Situation: A company XYZ Ltd. delivers goods/provides services to individuals in the EU.
How does the One Stop Shop scheme apply? Do advance invoices count towards the EUR 10,000 threshold?
Solution:
We remind you that distance selling is regulated by articol 275, paragraph (2) of the Fiscal Code. As an exception to the provisions of para. (1) (a), the place of delivery in the case of intra-Community distance sales of goods is deemed to be the place where the goods are located at the time of dispatch or transport of the goods to the customer.
As a result, the Romanian company is obliged to register for VAT in the Member State where it makes the distance supplies.
The use of the OSS system is optional, the simplification being that the system offers the opportunity for companies selling at a distance to stop registering and declaring VAT in each of the Member States where they owe VAT, but to benefit from electronic services for the fulfilment of these obligations through the Member State of identification.
The use of this simplified OSS scheme can only be used if the supplier in Romania is registered for VAT purposes in Romania either according to articol 316 or according to articol 317 of the tax code which states that (4) “For taxable transactions carried out under the terms of this special scheme, the taxable person shall use only the VAT registration code allocated to him by the Member State of registration”. If Romania is the Member State of registration, the registration code used by the taxable person is the one allocated to him according to articol 316 or articol 317.
If the company applies the special OSS regime for the final invoice, it is mandatory to apply this regime for the advance invoice as well.
For the company in Romania, for B2C (business to consumer) transactions, starting from July 1st 2021, the following new rules are applicable:
– if it meets the conditions for applying the limit of 46,337 lei for intra-Community distance sales/provision of TBE services (telecommunications services, broadcasting services and electronically supplied services) to other Member States, then the Romanian tax regime can be applied;
– from the moment it has exceeded the threshold provided for exemption or if that threshold is not applicable, it can:
- a) opt for the application of the special OSS regime and will pay in Romania the value added tax due in each Member State of consumption, or
- b) not apply the EU scheme and register for tax purposes in each Member State of consumption.
The threshold of 46,337 lei regulated for B2C transactions (for beneficiaries individuals from another EU Member State) for which the Romanian tax regime can be applied includes the total value, excluding VAT, of intra-Community distance supplies of goods to other Member States, as well as the total value of TBE services provided to non-taxable persons in other Member States.
The necessary conditions for the possibility to apply the Romanian taxation regime, up to the limit of 46,337 lei are:
- the supplier must be established in a single Member State;
- the transport of the goods must start in the Member State of the supplier for all supplies (in Romania for the case described in the question).
If the transport of the goods starts both in Romania and in other Member States or if the supplier is registered in other Member States, then the 46.337 lei limit is not applicable, VAT will be due in the Member State of consumption starting with the first transaction made after July 1st 2021.
Please note that the rules set out in Article 278^1 of Law 227/2015 on the Fiscal Code are applicable:
“278^1. (1) The provisions of article 275 paragraph (2) and article 278 paragraph (5) letter h) do not apply if the following conditions are met cumulatively:
(a) the supplier is established or, if not established, has his permanent address or usually resides in a single Member State;
(b) services are supplied to non-taxable persons who are established, have their permanent address or usually reside in any Member State other than the Member State referred to in point (a), or goods are dispatched or transported to a Member State other than the Member State referred to in point (a); and
(c) the total value, exclusive of VAT, of the transactions referred to in point (b) does not exceed, in the current calendar year, EUR 10 000 or the equivalent thereof in national currency and has not exceeded that amount in the previous calendar year.
(2) Where, during a calendar year, the threshold referred to in paragraph (1)(c) is exceeded, the provisions of Article 275(2) and Article 278(5)(h) shall apply from the time the threshold is exceeded.
(3) Taxable persons referred to in paragraph (1) who are established or, if not established, have their permanent address or habitual residence in Romania shall have the right to opt for the place of supply to be determined in accordance with the provisions of Articles 275(2) and 278(5)(h). The option applies for at least two calendar years.
(4) The National Tax Administration Agency shall take appropriate measures to monitor the compliance of the taxable person with the conditions laid down in paragraphs (1) to (3).
(5) The equivalent amount in the national currency of the Member States of the amount referred to in paragraph (1)(c) shall be calculated by applying the exchange rate published by the European Central Bank on the date of adoption of Council Directive (EU) 2017/2.455 of 5 December 2017 amending Directive 2006/112/EC and Directive 2009/132/EC as regards certain value added tax obligations in respect of supplies of services and distance sales of goods. For Romania, the equivalent value in national currency is 46,337 lei.”
We remind you that by OPANAF 1387/2021 the registration procedure was approved in order to use one of the special regimes for taxable persons providing services to non-taxable persons or making sales of goods at a distance, as well as for declaring value added tax, according to the provisions of article 314, article 315 and article 315^2 of the Tax Code, in case Romania is the Member State of registration.
It is mandatory to submit a declaration of the beginning of the activity, regulated by item 6 paragraph (1), paragraph (4), point 7 – 9 of the mentioned procedure.
We stress that registration for VAT purposes is mandatory, but it can be for both normal tax purposes and special tax purposes.
Filing returns:
As regards the submission of declarations, legal entities registered for VAT according to Article 316 of the Tax Code will submit both the tax declaration form D300 and the special VAT declaration form 398.
Legal persons registered for VAT under Article 317 will only submit the special VAT return form 398, relating to the special scheme, for the tax due in each Member State of consumption.
The special VAT return form 398 (VAT Return One Stop Shop) shall be prepared and submitted in accordance with the rules laid down in Articles 314, 315 and 315^2 of Law 227/2015 on the Fiscal Code.
The VIES recapitulative declaration form 390 is not subject to reporting for invoices issued to non-taxable persons in the EU. Form D390 VIES “Summary declaration on intra-Community supplies/purchases/borrowings” is drawn up according to the instructions for completion approved by OPANAF 705/2020.
Legal basis:
-Order 705/2020 approving the model and content of the form (390 VIES) ”Summary declaration on intra-Community supplies/purchases/provisions”;
-ANAF Order 1387/2021 for the approval of the registration procedure for the use of one of the special regimes for taxable persons who provide services to non-taxable persons or make sales of goods at a distance, as well as for the declaration of value added tax, according to the provisions of Article 314, Article 315 and Article 315^2 of the Tax Code, in case Romania is a member state of registration, and for the amendment of some procedural provisions;
-Tax Code (approved by Law no.227/2015, published in the Official Gazette no.688 of 10.09.2015), with subsequent amendments and additions;
-Methodological Norms for the application of the Tax Code (approved by HG no.1/2016).