RomaniaManual

VAT in Romania

VAT Deduction limits in Romania

Input VAT is generally deductible as long as the goods or services are used for business purposes.

Unlike most EU countries, Romania only restricts VAT deduction on a few items. In general, input VAT incurred in the course of a business in hotel and other travel expenses, advertising, attendance to conferences, purchase of vans and trucks (vehicles with a maximum authorized mass exceeding 3,500 kg or more than 9 seats, including the driver's seat), are 100% deductible.

The following supplies are subject to special rules concerning input VAT deduction:

  • Input VAT from business gifts when the individual value is higher than RON 100 are not deductible.
  • Alcohol and tobacco, unless they are used as part of the business’ taxable transactions are not deductible. Art. 297 Romanian Fiscal Code.
  • The purchase of vehicles is limited to a deduction of 50%. However, for certain activities the 100% of input VAT deduction is allowed provided that the conditions can be certified:
    •  vehicles used exclusively for emergency services, security and protection services and courier services;
    •  vehicles used by sales and purchasing agents;
    •  vehicles used for the transport of paid persons, including taxi services;
    •  vehicles used for the provision of paid services, including for training by driving schools;
    •  vehicles used for rental or whose use is transferred under a financial or operational leasing contract;
    •  vehicles used as goods for commercial purposes.

A valid and fully compliant VAT invoice must be issued for each expense on which VAT is deducted.

The VAT deduction limits in Romania are regulated in Art. 297 and following of the Romanian Fiscal Code.

Statute of Limitations in Romania

The statute of limitations in Romania is five years.

The statute of limitations period determines the periods on which the tax authority can go back to review the information declared, and apply additional VAT assessments, penalties or interests. However, please consider that in case of fraud or fiscal evasion, the re-assessment from tax authorities may go back up to 10 years.

Also, the statute of limitations determines the period a taxpayer can voluntarily correct any errors on past submissions, and deduct input VAT.

You can find an overview of the statute of limitations in Europe under the following link.

Tax point rules in Romania

The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.

  • General rule: VAT becomes due when the goods are put at the customer’s disposal, or when the services are completed.  
  • Prepayments or advanced payments: the tax point is at the moment of receiving the prepayment or deposit.
  • Intra-Community transaction: Tax point occurs on the invoice date or the 15th day of the month following the month in which the invoice was issued, whichever occurs earlier.

Tax point rules in Romania are regulated in Arts. 280 and following Romanian Fiscal Code (Chapter VI).

 

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