Situation:
An ABC SRL company acquires from the USA, an annual license for VNC (Virtual Network Computing) connection – provided through the internet (user and password). What declarative obligations derive from the registration of this invoice?
Do I have to pay additional taxes in Romania?
Solution:
For starters, we mentioned that Virtual Network Computing (VNC) is used on computers to view and control other equipment remotely over a network connection.
The provision of standard software on the diskette or on another data carrier, accompanied by the usual license which prohibits their copying and distribution and which allows only their installation, constitutes the delivery of goods according to art. 270 of the Fiscal Code.
According to point 28 paragraph (11) of the Methodological Norms for the application of the Fiscal Code, within the meaning of art. 271 of the Fiscal Code, the following services are considered:
- a) the provision of standard software programs through the Internet or through any other electronic network and which is mainly automated, requiring minimal human intervention, being a service provided electronically, according to art. 266 para. (1) point 28 of the Fiscal Code;
- b) the provision of licenses within a license agreement regarding software programs, which allows the client to install the software on various workstations, together with the provision of standard software programs on diskette or on another data carrier, according to art. 271 para. (3) lit. b) of the Fiscal Code;
- c) providing customized software programs, even if the software is provided on a floppy disk or other data carrier.
The customized software program represents any software program created or adapted to the specific needs of the clients, according to the requirements expressed by them.
We mention that depending on the way in which the software is presented (on the diskette, through the internet, or any other electronic network) the acquisition can be treated as the acquisition of goods or services.
Considering that the acquisition of the license presupposes the user and the password, we will consider the operation of acquiring services.
According to point 15 para. (7) of the Methodological Norms of the Fiscal Code, the services provided in art. 278 para. (2) of the Fiscal Code, provided by providers established outside the European Union to beneficiaries taxable persons who are established in Romania, follow the same rules as intra-community services regarding the determination of the place of supply and other obligations imposed by this title, but not implies obligations regarding the declaration in the recapitulative statement, according to the provisions of art. 325 of the Fiscal Code, regardless of whether they are taxable or if they benefit from tax exemption, nor any obligations regarding the registration for VAT purposes specific to the intra-community services provided in art. 316 and 317 of the Fiscal Code.
Given that the operation is a provision of services, according to the above provisions, then the place of provision of services is the place where the person receiving the services has established the headquarters of its economic activity according to the general rule of art.278 para. (2) from the Fiscal Code, and the taxable person will be obliged to pay the tax according to the provisions of art. 307 paragraph (2), by reverse charge according to the provisions of art. 326 paragraph (2) of the Fiscal Code.
The acquisition of services is declared in D300 in lines 7 and 22. The operation is not the subject of form 390 because the provider is not a taxable person from the EU.
Given that the company ABC is the person obliged to pay the tax, it means that the operation is taxable in Romania, so it is declared in 394 except for the invoices with reverse taxation which is declared in 390).
Cell F of declaration 394 declares the operations carried out with unregistered taxable persons and who are not obliged to register for VAT purposes in Romania, not established on the territory of the European Union.
Regarding the tax on non-residents, if according to the contract concluded between the parties, the Romanian company benefits only from the right to use this software, no tax is due for the income paid to non-residents.
Withholding at the source of income tax non-resident legal entities is not performed in the situation where the acquisition of software takes place, an operation that is not of the nature of royalties.
Payments for software purchases intended exclusively for the operation of the respective software, including for its installation, implementation, storage, personalization, or updating, are not considered royalty.
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).