Situation:
A Romanian company, registered for VAT purposes, provides IT maintenance services for a company from Great Britain.
What is the tax treatment of these maintenance services?
Solution:
First of all, we point out that from the VAT perspective, according to Article 7 (1) and (2) of the Implementing Regulation (EU) no. 282/2011 of the Council of 15 March 2011, services provided electronically include services provided over the Internet or through an electronic network whose nature determines their automatic provision, which involves minimal human intervention, and impossible to achieve in the absence of information technology.
“Article 7
(1) “Services provided by electronic means” provided for in Directive 2006/112 / EC include services provided on the Internet or through an electronic network whose nature determines their automatic provision, which involves minimal human intervention, and impossible to perform in the absence of technology. information.
(2.) The provisions of paragraph 1 shall apply, in particular, in the following cases: (
- a) the supply of digital products in general, including software and software modifications or updates;
(b) services that provide or support the presence of companies or individuals in an electronic network, such as a website or webpage; “
In the Romanian fiscal legislation, respectively in the Law no.227 / 2015 regarding the Fiscal Code applicable from 2016, the electronic services are treated in article 266 “The meaning of some terms and expressions”, point 28. Thus, the services provided electronically include, in in particular, the services provided for in Annex II to Directive 112 and in Article 7 (1) of Implementing Regulation (EU) No 1095/2010, Council Regulation (EC) No 282/2011 of 15 March 2011 laying down measures for the implementation of Directive 2006/112 / EC on the common system of value added tax, as subsequently amended and supplemented; ”.
Therefore, it is very important to note that, although they are provided in the IT field, the services provided by the Romanian company (IT maintenance services) are not of the nature of electronic services in which human intervention is minimal.
In the case of IT maintenance services, the human intervention is maximum, the respective services being provided, most of the times, in emergency regime.
Usually, IT services consider providing the beneficiary with specialized technical support in the field of information technology, for example, IT maintenance service to ensure an optimal level of operation of IT equipment, system maintenance service, network administration service and, if applicable, help provided by helpdesk specialists, etc.
In this situation, the Romanian provider applies by the issued invoice the provisions of the general rule from article 278 paragraph (2) according to which the place of supply is considered to be the place where the beneficiary is the taxable person.
This treatment is applicable d.p.d.v. of VAT regardless of the fact that the service is provided at the headquarters of the beneficiary in the UK or at the headquarters of the provider in Romania.
Thus, when issuing the invoice, the Romanian provider applies the B2B (business to business) rule, the place of provision being considered the place where the service is “consumed”, for example, at the headquarters of the economic activity in the UK.
Being a taxable person established in the territory of a third country, it is irrelevant whether or not that beneficiary is registered for VAT purposes in the UK. This was relevant before 2021, when the United Kingdom / UK fell into the category of Member States.
Therefore, for this service, the Romanian provider has the following fiscal and accounting obligations in Romania:
- to issue the invoice in the name of the beneficiary from the UK by entering the name of the service provided according to the concluded contract / order received within a framework IT assistance contract, if applicable;
- to enter in the invoice issued in the name of the beneficiary from the UK the mention “non-taxable in Romania cf. article 278 paragraph (2) of the Fiscal Code” or “non-taxable in Romania cf. article 44 of the EEC Directive no. 112/2006 ”, obligation regulated by article 319, paragraph 20, letter l) of the Fiscal Code“ l) in case a tax exemption is applicable, the reference to the applicable provisions of this title or of Directive 112 or any other mention of resulting in an exemption from the supply of goods or services “
- to register the invoice in the accounting records at the exchange rate of the B.N.R. from the date of issue, as the date of VAT exigibility;
- to highlight the invoice issued in the sales journal at a tax base in lei determined by using the exchange rate in force at the date of issuing the invoice;
- to report the operation only through the VAT return in line 3 called “Deliveries of goods or services for which the place of delivery / place of supply is outside Romania (in the EU or outside the EU), ……”, but without reference to line 3.1 allocated to “Intra-Community services which do not benefit from the exemption in the Member State in which the tax is due”;
- not to report the operation performed, neither by the recapitulative statement code 390 VIES, nor by the informative statement code 394.
Legal basis:
– EU Regulation 282/15-Mar-2011 laying down measures for the implementation of Directive 2006/112 / EC on the common system of value added tax (recast)
– Fiscal Code (approved by Law no. 227/2015, published in the Official Gazette no. 688 of 10.09.2015), with subsequent amendments and completions;
– Methodological Norms for the application of the Fiscal Code (approved by HG no. 1/2016).