Reverse Charge in Romania

Reverse charge for non-established companies in Romania

According to art 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses. Romania has introduced this reverse charge on supplies of goods and services located in Romania.

Where a non-established supplier supplies goods or provides services located in Romania to a taxable person VAT-registered in Romania, the domestic reverse charge applies.

  • Supplier requirements
    Not established and not VAT registered in Romania.
  • Customer requirements
    Taxable person VAT registered in Romania.
  • Scope
    Supplies of goods and services located in Romania.

The domestic reverse charge on services is rather exceptional as it would only apply where the B2B rule on services does not apply. This is, for example, the case for supplies of services connected to immovable property.

The reverse charge on supplies made by non-established companies is regulated in Art. 307.2, 3 Romania Fiscal Code.

Reverse charge in B2B services

Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located.

According to the general B2B rule, any business resident outside Romania supplying services to a Romanian based customer will not charge any VAT and the transaction will be reverse charged by the customer.

There are however a number of exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in Romania provided the following conditions are met:

  • Services connected to immoveable property are located where the property is located.
  • Passenger transport services will be located where the transport takes places (apportioned if necessary).
  • Catering services are located where the catering takes place.
  • Short term leasing of means of transport are located where the vehicle put at the disposal of the customer.
  • Access to conferences, fairs and exhibitions is located where the event takes place.

The general rule may also be deviated where the supplier has a permanent establishment in the country of the customer and the PE has intervened in the supply.

Find out more about the rules for B2B services in the EU here.

Reverse charge on specific goods and services in Romania

Domestic reverse charge may also apply on the certain domestic supplies of goods and services. This reverse charge applies only when both the supplier and the customer are VAT registered in Romania:

  • Ferrous and non-ferrous waste and scrap materials.
  • Raw wood and other wood materials.
  • Transfer of emission rights for greenhouse gas.
  • Supplies of cereals and technical plants, including oilseeds and sugar beet.
  • Construction and supplies of immovable property.
  • Supply of electricity and natural gas to a taxable person established in Romania, under specific conditions.
  • Also, temporarily, the supplies of mobile phones, integrated circuits and games consoles, PC tablets and laptops.
  • Deliveries of investment gold when opted to tax.

The reverse charge on supplies made by non-established companies is regulated in Art. 331 Romania Fiscal Code.

 

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