Situation: A company ABC SRL, which installed photovoltaic panels, received from the electricity supplier a prosumer invoice (VAT with reverse charge) issued in the name of the company.
What are the important tax issues related to being a prosumer that the company should be aware of?
Solution:
According to Law no.123 /2012 on electricity and natural gas, as subsequently amended and supplemented, the prosumer is the final customer who carries out its activities in its own premises located in a given area or in other premises in close proximity or in a mobile unit equipped with systems for generating electricity during recovery braking and which produces electricity from renewable sources for its own consumption, whose specific activity is not the generation of electricity, which consumes and which may store and sell electricity from renewable energy sources produced in its building, including an apartment block, a residential area, a shared service, commercial or industrial site or in the same closed distribution system, provided that, in the case of non-household independent consumers of electricity from renewable energy sources, these activities do not constitute their primary commercial or professional activity.
In view of the above, it follows that the prosumer does not have to have electricity production as its main activity, but I believe that the secondary activities must include the CAEN code specific to electricity production.
According to the Methodology of 2022 for establishing the rules for the trading of electricity produced in power plants from renewable sources with an installed electrical power of not more than 400 kW per place of consumption belonging to prosumers, approved by the A.N.R.D. Order. E 15/2022, in the case of prosumers who are legal entities, the electricity supplier shall offset the invoice issued for the electricity consumed from the electricity grid by the prosumer as a consumer against the invoice issued in the name and on behalf of the prosumer for the electricity produced from renewable sources and delivered to the electricity grid on the basis of the prior agreement and acceptance procedure concluded between the parties in accordance with the applicable tax regulations, as follows:
(i) the invoice issued by the electricity supplier in the name and on behalf of the prosumer, as provided for in paragraph 3(c), shall invoice the electricity produced from renewable sources and delivered to the electricity grid, not exceeding the amount of electricity consumed from the electricity grid by the prosumer, in the billing period, on the basis of the records of the electricity meters produced and delivered/consumed from the electricity grids and, if applicable, including the electricity meters located in the premises of the supplier, multiplied by the price referred to in paragraph 3 point (a), with VAT being applied to the value resulting from this multiplication, as appropriate, in accordance with the legal provisions in force in the field of taxation;
(ii) the invoice issued by the electricity supplier for the electricity consumed from the electricity networks of the prosumer as a consumer shall show separately the quantity of electricity consumed from the electricity network of the prosumer, on the basis of the records of the electricity metering meter consumed from the electricity networks, multiplied by the price referred to in paragraph 3(b)(i), and the other components referred to in paragraph 3(b) point (ii) to (viii).
Applicability of excise duties:
According to article 335 and 358 of the Tax Code, electricity with CN code 2716 is subject to harmonized excise duties under the conditions regulated in Title VIII of the Tax Code.
Electricity is subject to excise duty and excise duty becomes payable at the time of supply of electricity, as the case may be, by producers, distributors or redistributors to final consumers in Romania.
Thus, an entity that produces electricity for its own use is considered both producer and final consumer.
As an exception to the provisions of Article 338, the consumption of electricity used to maintain the capacity to produce, transport and distribute electricity, within the limits set by the regulatory authority in the field, is not considered as an excise duty generating event.
Authorised economic operators in the field of electricity are obliged to register with the competent authority before carrying out their activity with electricity, under the conditions provided for in the methodological rules.
In the case of electricity generation for own consumption, excise duty becomes payable at the time of consumption. Economic operators in this situation are obliged to draw up a self-billing invoice for excise purposes by the 25th of the month following the month in which their own consumption was registered.
Please note that, according to Article 399 paragraph (1) letter m) of the Tax Code, electricity produced from renewable energy sources is exempt from excise duty.
Exemption from excise duty is granted directly for electricity produced from renewable energy sources that is supplied directly to an end consumer. Renewable energy sources include wind, solar, geothermal, wave, tidal, hydro-, biomass, waste fermentation gas, sludge fermentation gas from sewage treatment plants, biogas and the like.
The exemption is granted on the basis of the notification submitted by the electricity producer to the territorial customs authority. Household consumers who produce electricity and who benefit from the exemption are not obliged to notify the territorial customs authority.
Please note that the notification shall be drawn up according to the model provided in Annex no.23. Within 5 working days after the notification has been sent, the territorial customs authority shall notify the applicant of the registration in the special register created for this purpose at the level of the competent customs authority, if the documents specified in the notification have been submitted. The exemption from payment of excise duty for the electricity subject to notification shall take effect from the date of registration in this register. The date of registration shall be entered on the notification. The notification is valid for one year from the date of registration.
After registration of the notification, a copy of this notification with the registration number will be kept by the electricity producer.
Therefore, electricity with NC code 2716 is an excisable product and the company is obliged to register as an excise duty payer, to submit monthly declaration 100 and annual excise duty declaration – Form 120.
In order to benefit from exemption from excise duty, the company must submit to the territorial customs authority a notification, the model of which is provided in Annex No 23 to Title VIII of the implementing rules of the Tax Code.
The exemption applies only on the basis of this notification with the registration number.
[Extract from the 2016 Methodological Norms for the application of Law no.227/2015 on the Fiscal Code – ANNEX no. 23:]
APPLICATION FOR AUTHORISATION | Nr. …………….. | |
REGISTERED RECIPIENT | Box reserved for the territorial customs authority | |
1. Full name or company name and exact address | Unique registration code VAT identification number Telephone number Fax number E-mail address |
|
2. In the case of legal persons, the name, address and personal number code of each director must be entered: | ||
3. Address of the location(s) of receipt of the products: | ||
4. Type of excise goods, excise product codes and quantity of excise goods received under suspension of excise duty, estimated for one year: | ||
|_| alcoholic beverages |_| beer – product code ….. litres ….. |_| still wine – product code ….. litres ….. |_| sparkling wine – product code ….. litres ….. |_| intermediate products – product code ….. litres ….. |_| still fermented drinks – product code ….. litres ….. |_| sparkling fermented drinks – product code ….. litres ….. |_| alcoholic spirit drinks – product code ….. litres ….. | |_| energy products |_| fuels – product code ….. litres ….. |_| fuels – product code ….. litres ….. |_| manufactured tobacco |_| cigarettes – product code ….. thousand cigarettes |_| cigarettes and cigars – product code ….. thousand pieces |_| smoking tobacco – product code ….. kg | |
5. If you are already the holder of an authorisation issued by the competent authority, please indicate the date and subject of the authorisation: Number ……………. from …………………. 1………………1 Number ……………. from …………………. 1………………1 | ||
6. If any previous registered consignee authorisation has been rejected, revoked or cancelled, please specify this fact: | ||
7. Documents to attach: |_| criminal records of the administrators and criminal records of the legal entity || the certificate issued by the National Office of the Trade Register, showing: share capital, object of activity, administrators, working points where the reception of excise products is to be carried out, as well as a copy of the registration certificate issued according to the regulations in force |_| copy of contracts, agreements, agreements concluded directly between the proposed registered consignee and the authorised person from another Member State. If the contract/agreement/understanding is concluded with a representative of the authorised person from another Member State, a declaration attesting the contractual relationship between them shall be submitted. |_| bank letter of creditworthiness, if the guarantee is constituted by the deposit of money with the State Treasury |_| the name, address and telephone number of the proposed guarantor and an assurance of the intention to provide a bank guarantee for a specified amount and period of time (bank guarantee letter), where a bank guarantee is given | ||
Being aware of the provisions of Article 326 of the Criminal Code on false declarations, I declare that the data entered on this form are correct and complete. | ||
Provided for validation of the signature of the person in charge of the company | Date, name and capacity (owner, partner) | |
Legal basis:
-Law 123/2012 on electricity and natural gas, as amended and supplemented;
– ANRDE Order 15/2022 for the approval of the Methodology for establishing the rules for the trading of electricity produced in power plants from renewable sources with an installed electrical power of no more than 400 kW per place of consumption belonging to prosumers.
-Fiscal Code (approved by Law no.227/2015, published in MO no.688 of 10.09.2015), with subsequent amendments and additions;
-Tax Procedure Code (approved by Law no.207/2015, published in the Official Gazette no.547 of 23.07.2015), as amended and supplemented;
-Methodological Norms for the application of the Tax Code (approved by HG no.1/2016).