Situation: A company ABC SRL from Romania, registered for VAT purposes, acquires from a company from Turkey, not registered for VAT purposes, installation-assembly services, related to a real estate. The services are provided in Romania.
What is the fiscal treatment of the operation (VAT, non-resident tax)?
Solution: Regarding the VAT treatment, in the case of installation-assembly services related to real estate, the place of provision of services is considered the place where the real estate is located (in Romania), according to article 278 paragraph (4) letter a) of the Fiscal Code . We mention that even if the installation services were not related to real estate, but to general services, the place of provision of services would have been considered also in Romania, where the beneficiary’s headquarters are located, based on the general B2B rule. to Article 278 paragraph (2) of the Fiscal Code.
Thus, the Romanian company is the person obliged to pay VAT according to article 307 paragraph (6) or article 307 paragraph (2) of the Fiscal Code, as the case may be. The related tax will be paid by reverse charge according to article 326 paragraph (2) of the Fiscal Code.
In D300 the acquisition of the installation-assembly services is declared in row 7 and row 22. The acquisition of the service is declared by the beneficiary company and in the informative declaration D394 the F cartridge (it is not an intra-community service, to be declared in D390 VIES).
Regarding the invoicing of installation-assembly services, the invoice will be issued by the Turkish provider without VAT, considering that, in the absence of establishing a fixed headquarters and registration for VAT purposes in Romania of the Turkish company, the person obliged to pay VAT is the beneficiary company from Romania, in accordance with the provisions of article 307 paragraph (6) of the Fiscal Code (if the services are related to real estate) or with those of article 307 paragraph (2) of the Fiscal Code (if the services are general on B2B rule ).
Regarding the income tax of non-residents, the income obtained by the non-resident company from Turkey from installation-assembly services are taxable in Romania by withholding tax, as it appears from the provisions of article 223 paragraph (1) letter k) of the Fiscal Code.
Thus, the company paying income in Romania is the one that must withhold at source the income tax of non-residents, declare it and pay it to the state budget.
We mention that the tax is 16% of the gross value of the services provided, withheld at source at the time of payment of income to the non-resident company, is determined based on the exchange rate communicated by BNR for the day pays to the state budget until the 25th of the month following the month in which the income was paid, according to article 224 paragraph (1), paragraph (4) d) and paragraph (5) of the Fiscal Code (declared on the basis of the declaration D100).
Another obligation of ABC SRl is to submit, annually, until January 31 inclusive of the current year for the expired year, according to article 231 paragraph (1) of the Fiscal Code, form D207 Informative declaration regarding the withholding tax / exempt income , on non-resident income beneficiaries approved by OPANAF 48/2019.
It is important to mention that the non-resident company, because it achieves such income subject to income tax of non-residents with withholding tax, the tax being final, is required to register for tax purposes in Romania, to receive a tax identification code either directly, or at the request of the Romanian income-paying company, in accordance with the provisions of article 82 paragraph (1) letter a) and paragraph (3) of the Fiscal Procedure Code, by submitting form 015 “Declaration of fiscal registration / Declaration of mentions / Declaration of deregistration for non-resident taxpayers who do not have a permanent headquarters in Romania provided by OPANAF 3725/2017.
In case the non-resident Turkish company will make available to the Romanian company the tax residency certificate issued by the Turkish tax authorities, in accordance with the provisions of article 1 paragraph 3 and article 230 paragraphs 1 and 2 of the Fiscal Code, the provisions of article 22 Other income from the Convention for the avoidance of double taxation between Romania and Turkey according to which such income may be taxed in the Contracting State in which it arises (ie in Romania, in accordance with its own domestic tax legislation, as specified above).
Also, considering that the service takes place on the Romanian territory, which could possibly imply the existence in Romania of a permanent headquarters / fixed bases for non-residents, the income payer will have to register the contract concluded with the non-resident company providing the authorities. in Romania in accordance with the provisions of article 8 paragraph 8 of the Fiscal Code.
The registration will be made through the form 017 “Declaration of registration of contracts / documents justifying the actual provision of services in Romania, initial / additional (related), concluded with foreign legal entities or non-resident individuals” provided by OPANAF 2994/2016.
Legal basis:
– Convention between Romania and Turkey for the avoidance of double taxation with respect to taxes on income and on wealth;
– ANAF Order 2994/2016 on the procedure for registering contracts / documents concluded between Romanian legal entities, resident individuals, as well as foreign legal entities operating in Romania through a permanent establishment / designated permanent establishment and foreign legal entities or individuals non-resident;
– 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).