Situation: An authorized natural person (PFA), with the object of activity CAEN 6202 Information technology consulting activities, provides services to a taxable person from the USA. Can I request a VAT refund for purchases in Romania?
Solution: Considering the object of activity of the PFA, respectively the CAEN code 6202 Information technology consulting activities, when invoicing the service provided on behalf of the US taxable person, the provisions of article 278 paragraph (2) of the Fiscal Code apply according to which the place the provision is considered to be the place where the beneficiary of the respective services is established.
Please note that the electronic service provided for the benefit of a non-taxable person from the point of view of VAT is also non-taxable, for example, for the benefit of a natural person domiciled in the USA. or a U.S.-based nonprofit entity. In this situation, the provisions of the exception from article 278 paragraph (3), exception regulated by article 278 paragraph (5) letter h) point 3 of the Fiscal Code, are applicable.
According to this exception, the place of supply of the service shall be deemed to be the place where the recipient of the non-taxable person in a non-member country has his or her domicile established:
(…) h) the place where the beneficiary is established, has his stable domicile or habitual residence, in case of the following services provided to a non-taxable person:
- telecommunications services;
- broadcasting and television services;
- electronically supplied services. “
Thus, in each of the two possible situations, the service is non-taxable in Romania. However, for all purchases of goods and services made, necessary to provide a non-taxable service, the Romanian provider may exercise its right of deduction regardless of the nature of the purchase:
- acquisition from a supplier/provider in Romania, VAT payer in normal regime;
- acquisition from a supplier/provider based in a Member State, with a VAT code in the VIES system for which VAT is due by applying the reverse charge regime;
- import purchase for which VAT is due at customs.
It is important to emphasize that the non-taxable services in Romania are operations with the right of deduction, aspect expressly regulated by article 297 “Scope of the right of deduction” paragraph (4) letter b) “Every taxable person has the right to deduct the tax related to the acquisitions, if they are intended for use for the following operations:
– taxable operations;
– operations resulting from economic activities for which the place of delivery/service is considered to be abroad if the tax would be deductible if these operations had been performed in Romania; “
These provisions may be corroborated with those of point 69 paragraph (1) “Conditions for exercising the right of deduction” “The taxable person may deduct the tax related to the acquisitions if the substantive conditions provided in point 67 paragraph (1) are met, as well as and the formalities provided for in Article 299 of the Fiscal Code. “
Point 67 paragraph (1) considers the right of the taxable person to deduct the tax paid or due for the goods/services purchased intended for use for the purposes of operations provided for in Article 297 paragraph (4) of the Fiscal Code, the exercise of this right is a fundamental principle of the VAT system.
Therefore, the right of deduction regulated by article 297 of the Fiscal Code is an integral part of the VAT mechanism, without being limited or prohibited. This right is exercised immediately for the entire tax applied to upstream operations.
In order to benefit from the right to deduct, the substantive conditions must be met first, as it results from the jurisprudence of the Court of Justice of the European Union, respectively, on the one hand, the interested party must be a taxable person within the meaning of Title VII of the Fiscal Code. On the other hand, the goods or services invoked to justify this right to be used downstream by the taxable person for the purposes of the operations provided for in Article 297 paragraph (4) of the Fiscal Code, and upstream, these goods or services to be provided by another taxable person.
At Article 299 (1) (a) we have the conditions for exercising the right to deduct, provisions which are supplemented by those in point 69 (1) of the implementing rules of this Article refer to:
– possession of an invoice issued in accordance with the provisions of article 319;
– proof of payment in case of purchases made by a taxable person who applies the VAT collection system or made by a person who does not apply this system, but makes purchases from suppliers/providers who apply the VAT collection system.
Thus, considering the aspects mentioned above, the PFA can request for all purchases made, through the VAT return code 300, the refund of the deductible VAT amount deducted, by checking the box in the return regarding the refund.
However, it should be noted that the amount of VAT that is below the ceiling of 5,000 lei cannot be requested for reimbursement. In this sense, we bring as an argument the provisions of article 303 of the Fiscal Code “Tax refunds to taxable persons registered for VAT purposes”, according to article 316 paragraph (7).
” (7) The taxable persons, registered according to article 316, may request the reimbursement of the balance of the negative amount of the tax from the reporting fiscal period, by checking the corresponding box in the tax return from the reporting fiscal period, the statement being also a request for reimbursement. a negative amount in the statement of the next fiscal period. If the taxable person requests a refund of the balance of the negative amount, it is not carried forward to the next fiscal period. It is not possible to request the reimbursement of the balance of the negative amount of the tax from the fiscal reporting period, less than 5,000 lei inclusive, this being obligatorily carried over to the statement of the following fiscal period. As an exception, the balance of the negative amount of value-added tax entered in the value-added tax return for the fiscal period prior to the opening date of the insolvency procedure provided by the relevant legislation is not taken over in the tax return for the fiscal period in which the procedure was opened. which the debtor is obliged to request the reimbursement of the tax by correcting the statement of the previous fiscal period. “
We remind you that the reimbursement of the requested VAT amount is also regulated by Law no. 207/2015 on the Fiscal Procedure Code, article 169 “Special provisions regarding the reimbursement of value-added tax”, for example:
(1) The value-added tax requested for reimbursement through the returns with the negative amount of value-added tax with reimbursement option, submitted within the legal term of deposit, shall be reimbursed by the central fiscal authority, according to the procedure and conditions approved by order of the president. ANAF (Order ANAF 3699/2015).
(2) In the case of the statements with the negative amount of value-added tax with reimbursement option, submitted after the legal term of deposit, the negative amount of these shall be taken over in the statement of the following period.
(3) The central fiscal authority decides under the conditions provided in the order mentioned in paragraph (1) whether to carry out the fiscal inspection before or after the approval of the reimbursement, based on a risk analysis.
(4) By exception from the provisions of paragraph (3), in the case of the statement with the negative amount of value-added tax with reimbursement option for which the amount requested for reimbursement is up to 45,000 lei, as well as in the case of the statement with the negative amount of value-added tax with reimbursement option submitted by the taxpayer who benefits from a payment rescheduling according to chap. IV, the central fiscal authority reimburses the fee with the subsequent performance of the fiscal inspection.
Even in other situations, the reimbursement with subsequent control was extended until January 31, 2022, according to the provisions of OUG no. 19/2021 on some fiscal measures, as well as for amending and supplementing some normative acts in the fiscal field, normative act published in Official Gazette no. 315 of March 29, 2021.
In conclusion, PFA can request a VAT refund because it has performed/performs operations with the right of deduction.
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); – ANAF Order 3699/2015 for the approval of the Procedure for solving the returns with negative amounts of value added tax with reimbursement option and for the approval of the model and content of some forms;
– OUG 19/2021 regarding some fiscal measures, as well as for the modification and completion of some normative acts in the fiscal field.