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05.12.2018

Romania: General VAT compliance obligations and registration requirements

Aspects which should be avoided by Romanian companies registering for VAT purposes

Key Facts
  • VAT return code 300: including all transactions performed during the month.
  • VAT return code 390: including EU Intra-Community acquisitions and sales.
  • VAT return code 394: including the Romanian domestic transactions.
  • The VAT registration procedure is simplified for non-resident companies which intend to register for VAT purposes in Romania.
  • The Romanian tax authorities want to fight against VAT fraud through a rigid VAT registration procedure applicable to Romanian companies.
  • A VAT registration process is not straightforward, If a Romanian company does not have employees, has a foreign individual as administrator, has a minimum share capital and headquarters in the premises of a service provider.

Romanian VAT payers include local companies, as well as non-resident companies registered for VAT purposes in Romania, either directly, in the case of EU companies, or through a fiscal representative, in the case of non-EU companies (non-EU companies are obliged to register for VAT purposes through a fiscal representative).

A Romanian VAT payer will submit to the tax authorities the following VAT returns:

  • (i) VAT return code 300 including all transactions performed during the month, submitted by the 25th of the following month/quarter;
  • (ii) VAT return code 390 including EU Intra-Community acquisitions and sales, submitted by the 25th of the following month;
  • (iii) VAT return code 394 including the Romanian domestic transactions, submitted by the 25th of the following month/quarter. Depending on the volume of the transactions, Intrastat statistical reports can be submitted in respect of the goods exchanged with other EU Member States by the 15th of the following month.

The VAT registration procedure is simplified for non-resident companies which intend to register for VAT purposes in Romania, compared with local companies. Although both procedures require the provision to the tax authorities of documents justifying the intention to perform an economic activity in Romania, we consider it of interest to present the VAT registration procedure for local companies, as such procedure is burdensome or even arbitrary.

The Romanian tax authorities want to fight against VAT fraud through a rigid VAT registration procedure applicable to Romanian companies. Thus, the tax authorities analyze various topics, allocate negative points for each topic (the exact scoring is not public) and compute the overall scoring by adding 100 points to the sum of the allocated points. If the overall scoring is below 51 points (hence, the negative aspects prevail), the fiscal risk is high and the VAT registration is rejected.

Having considered the above, we present below some aspects which should be avoided by Romanian companies registering for VAT purposes (the below examples are not exhaustive).

  • A Romanian company should not have its headquarters within a lawyer’s office and the period of use of the headquarters should be more than one year. The company should perform its activity in its headquarters and/or working units.
  • The administrators/shareholders (with more than 25% of the shares) should not have committed fiscal offenses/crimes and they should not have been administrators/shareholders in other Romanian companies in the following cases: insolvent/bankrupt/ fiscally inactive/trade registry inactive/with annulled VAT registration/with overdue taxes.
  • The company should have employees other than the economic director/head accountant.
  • It is also interesting that the Romanian tax authorities consider it a negative aspect if at least one of the administrators is a non-Romanian tax resident individual and the company applying for the VAT registration has a share capital below RON 45,000.

Consequently, if a Romanian company does not have employees, has a foreign individual as administrator, has a minimum share capital and headquarters in the premises of a service provider, its VAT registration process is not straightforward, even if the new company has a serious business plan.

Fortunately, Romanian branches of foreign companies/EU companies registering directly for VAT purposes in Romania are not subject to the above VAT risk analysis.

Article published in WTS Global VAT Newsletter Q4/2018
Recent or expected changes in VAT and GST regulations and compliance duties in various EU and third countries
View publication
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