Business Guide to Romania* - Bayern - Europa

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Chapter 10 Indirect Taxation Value Added Tax ■ The standard VAT rate is 19% and the reduced VAT rate is 9% ■ VAT payment exoneration for import of equipment and certain raw materials (included in a list) ■ No physical payment for VAT reverse charge ■ Simplification measures for certain transactions ■ Only companies registered for VAT purposes in Romania are entitled to reclaim VAT ■ VAT reimbursement within 45 days Excise Tax ■ Tax warehouseas suspensive regime 10.1 Value Added Tax (VAT) Scope of VAT The operations included in the scope of VAT are those for which the following conditions are fulfilled: ■ They represent the supply of goods or services in return for a payment or an operation assimilated thereto; ■ The deemed place of supply is in Romania; ■ They are performed by taxable persons; ■ They result from economic activities. The import of goods is also within the scope of VAT. A taxable person is any person conducting economic activities anywhere in an independent manner, irrespective of the purpose or result of those activities. 46 PricewaterhouseCoopers - Business Guide to Romania 2005 Customs and International Trade ■ Romania has adopted the Harmonised System for the denomination and classification of goods (HS), which is a six-digit code nomenclature and detailed at eight-digit codes in line with the Combined Nomenclature applied by EU countries ■ Romania is an associate member of the EU, EFTA and CEFTA and has signed free trade agreements with Albania , Bosnia-Herzegovina, Israel, Macedonia, Moldova, Serbia and Montenegro and Turkey ■ A wide range of products can be imported or exported without an import/export license. Nonetheless, import licenses are required for commodities such as oil, certain chemical products, and weapons ■ Import of goods with preferential origin (i.e. EU) are not subject to customs duties Place of Supply The rules for establishing the place of supply for goods and services (and therefore the place of VAT taxation) are similar to those stipulated in the EU 6th VAT Directive. Taxable Regimes Standard rate The standard VAT rate is 19% and is applied to all supplies of goods and services, including imports, not qualifying for an exemption (with or without credit) or for VAT reduced rate. Reduced rate The reduced VAT rate is 9% and is applied to medicine for human and veterinarian use, books, newspapers and periodicals, accommodation in hotels or in areas with a
similar function, cinema tickets, admission fees at museums, historical monuments, zoos and botanical gardens, fairs and exhibitions, supply of school manuals, supply of prostheses and orthopaedic products. Exemption with credit There are also operations that are exempt with credit (deduction right) for input VAT: ■ export of goods, transport and related services; ■ goods sold through duty-free shops; ■ international transport of passengers; ■ certain operations performed in free trade zones and free harbours; ■ supply of goods to a bonded warehouse and related services; ■ services provided in connection with goods placed under customs suspensive regimes; ■ supply of goods and services under projects financed through grants, and supplies to diplomatic missions. Exemption without credit VAT exemption applies to a range of activities including banking, financial, insurance, lease of certain real estate properties. The exemption also applies for medical, veterinary, and social assistance and educational activities if provided by the licensed entities. Import VAT Import of goods Supply of foreign goods, which are placed under suspensive customs regimes, is an operation outside the scope of VAT. VAT on imported goods is due at the date of their customs clearance. In certain circumstances, the companies can benefit from VAT payment exoneration - see below. The taxable amount for VAT purposes for imported goods is the customs value, to which are added customs duties, customs commissions, excise duties (if applicable) and accessory expenses, such as commissions, packing, transport and insurance costs occurring subsequent to he entry of goods into Romania until their first destination. Services Services provided by offshore entities to Romanian companies with a deemed place of supply in Romania, are subject to Romanian VAT. A reverse charge mechanism applies if non-residents do not opt to appoint a fiscal representative. The VAT reverse charge should not be physically paid, but only shown in the VAT return as both input and output tax, provided that the beneficiary is registered as a VAT payer. The beneficiaries registered as VAT payers are also required to issue self-invoices for VAT purposes for the services subject to VAT reverse charge. Fiscal Representation Offshore entities can appoint a fiscal representative for VAT purposes in Romania if they provide services to Romanian entities with a deemed place of service supply in Romania, except for the services that have the place of supply at the beneficiary's headquarters (e.g. consultancy, marketing services). Once registered, output VAT charged on the goods and services supplied in Romania are accounted for through a monthly VAT return submitted by the fiscal representative. A foreign business can recover input VAT charged by the local suppliers in the monthly VAT returns. If the non-resident does not appoint a fiscal representative in Romania then the Romanian beneficiary has to apply VAT under the reverse charge mechanism. Non-residents are required to appoint a fiscal representative in Romania for any supply of goods in Romania. VAT Incentives The VAT payers can benefit from VAT payment exoneration in customs for the import of industrial machinery, technological equipment, installations, equipment, measurement and control devices, automations imported for investments, as well as farming machinery, means of transportation and certain raw materials (included in a list issued by the Ministry of Public Finance). VAT exoneration can be applied only based on a VAT exoneration certificate issued by the local tax authorities where the VAT payer is registered. Simplification Measures Chapter 10 - Indirect Taxation In the case of sale-purchase transaction with land, buildings or part of buildings, wasted materials, scrap iron and non-ferrous metals, and wood, between VAT payers, VAT is not actually paid. This VAT will only be shown by both the seller and the buyer in the VAT return and VAT ledgers as both output and input tax. PricewaterhouseCoopers - Business Guide to Romania 2005 47
Page 1 and 2: Business Guide to Romania* 2005 Edi
Page 3 and 4: Contents Chapter Page 1. Romania: a
Page 5 and 6: ■ Unions 30 6.2 Working Condition
Page 7 and 8: ■ VAT Compliance 48 10.2 Customs
Page 9 and 10: Chapter 1 Romania: a Profile ■ Ro
Page 11 and 12: upgrades made by Moody's and Fitch
Page 13 and 14: All visitors to Romania require pas
Page 15 and 16: nearly one-third of Romania's banki
Page 17 and 18: Mortgages are created under authent
Page 19 and 20: allowance of 20% of the value of th
Page 21 and 22: Chapter 4 Banking, Finance and Insu
Page 23 and 24: ■ Taking deposits; ■ Making loa
Page 25 and 26: tried to bring more transparency an
Page 27 and 28: Chapter 5 Corporate and Business La
Page 29 and 30: EUR 25,000 by 31 December 2005). Pa
Page 31 and 32: Chapter 6 Labour Relations and Soci
Page 33 and 34: employment contract with an occupat
Page 35 and 36: Chapter 7 Accounting and Audit Requ
Page 37 and 38: Chapter 8 Taxation of Corporations
Page 39 and 40: exempt from paying profit tax throu
Page 41 and 42: ■ Other salary and/or similar exp
Page 43 and 44: - revenues obtained from management
Page 45 and 46: Income Subject to 16% Flat Tax Rate
Page 47: ■ Income from sale of movable and
Page 51 and 52: guarantee import duties could be ob
Page 53 and 54: are transported between tax warehou
Page 55 and 56: also stipulates the elements that s
Page 57 and 58: elationships with key contacts, inc
Page 59: Appendices
Page 62 and 63: Appendix II Appendix II Major Banks
Page 64 and 65: Appendix III Restaurants Phone ■
Page 66 and 67: Appendix IV 481- 482 Internal Settl
Page 68 and 69: Appendix VI Appendix VI Accountants
Page 70 and 71: Appendix VII (b) Appendix VII (b) W
Page 72 and 73: Appendix IX Appendix IX Customs Dut
Page 74: Appendix XI Appendix XI Excise Tax

Business Guide to Romania* - Bayern - Europa

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