According to the tax regulations, reverse charge is a way to simplify the payment of value added tax.
Through the reverse charge mechanism, no VAT payment is made between the supplier / provider and the beneficiary of some deliveries / services, the latter owing, for the operations performed, the input tax and having the possibility, in principle, to deduct the respective tax.
The obligatory condition for the application of reverse charge is that both the supplier and the beneficiary are registered for VAT purposes according to article 316 of the Fiscal Code.
This way of simplifying the payment of the tax is done by issuing invoices in which the supplier / provider does not enter the related tax, including for advances, this being calculated by the beneficiary and registered both as tax collected and as tax deductible in the tax return.
The Supplier / Provider has the obligation to write on the invoice the mention of reverse charge.
The collection of value added tax at the level of the deductible tax is assimilated with the payment of the tax to the supplier / provider.
From an accounting point of view, the beneficiary registers during the fiscal period in which the tax is due the amount of the related tax in the following accounting formula:
4426 “ Deductible VAT” = 4427 „VAT collected”.
In case of non-application of the reverse charge provided by law, respectively in case the supplier / provider issues a VAT invoice for the operations provided in article 331 paragraph (2) of the Fiscal Code and does not include the reverse charge in that invoice, and the beneficiary deducts in the invoice, he loses his right to deduct for the respective acquisition of goods or services because the substantive conditions regarding the reverse charge were not respected and the invoice was drawn up erroneously.
Deliveries of goods / services made within the country for which the reverse charge is applied:
According to Article 331 paragraph (2) of the Fiscal Code, the operations for which the reverse charge is applied are:
a) delivery of the following categories of goods:
– ferrous and non-ferrous waste, of ferrous and non-ferrous scrap, including semi-finished products resulting from their processing, manufacture or smelting;
– residues and other recyclable materials made of ferrous metals and
– non-ferrous metals, their alloys, slag, ash and industrial residues containing metals or
– their alloys;
– waste of recyclable materials and used recyclable materials consisting of
– paper, cardboard, textile, cables, rubber, plastic, shards of glass and glass;
- the materials provided in points 1 – 3 after their processing / transformation
- by operations of cleaning, polishing, selection, cutting, fragmentation, pressing or casting in
- ingots, including non-ferrous metal ingots for which they have been added e)
- other alloying elements;
b) delivery of wood and wood materials, as defined by Law no. 46/2008 – Forestry Code, republished;
c) the delivery of cereals and technical plants, including oilseeds and sugar beet, which are not in principle intended as such for final consumers (applies until June 30, 2022 inclusive).
d) the transfer of greenhouse gas emission allowances as defined in Article 3 of Directive 2003/87 / EC of the European Parliament and of the Council of 13 October 2003 establishing a system for the trading of greenhouse gas emission allowances greenhouse gases within the Community and amending Council Directive 96/61 / EC, transferable in accordance with Article 12 of the Directive, as well as the transfer of other units which may be used by operators in accordance with the same Directive; until June 30, 2022 inclusive).
e) the delivery of electricity to a taxable person trader, established in Romania according to article 266 paragraph (2) of the Fiscal Code (applies until June 30, 2022 inclusive). The taxable person trader represents the taxable person whose main activity. In terms of electricity purchases, it is represented by its resale and whose own electricity consumption is negligible.
Negligible own consumption of electricity means a maximum consumption of 1% of the purchased electricity.
f) the transfer of green certificates, as defined in Article 2 letter h) of Law no.220/2008 for establishing the system for promoting the production of energy from renewable energy sources, republished, with subsequent amendments and completions;(applies until June 30, 2022 inclusive).
g) the constructions, as defined in article 292 paragraph (2) letter f) point 2, the parts of the construction and the lands of any kind, for the delivery of which the taxation regime is applied by the effect of the law or by option;
h) the gold deliveries of investments made by taxable persons who have exercised their taxation option and the deliveries of raw materials or semi-finished products of gold with a title greater than or equal to 325 per thousand, to buyers of taxable persons;
i) the supply of mobile phones, namely devices manufactured or adapted for use in connection with an authorized network and operating on certain frequencies, whether or not they have any other use; (applies until June 30, 2022 inclusive).
j) the supply of integrated circuit devices, such as microprocessors and central processing units, before their integration into end-user products; (applies until June 30, 2022 inclusive).
k) supplies of game consoles, tablet PCs and laptops (applies until June 30, 2022 inclusive).
l) delivery of natural gas to a taxable person trader, established in Romania according to article 266 paragraph (2) (applies until June 30, 2022 inclusive).
The trader is a taxable person representing a taxable person whose main activity, in terms of natural gas purchases, is their resale and whose own natural gas consumption is negligible.
Negligible natural gas consumption means a maximum consumption of 1% of the amount of natural gas purchased.
For the delivery of the goods provided in i) -k), the reverse charge is applied only if the value of the delivered goods, excluding VAT, registered in an invoice, is greater than or equal to 22,500 lei.
Example of a case: Building land for sale:
Situation: A legal entity sells two plots of buildable land. Both the buyer and the seller are legal entities registered for VAT purposes. What is the VAT regime applicable to the sale transaction?
Solution: The definition of building land regulated by Article 292 paragraph (2) letter f) point 1 of the Fiscal Code “(2) The following operations are also exempt from tax:…. F) the delivery of constructions / parts of constructions and the exemption does not apply to the delivery of new construction, new construction parts or buildable land.
- buildable land represents any arranged or unarranged land, on which constructions can be executed, according to the legislation in force; ” These provisions are completed with those from point 55 paragraph (6) of the Fiscal Code, which refers to the urbanism certificate, a document which results in the classification of a land as buildable or land with another destination.
“(6) In application of article 292 paragraph (2) letter f) of the Fiscal Code, the qualification of a land as buildable land or land with another destination, at the time of its sale by the owner, results from the urbanism certificate. of a land on which a construction is located takes place after the delivery of the construction or independently of the delivery of the construction, the delivery being made by the person who also owns the title to the building or by another person who owns only the title to the land, is considered to take place delivery of building land within the meaning of Article 292 (2) (f) of the Fiscal Code. “
We mention that the urbanism certificate shows the legal, economic and technical regime of the land at the time of sale: buildable / non-buildable, regardless of whether the land is in town or out of town.
When selling a buildable plot of land, the owner of the taxable person registered for VAT purposes in the normal regime according to the provisions of article 316, with a valid VAT code at the date of the generating fact (date of transfer of ownership) and the exigibility of VAT (date of issuing the invoice), applies the following reverse charge regime regulated by article 331 paragraph (2) letter g) in the situation where the buyer is a taxable person registered for VAT purposes, with a valid VAT code at the date of the generating fact and the VAT exigibility.
This regime is mandatory, without being optional, an aspect expressly regulated by paragraph (1) of Article 331. for the operations referred to in paragraph 2. The mandatory condition for the application of reverse charge is that both the supplier and the beneficiary be registered for VAT purposes in accordance with Article 316. “
We specify that in order to apply a correct fiscal treatment, for the sale of each land, the owner must obtain a town planning certificate.
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 Government Decision no. 1/2016).