VAT exemption – new provisions

Order 2148/2020: Modification and completion of the instructions for applying the VAT exemption

On 17.07.2020 it was published in the Official Gazette no. 628 Order no. 2148/2020 on amending and supplementing the Instructions for applying the value added tax exemption for the operations provided in art. 294 para. (1) lit. a) -i), art. 294 para. (2) and art. 296 of Law no. 227/2015 on the Fiscal Code, approved by Order of the Minister of Public Finance no. 103/2016.

Specifically, the Order aligns the Romanian VAT legislation both with the European Regulations and Directives already in force at the date of publication of this Order, and with the jurisprudence of the Court of Justice of the European Union (hereinafter “CJEU”) of various recent cases.

Pursuant to the provisions of art. 10 para. (4) of the Government Decision no. 34/2009 regarding the organization and functioning of the Ministry of Public Finance, with the subsequent modifications and completions, and of the provisions of art. 5 para. (4) of Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions, based on the provisions of art. 294 para. (1) lit. a) -i), art. 294 para. (2) and (3) and art. 296 of Law no. 227/2015 on the Fiscal Code, with subsequent amendments and completions,

Art. I. –

The instructions for applying the value added tax exemption for the operations provided in art. 294 para. (1) lit. a) -i), art. 294 para. (2) and art. 296 of Law no. 227/2015 on the Fiscal Code, approved by Order of the Minister of Public Finance no. 103/2016, published in the Official Gazette of Romania, Part I, no. 106 of February 11, 2016, with subsequent amendments, is amended and supplemented as follows:

1. In Article 1 (3), letter f) is amended and will have the following content:

“f) exporter within the meaning of VAT, hereinafter referred to as exporter, is considered the supplier mentioned in letter d), who makes the deliveries referred to in letter e), as well as the person transporting goods outside the European Union, in the absence of a commercial transaction. ”

1. In Article 1 (3), letter f) is amended and will have the following content:

“f) exporter within the meaning of VAT, hereinafter referred to as exporter, is considered the supplier mentioned in letter d), who makes the deliveries referred to in letter e), as well as the person transporting goods outside the European Union, in the absence of a commercial transaction. ”

2. In Article 1, paragraph 4 is amended and will have the following content:

“(4) The presentation of the documents for the justification of the tax exemption shall be made within maximum 150 calendar days from the date on which the tax generating event for the operation in question occurred.”

3. In Article 2, paragraph 2 is amended and will read as follows:

“(2) The tax exemption provided in art. 294 paragraph (1) letter a) of the Fiscal Code shall be justified by the exporter with the following documents:

a) the invoice, which must contain the information provided in art. 319 para. (20) of the Fiscal Code;

b) one of the following documents:

1. the certification of the conclusion of the export operation by the customs office of export or, as the case may be, the export notification certified by the customs office of export, in the case of the electronic customs declaration of export; or
2. copy 3 of the single administrative document, used as a paper-based export declaration, certified on the reverse by the customs office of exit; or
3. in the case of excisable products moved under excise duty suspension using EMCS, the export report submitted to the consignor certifying that the excisable products have left EU territory. “
4. In Article 2, after paragraph 2, three new paragraphs, paragraphs 3 to 5, are inserted, with the following wording:

“(3) If the supplier is not established in the European Union and cannot be an exporter from a customs point of view, in order to justify the VAT exemption it is necessary for him to hold the export customs declaration, in which his identification data and the series and / or number of the invoice issued by him for the delivery of the goods transported outside the European Union to be mentioned in box 44.

(4) If the supplier is established in the European Union, but does not have the quality of exporter from a customs point of view, in order to justify the VAT exemption it is necessary for him to hold the export customs declaration, in which his identification data and series and / or the invoice number issued by him for the delivery of the goods transported outside the European Union to be mentioned in box 44.

(5) In the situation where the exit of the goods from the territory of the European Union cannot be justified with the documents provided in par. (2) lit. b), the exporter can prove the actual exit of the goods from the territory of the European Union by other means of proof, as the Court of Justice of the European Union has ruled in Case C-275/18 “Milan Vins”. ”

5. In Article 3, paragraph 2 is amended and will read as follows:

“(2) The exemption from value added tax provided for in paragraph (1) shall be justified by the supplier who makes the delivery according to art. 2 paragraphs (2) – (5).”

6. In Article 4, paragraph 1 is amended to read as follows:

“Art. 4. –

(1) They are exempted from the tax, according to the provisions of art. 294 para. (1) lit. c) of the Fiscal Code, the provision of services, including transport and ancillary transport services, other than those exempted according to art. 292 of the Fiscal Code, directly related to the export of goods. Directly related to the export of goods are services which contribute to the actual carrying out of an export operation and which are provided directly to the exporter or consignee of the exported goods, as ruled by the Court of Justice of the European Union in Case C-288/16 “L.E.” IK. ”

7. In Article 4 paragraph (2), letter b) is amended and will have the following content:

“(b) the contract concluded with the beneficiary, who may be the exporter or consignee of the goods;”.

8. In Article 4 (6), letter a) is amended and will have the following content:

“(a) the contract concluded with the beneficiary, who may be the exporter or consignee of the goods;”.

9. In Article 4 (8), letter a) is amended and will have the following content:

“(a) the contract concluded with the beneficiary, who may be the exporter or consignee of the goods;”.

10. Article 6 is amended and will have the following content:

“Art. 6. –

• They are exempted from the tax, according to the provisions of art. 294 para. (1) lit. e) of the Fiscal Code, the provision of services performed in Romania on movable goods purchased or imported for processing in Romania and which are subsequently transported outside the European Union by the service provider or by the client, if he is not established in Romania, or by another person on behalf of any of them. The exemption from value added tax provided in art. 294 para. (1) lit. e) of the Fiscal Code applies to the provision of processing services and if the service provider that performs these services based on a contract concluded with a client not established in Romania purchases or imports goods for incorporation into the processed product or for use in direct connection with processed products. The tax exemption provided in art. 294 para. (1) lit. e) of the Fiscal Code applies to the provision of services for which the place of supply is considered in Romania, according to the provisions of art. 278 of the Fiscal Code, and is justified according to the provisions of par. (3). Any goods incorporated in the processed product, packaging or other goods used in direct connection with the processed product are accessories to the services provided and will not be treated as deliveries of goods, but as part of the service provided.
• In the case of goods imported into Romania for processing, the quality of importer may have it, according to title VII of the Methodological Norms for the application of Law no. 227/2015 on the Fiscal Code, approved by Government Decision no. 1/2016, with subsequent amendments and completions, either the owner of the goods or the taxable person registered according to art. 316 of the Fiscal Code, which imports goods in Romania for processing, provided that the goods resulting from these operations are transported outside the European Union or are purchased by the respective taxable person. If the goods resulting from the processing are not transported outside the European Union, the service provider who imported the goods in Romania for processing loses the right to deduct the value added tax related to the import, unless it acquires the goods resulting in following the processing or re-invoicing the value of the imported goods for processing and the value added tax related to the owner of the goods, in which case the re-invoicing of the entire value of the goods is considered only for the purpose of value added tax, not implying a commercial transaction. In the situation where the place of performance is considered to be in Romania according to the provisions of art. 278 of the Fiscal Code, if the goods resulting from the processing are not transported outside the European Union, the provision of processing services is not exempt from value added tax. If the services are provided to a taxable person, established in another Member State, the place of supply is considered in the Member State where the beneficiary is established according to art. 278 para. (2) of the Fiscal Code and under the conditions established by the norms of application of this article, the services being non-taxable in Romania. However, the provider does not have the obligation to submit the recapitulative statement provided in art. 325 of the Fiscal Code, if the provision of services is exempt from VAT in the beneficiary’s state.
• The tax exemption provided in par. (1), for the processing of tangible movable goods purchased from Romania or from other Member States or imported for processing in Romania, shall be justified by the service provider with the following documents:

a) the contract concluded with the client who is not established in Romania;

b) the invoice for the processing services performed;

c) documents showing that the processed goods have been transported outside the European Union by the service provider or by the client, if he is not established in Romania, or by another person on behalf of any of them, according to the provisions of art. 2 para. (2) – (4).

Example 1: A invoices to B textile services, the raw materials being purchased from France by the customer, respectively by B. A is a taxable person established in Romania, and B is a taxable person established in Switzerland. The place of services being in Romania according to art. 278 para. (6) of the Fiscal Code, because the beneficiary is a taxable person established outside the European Union, A must justify the VAT exemption, as he would have had the obligation to pay the tax if the operation had not been exempted from the tax.

Example 2: A invoices to B textile manufacturing services, the raw materials being purchased from France by the customer, respectively by B. A is a taxable person established in Romania, and B is a taxable person established in Italy. The place of provision of services is considered to be in Italy, according to art. 278 para. (2) of the Fiscal Code and under the conditions established by the norms of application of this article, the services being non-taxable in Romania. Although the operation represents an intra-community provision of services, the provider does not have the obligation to submit the recapitulative statement provided in art. 325 of the Fiscal Code, if the provision of services is exempt from VAT in the beneficiary’s state, respectively in Italy. ”

11. In Article 8, a new paragraph 11 is inserted after paragraph 1, with the following wording:

“(11) For the purposes of Article 294 paragraph (1) letter h) of the Fiscal Code, ships used predominantly in an immovable position to explore / exploit hydrocarbon deposits at sea are not considered ships attributed to offshore navigation, as The Court of Justice of the European Union also ruled in case C-291/18 “Grup Servicii Petroliere SA”. ”

12. In Article 8, paragraphs 4 to 7 are amended to read as follows:

(4) The justification of the value added tax exemption is made either by the supplier / provider, or by the beneficiary, based on the documents attesting that the deliveries of goods and services are intended for the purposes provided by law. In the case of ships that are not new, respectively of ships that have sailed before, used for the transport of passengers / goods for payment or for commercial, industrial or fishing activities, which are attributed to navigation at sea, the VAT exemptions provided by art. 294 para. (1) lit. h) of the Fiscal Code applies if the ship is effectively and mainly used for navigation at sea. In order to determine whether a ship is effectively and predominantly used offshore, not only objective criteria, such as the length or tonnage of the ship, may be taken into account, but they could be used to exclude from the scope of the exemptions ships which, in any case, they do not meet the conditions provided in art. 294 para. (1) lit. h) of the Fiscal Code, respectively they would not be capable of navigating the sea. The requirement regarding sea navigation does not apply to the VAT exemptions provided by art. 294 para. (1) lit. h) of the Fiscal Code in the case of vessels used for rescue or assistance at sea or for coastal fishing. In order to establish whether a ship that meets the objective conditions of being able to navigate the sea due to its length and tonnage has been effectively and predominantly used for sea navigation, means of proof provided by Law no. 207/2015 on the Fiscal Procedure Code, with subsequent amendments and completions, or any other means of proof provided by law.

In the case of ships that are not new, respectively of ships that have sailed before, the condition that the ship has been effectively and mainly used for offshore navigation is considered fulfilled if the ship has been used in the last 5 years or during the entire period of use. , if it is less than 5 years. The concept of navigation “offshore” within the meaning of Council Directive 2006/112 / EC of 28 November 2006 on the common system of value added tax and of art. 294 para. (1) lit. h) of the Fiscal Code covers any part of the sea outside the territorial waters of any country, which is beyond the limit of 12 nautical miles, measured from the baselines established in accordance with international law of the sea (United Nations Convention on the Law of the Sea , signed at Montego Bay on 10 December 1982).

(5) The exemption provided in art. 294 para. (1) lit. h) of the Fiscal Code applies both for the deliveries of goods / services made for the direct benefit of ship owners / operators, and in the situation where a ship agent is interposed between suppliers / providers and owner / operator. The tax exemption provided in art. 294 para. (1) lit. h) point 2 of the Fiscal Code for the delivery of fuels and supplies intended to be used on ships assigned to navigation at sea and which are used for the transport of passengers / goods for payment or for commercial, industrial or fishing activities shall also apply in the situation in which intermediaries acting in their own name intervene in the delivery, if at the time of delivery the final destination of the goods is known and if the transfer of ownership of the goods in question to these intermediaries occurred at the same time as the ship operators were ability to dispose of such goods in fact as if they had the status of owners, as ruled by the Court of Justice of the European Union in Case C-526/13 «Fast Bunkering Klaipeda» UAB. The tax exemption for loading / unloading services on / off a ship attributed to offshore navigation applies both to services provided to the ship’s owner / operator or to the ship’s agent, and to services provided at an earlier stage, such as a service provided by a subcontractor to an economic operator who subsequently invoices it to a shipping company or a carrier, as well as services of this nature provided to the holder of the cargo, who may be its exporter or importer. ) The Court of Justice of the European Union in Case C-33/16 “A Oy” also ruled in this regard. Exemption from the tax for the provision of services provided in art. 294 para. (1) lit. h) points 1 and 3 of the Fiscal Code are justified by the service provider, insofar as the place of service provision is considered to be in Romania in accordance with the provisions of art. 278 of the Fiscal Code and if he had been the person obliged to pay the tax according to art. 307 para. (1) of the Fiscal Code, in case a tax exemption does not apply. If the place of services provided in art. 294 para. (1) lit. h) points 1 and 3 of the Fiscal Code is in Romania, the tax exemption is justified by the beneficiary of the services, if he were the person obliged to pay the tax according to art. 307 of the Fiscal Code, in the situation where the operation would not be exempted.

(6) In the case of services and / or deliveries of goods made for the direct needs of ships and / or for their cargo, for which the exemption provided in art. 294 para. (1) lit. h) of the Fiscal Code, both the provider / supplier and the other taxable persons provided in par. (5) which intervene in the delivery / provision must justify the application of the exemption with the declaration on own responsibility of the owner / operator of the ship or, as the case may be, with a copy of this declaration, showing that the respective ship was effectively and predominantly used in off the sea.

(7) In the case of new ships, respectively of ships that have not been used, the exemption provided in art. 294 para. (1) lit. h) of the Fiscal Code is applied on the basis of objective criteria, such as the length or tonnage of the ship, which makes them capable of being used offshore.

Example 1: A invoices to B repair services of a ship destined for sea transport, the services being performed on the Romanian territory. A is a taxable person established in Romania, and B is a taxable person established in Norway. The place of providing the service being in Romania according to art. 278 para. (6) of the Fiscal Code, because the beneficiary is a taxable person not established in the European Union, the provider must justify the tax exemption, as it would have been the person obliged to pay the tax if the operation was not exempt.

Example 2: A invoices to B repair services of a ship destined for sea transport. A is a taxable person established in Dubai, and B is a taxable person established in Romania. The place of providing the service is in Romania according to art. 278 para. (2) of the Fiscal Code, because the beneficiary is a taxable person established in Romania. As the provider is not established in Romania, the beneficiary must justify the tax exemption, as it would have been the person obliged to pay the tax if the operation had not been exempted.

Example 3: A delivers a ship, which is already in use, to B. The ship meets objective criteria, such as the length or tonnage of the ship, which make it capable of being used offshore. Supplier To apply the VAT exemption if the ship has been used effectively and mainly offshore. The condition that the ship has been effectively and predominantly used for offshore navigation shall be deemed to be fulfilled if the ship has been so used for the last 5 years or for the entire period of use, if it is less than 5 years. ”

13. In Article 9, a new paragraph 51 is inserted after paragraph 5, with the following wording:

“(51) The value added tax exemption provided for in Article 294 paragraph (1) letter i) of the Fiscal Code also applies to the delivery of an aircraft to an economic operator that is not itself an airline that performs mainly transport international law of persons and / or goods with payment, but which acquires the respective aircraft for the purpose of its exclusive use by such a company, for example, in a leasing operation. in Case C-33/11 ‘A Oy’. ”

14. In Article 9, paragraph 7 is amended to read as follows:

“(7) The justification of the value added tax exemption is made on the basis of the documents attesting that the deliveries of goods and services are intended for the purposes provided by law and the certificate provided in paragraph (5) for airlines established in Romania. in the case of delivery provided for in paragraph (51), in order to justify the VAT exemption, the certificate provided for in paragraph (5) issued to the airline that will use the aircraft is required, if it is an airline established in Romania. in Article 294 paragraph (1) letters i) points 1 and 3 of the Fiscal Code is justified by the service provider, insofar as the place of provision of services is considered to be in Romania, in accordance with the provisions of Article 278 of The Fiscal Code and if he had been the person obliged to pay the tax, according to article 307 paragraph (1) of the Fiscal Code, in case a tax exemption does not apply. provided in art. 294 para. (1) lit. i) points 1 and 3 of the Fiscal Code is in Romania, the tax exemption is justified by the beneficiary of the services, if he were the person obliged to pay the tax according to art. 307 of the Fiscal Code, in the situation in which the operation would not be exempted. ”

15. Article 10 is amended and will have the following content:

“Art. 10. –

(1) The tax exemption for the intra-community deliveries of goods provided in art. 294 para. (2) lit. a) of the Fiscal Code, with the exceptions from points 1 and 2 of the same letter a), is justified on the basis of the following documents:

1. a) the invoice in which the registration code for VAT purposes assigned to the buyer in another Member State must be mentioned;
2. b) documents certifying that the goods have been transported from Romania to another Member State, which may be different from the Member State which assigned the registration code for VAT purposes communicated by the buyer.

(2) In the case of intra-community deliveries of new means of transport to a buyer who does not communicate to the supplier a valid registration code for VAT purposes, provided in art. 294 para. (2) lit. b) of the Fiscal Code, the tax exemption is justified by:

1. a) the invoice or, if the supplier is not a taxable person, the sale-purchase contract;
2. b) the documents attesting that the goods were transported from Romania to another member state.

(3) In the case of intra-community deliveries of excisable products provided in art. 294 para. (2) lit. c) of the Fiscal Code, with the exceptions from points 1 and 2 of the same letter c), to a taxable person or to a non-taxable legal person who does not communicate to the supplier a valid registration code for VAT purposes, if the transport of goods is performed according to art. 34 para. (1) and (2) or art. 19 of the Council Directive 2008/118 / EC of 16 December 2008 on the general regime of excise duties and repealing Directive 92/12 / EEC, the tax exemption is justified by:

a) the invoice which must not contain the VAT registration code of the buyer in another Member State;

b) the documents attesting that the goods were transported from Romania to another member state.

(4) In the case of intra-community deliveries assimilated of goods provided in art. 270 para. (10) of the Fiscal Code, respectively the transfers of goods, the tax exemption provided in art. 294 para. (2) lit. d) of the Fiscal Code is justified, with the exceptions provided in the same paragraph, on the basis of the following documents:

1. a) the self-invoice provided in art. 319 para. (9) of the Fiscal Code in which to be mentioned the registration code for VAT purposes assigned in another member state of the person making the transfer from Romania;
2. b) documents for the transport of goods from Romania to another Member State, such as a signed CMR document or a signed consignment note, a bill of lading, the specific air waybill document (Air Waybill).

(5) In the situation of the intra-community deliveries of goods provided at par. (1), if the fiscal inspection finds that the VAT code of the beneficiary is erroneously written on the invoice, for granting the VAT exemption it will be allowed during the control the correction of the invoice by the supplier and the validity of the VAT code of the beneficiary will be verified by the bodies. fiscal inspection. This invoice will be attached by the supplier to the initial invoice, without generating entries in the tax return of the fiscal period in which the correction is operated.

(6) Exemption of an intra-community delivery, within the meaning of art. 294 para. (2) of the Fiscal Code, cannot be denied to the seller for the simple reason that the tax administration of another Member State has carried out a retroactive erasure of the registration code for VAT purposes of the person who purchased the good, from a previous date this delivery, although the deletion of the code occurred after the delivery of the good, as ruled by the Court of Justice of the European Union in Case C-273/11 – Mecsek Gabona.

(7) Art. 45a of the Implementing Regulation (EU) no. Council Regulation (EC) No 282/2011 of 15 March 2011 laying down measures for the implementation of Directive 2006/112 / EC on the common system of value added tax, as amended by Implementing Regulation (EU) 2018/1912 of the Council of 4 December 2018 amending the Implementing Regulation (EU) no. 282/2011 regarding certain exemptions for intra-community operations, hereinafter referred to as Regulation 282/2011, provides that, in the situation where the conditions from par. (1) lit. a) and b) of this Article, it is presumed that the goods have been dispatched or transported from a Member State to a destination outside its territory but within the Community. In this case, the documents attesting that the goods were transported from Romania to another member state are those provided in par. (1) and (3) of art. 45a of Regulation 282/2011.

(8) By independent parties, within the meaning of art. 45a of Regulation 282/2011, means parties that are not considered affiliated according to the provisions of art. 7 point 26 of the Fiscal Code.

(9) In the situation where the buyer does not provide the seller with the written declaration provided in art. 45th para. (1) lit. (b) point (i) of Regulation 282/2011, until the tenth day of the month following delivery, the supplier benefits from the presumption established in this article if he receives this declaration later, within the term provided in art. 1 para. (4).

(10) In the situations that do not fall within the presumption provided in art. 45a of Regulation 282/2011, the transport of goods from Romania to another Member State is justified according to the provisions of this article. Such situations can be, without being limited to these, those in which: the transport of goods is carried out with their own means of transport by the supplier or buyer, the goods that are the subject of delivery are means of transport that travel alone on wheels, by road sea, river or air, the persons involved in the transport of the goods are not independent of each other, as well as of the seller and the buyer or their independence cannot be proved. Own means of transport means the means of transport owned by the supplier or buyer of the goods or which are made available to him through leasing, rental, loan or other contracts of this type.

(11) For the purposes of par. (10), it is considered that the goods have been transported from Romania to another Member State, if the supplier has documents justifying the transport, such as:

a) in case of delivery of excisable products circulating under excise duty suspension: the administrative document in electronic format and the receipt report;

b) in the case of the delivery of means of transport that travel alone on wheels, by sea, river or air: the sale-purchase contract showing that the goods will be transported to another Member State and proof of registration of the means of transport in the state destination member;

c) in case of delivery of other goods than those provided in let. a) and b):

1. transport documents, such as a signed CMR document or a signed consignment note, a bill of lading, the specific air waybill document (Air Waybill); and
2. one of the following documents: an insurance policy corresponding to the dispatch or transport of the goods, bank documents attesting payment for the dispatch or transport of the goods, official documents issued by a public authority, such as a notary, attesting the arrival of the goods in the Member State of destination, a document certifying receipt of the goods, issued by a depositary in the Member State of destination other than the purchaser of the goods, a written declaration from the buyer stating that the goods have been dispatched or transported to the Member State of destination and containing : date of issue, name and address of the buyer, as well as the quantity and nature of the goods, date and place of arrival of the goods, identification of the person who accepts the goods on behalf of the buyer.

(12) The fiscal bodies may reject the justification of the transport performed in accordance with par. (11), if they have sufficient elements to prove that the goods were not transported from Romania to another Member State.

(13) The VAT exemption provided in art. 294 para. (2) lit. a) of the Fiscal Code does not apply in case the supplier has not complied with the obligation provided in art. 325 para. (1) of the Fiscal Code to submit a recapitulative statement or the recapitulative statement submitted by it does not contain the correct information regarding this delivery, unless the supplier can duly justify the deficiency in a manner considered satisfactory by the competent tax authorities.

(14) For the purposes of art. 294 para. (21) of the Fiscal Code, it is considered that the supplier duly justifies the deficiency, if it is remedied later, but not later than the completion of the fiscal inspection. It can be considered that the deficiency has been remedied in situations such as:

a) the supplier did not include the intra-Community delivery in the recapitulative statement related to the period in which the tax became chargeable, but included it in the recapitulative statement related to a subsequent period or in a rectifying declaration for the respective period;

b) the supplier included the intra-Community delivery in the recapitulative statement related to the period in which the tax became chargeable, but unintentionally erred in one or more information regarding the respective delivery, such as its value, type of operation, customer name and made the correction within a rectifying statement for that period. “