the EU: Taxation, Economics and Governance Cluj-Napoca

Is VAT payable in Romania? European and International Taxation Is VAT payable in Romania? 5 Essential questions: Taxable person Operation is taxable Place of the operation Exemption Person that has to pay the VAT

European and International Taxation •YES •Romania? •NO •NO •LIABLE PERSSON •Exemption? VAT SUPPLYER VAT CLIENT VAT IMPORTER VAT fiscal reprezentative NO VAT DUE IN ROMANIA •NO VAT IN ROMANIA

Taxable person => art. 269 Fiscal Code European and International Taxation Taxable person => art. 269 Fiscal Code any person that undergoes In an independent matter No matter the place Economic activities as forseen in art. 269(2) of the fiscal code Whatever the purpose and the outcome of this activity.

Taxable operations Supply of goods or services in cash European and International Taxation Taxable operations Supply of goods or services in cash Place of supply => Romania Undertaken by a taxable person Has to be generated from an economic activity

European and International Taxation Place of the operation Supply of goods with transportation => Place where the goods are located at the beginning includes intra-community acquisitions Supply of goods without transportation: the place where the goods are available to the client Supply of goods with installation / assembly => the place where these are installed Intra-community purchases => Place => the member state where the transport ends! Import of goods => Place => where the goods enter the community

European and International Taxation Import VAT procedures Obligations in cases goods are supplied or transferred to another MS: Conditions for the exemption are set by the MS (art 131 of VAT directive), Different obligations, control mechanisms in place, - VAT declaration, - VAT identification / possible tax representative, - Recapitulative statement (VIES)…

European and International Taxation Servicii legate de bunurile imobile •Servicii de restaurant si catering •Art. 271 CF •B2B • Locul unde beneficiarul isi are stabilit •sediul activitatii economice, •exceptand: •Activitati culturale, artistice, sportive, stiintifice, educationale, de divertisment precum si alte activitati similare Servicii de intermediere •Inchiriere de mijloace de transport pe termen scurt (Rent a car) •Servicii intangibile •Reguli speciale - Use and enjoyment •B2C Locul unde prestatorul isi are stabilit • •sediul activitatii sau un sediu fix de la care •sunt prestate serviciile •exceptand: •Servicii de transport intra-comunitar •Activitati auxiliare serviciilor de transport precum si lucrarile asupra bunurilor mobile corporale •:

Supply of services B2B B2C Where the beneficiary has its HQ or a PE European and International Taxation Supply of services B2B B2C Where the beneficiary has its HQ or a PE Where the supplier has his HQ or a PE from where the activities are carried out

Supply of services - exemptions European and International Taxation Supply of services - exemptions B2B / B2C B2C In case of services related to imovable goods Services related to cultural/sports/education/scientific activities Local transport of people Restaurant and catering Rent a car (short term lease of vehicles) Beneficiary is outside the EU: Services related to transport, evaluations and works on movable goods => taxable in Ro if these are done in Ro Mediation services Intra-community transport Beneficiary is outside the EU: Leasing / renting transport vehicles

Case studies: Case studies: •Romanian client is a taxable person European and International Taxation Case studies: Case studies: •Hungary •Supplier in HUN •Processed goods • Processed return to Romania •Romania •Romanian client is a taxable person •Raw materials

2. Operation in the scope of VAT? 3. Place of the operation? European and International Taxation Operation handled by a taxable person? 2. Operation in the scope of VAT? 3. Place of the operation? 4. Exemption? 5. Who is liable to pay VAT? Yes Yes (processing of raw materials) Romania (art. 271, alin. (2), CF) NO Romanian client

Other examples European and International Taxation Company A from Romania purchases goods from company B from Germany. According to the contract, the goods are transported from Germany in Hungary at the company C, C being one of A major clients. Company A from Romania, signs a contract for the sell of goods with company B from Hungary. On behalf of B, company A delivers the goods from Romania in the Ukraine to C, C being one of B’s distributor on the Ukraine market. Company A from Romania signs a contract with B from Portugal. Company A has to issue a report on the tax regime of real estate in Romania. Company A from Romania signs a contract with B from Germany. Company A has to issue a report related to a building which B wants to purchase. Company A from Romania signs a contract with B from Switzerland. Company A has to transport equipment from Constanta to Cluj to company C, C being one of B’s clients.