Situation:
A commercial company ABC SRL, based in Romania and paying VAT, provides construction services for real estate in Germany for VAT paying companies in Germany.
What is the declarative treatment regarding VAT? What if the services are provided to an individual resident in Germany?
Solution:
According to art. 278 paragraph (4) of the Fiscal Code, by exception from the provisions of par. (2) and (3), for the following services, the place of supply is considered to be:
- a) the place where the real estate is located, for the provision of services performed in connection with real estate, including the services provided by experts and real estate agents, accommodation in the hotel sector or in sectors with similar function, such as holiday camps or places arranged for camping , granting rights to use real estate, for services for the preparation and coordination of construction works, such as services provided by architects and companies that provide supervision on site;
According to point 16, paragraph (1) of the Methodological Norms, by exception from the general rules provided in art. 278 par. (2) and (3) of the Fiscal Code, regardless of the status of the beneficiary, respectively taxable person or non-taxable person, the place of provision of services provided in art.278 paragraph (4) of the Fiscal Code is established according to the rules provided in paragraph (4) of art.278 of the Fiscal Code.
In view of these provisions, the services performed on real estate in Germany are not declared in the recapitulative statement mentioned in art.325 of the Fiscal Code (D390), regardless of the status of the beneficiary, nor do the provisions regarding registration for tax purposes apply, which are specific to the provision and intra-community acquisitions of services.
The value of the issued invoice, highlighted in the purchase journal is reported only by the VAT return code 300 in line 3 allocated for “Deliveries of goods or services for which the place of delivery / place of supply is outside Romania (in the EU or outside the EU)”, without taking over line 3.1.
Thus, the operation does not represent for the Romanian company an intra-community provision of services, reason for which the value of the issued invoice is not reported by the Romanian taxable person through the recapitulative declaration code 390 VIES.
Therefore, regardless of the quality of the beneficiary, taxable or non-taxable (natural person) the operations are not taxable in Romania, being taxable in Germany, where the real estate is located.
It is important to mention that, if the services are performed for individuals, the Romanian provider must verify whether it is not obliged to register for VAT purposes in Germany for services provided through a fixed location, similar to the provisions of art. 316 paragraph (2) letter c) point 2 applicable in Romania and to invoice with VAT from Germany. \
According to these provisions, the taxable person who has the headquarters of the economic activity outside Romania, but is established in Romania through a fixed headquarters, according to art. 266 para. (2) lett. b), is obliged to request the registration for VAT purposes in Romania, thus:
(…) c) before carrying out some economic activities from the respective fixed headquarters under the conditions established in art. 266 para. (2) lett. b) and c) involving:
(…) 2. services taxable and / or exempt from value added tax with the right of deduction, other than those provided at pos. (a) and (b); “
According to the provisions of art. 266 para. (2) lett. b) it is considered that a legal person is established through a fixed headquarters if it has sufficient technical and human resources to perform taxable services.
Therefore, if the company has sufficient technical and human resources in Germany, it should be registered for VAT purposes in Germany.
Legal basis:
- Fiscal Code (approved by Law no. 227/2015, published in the Official Gazette no. 688 of 10.09.2015), with subsequent amendments and completions;
- Fiscal Procedure Code (approved by Law no. 207/2015, published in the Official Gazette no. 547 of 23.07.2015), with subsequent amendments and completions;
- Methodological Norms for the application of the Fiscal Code (approved by HG no. 1/2016).