What are the legal requirements and documents necessary to apply the self billing procedure?
The Romanian VAT legislation allows the buyer to issue the invoice on behalf of the seller, and sets the following conditions for the self-billing mechanism to be implemented:
- an agreement mentioning the billing procedure should be concluded between the parties;
- a written procedure in respect of the acceptance of the self-bill should be implemented;
- the customer must be established within the EU and registered for VAT purposes in Romania, based on the normal VAT registration procedure;
- both the supplier (if registered for VAT purposes in Romania, based on the normal VAT registration procedure) and the customer have to notify, through an official letter, the relevant tax authorities of their intention to implement the self-billing procedure, at least one calendar month before initiating such procedure. The agreement for implementing the self-billing procedure and also the written procedure for the acceptance of self-billing should also be attached;
- the invoices should be issued by the customer on behalf of the supplier, and sent to the latter;
- the invoice should comply with the minimum requirements stipulated by the VAT regulations;
- the invoice should be recorded by the supplier, if registered for VAT purposes in Romania based on the normal VAT registration procedure, in a special ledger.
As per the Romanian VAT legislation, a Company can issue the invoices in any language of the EU Member States (e.g. English). However, in the event of a tax inspection the Romanian tax authorities are entitled to request the invoices translated in Romanian. Therefore it is recommended (if feasible) to issue bilingual invoices (i.e. invoices bearing both Romanian and English).
What types of revenues are exempt from VAT
Under Romanian VAT legislation, a transaction may be subject to Romanian VAT or outside the scope of Romanian VAT. Thus, for those operations which are subject to VAT in Romania, the following situation may apply:
- taxable under the standard VAT rate (e.g. 19%, the majority of the operations);
- taxable under the reduced VAT rate (e.g. 9%, supply of human blood, books, mother milk, etc);
- taxable under the special reduced VAT rate (e.g. 5%, supply of social buildings);
- exempt with deduction right, i.e. no VAT is charged, but input VAT deduction is allowed (e.g. export of goods, intra-community delivery of goods etc.);
- exempt without deduction right, i.e. no VAT is charged and no input VAT deduction is allowed (e.g. financial services, insurance services, rental services, supply of non-building land and old buildings, etc.). Please note that for rental services, as well as for the supply of old buildings and non-bulding land, the Company can opt for the taxation regime;
- outside the scope of Romanian VAT, i.e. intangible services which are not connected to immovable properties located in Romania (e.g.: consultancy services, legal services, marketing services, etc).
