Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
Situation:
A company ABC SRL sells heat pumps to a German citizen at a price of 20.000 euro. The German citizen, a natural person, picks up the pump directly from the supplier and takes care of the transport of the product to his country of residence.
What VAT rate does ABC SRL apply to the sale of the heat pump?
Solution:
According to Article 275 paragraph 1(a) of the Tax Code, the place of supply of goods is considered to be the place where the goods are located at the time when dispatch or transport begins, in the case of goods that are dispatched or transported by the supplier, the buyer or a third party.
Taking into account that the heat pump is delivered on Romanian territory, the operation is taxable in Romania, the person liable to pay the tax being the Romanian supplier (ABC SRL).
Regarding the VAT rate, according to Article 291 paragraph 3(p) of the Fiscal Code, a reduced VAT rate (5%) applies to the supply and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency, low-emission heating systems that fall within the reference values for particulate emissions set out in Annex V of Regulation (EU) 2015/1. 189 of 28 April 2015 implementing Directive 2009/125/EC of the European Parliament and of the Council with regard to ecodesign requirements for solid fuel boilers and Annex V to Regulation (EU) 2015/1. 185 of 24 April 2015 implementing Directive 2009/125/EC of the European Parliament and of the Council with regard to ecodesign requirements for solid fuel-fired space heating appliances and which have been awarded a European Union energy label for demonstrating compliance with the criterion referred to in Article 7(2) of Regulation (EU) 2017/1. 369 of the European Parliament and of the Council of 4 July 2017 establishing a framework for energy labelling and repealing Directive 2010/30/EU, intended for residential housing, including installation kits, as well as all necessary components purchased separately.
According to the Law no.216/2023 for the modification and completion of the Law no.227/2015 on the Fiscal Code, dwellings are defined in article 2 letter a) and i) of the Housing Law no.114/1996, republished, with subsequent modifications and completions, whether they are owned by an individual or a legal entity.
Thus, in the case of natural person customers, suppliers may apply the reduced rate according to the provisions of Article 291, paragraph (3) letter p), r) and s) on the basis of the signature of the buyer of receipt of the products, applied on the invoice which expressly mentions the address of the dwelling where the products are installed. Otherwise, there is an obligation to submit a declaration on own responsibility according to the model provided in annex no.2 of Law no.216/2023.
[Annexe no.2: Own Responsibility Declaration]
The undersigned, legal entity – ………………………………………………………………………………… (name and surname),
identified by CI/BI series …… and no. ……………………., aware of the provisions of Article 326 of the Penal Code on false statements, declare on my own responsibility that I purchase products for purposes other than housing.
Name and surname in clear ……………………………………………………
Signature ……………………………………………………………………………..
Date …………………………………………………………………………………….”
Therefore, in order to apply the reduced VAT rate (5%), the heat pump must be intended for a dwelling (as defined by Law 114/1996) and must be based on a declaration on the buyer’s own responsibility expressly mentioning the address of the dwelling where the pump is installed.
If these conditions are not met, the reduced VAT rate cannot be applied, but the standard rate (19%).
Legal basis:
– Law 216/2023 for the amendment and completion of Law no. 227/2015 on the Tax Code;
– Fiscal Code (approved by Law no.227/2015, published in the Official Gazette no.688 of 10.09.2015), as amended and supplemented.