VAT exemptions in the health sector – VAT refund for ONGs

In the Official Gazette (Part I) no.788 of September 1, 2023 was published the MF Order no.2438 for the approval of the VAT refund procedure for purchases of goods or services made by non-profit entities, for which the tax exemption is applied according to art. 294 para. (5) letters a) and b) of Law no.227/2015 on the Tax Code.

The newly approved procedure was necessary in the context that Law no. 88/2023 regulated the VAT exemption for:

• construction, rehabilitation, modernization services of hospital units in the state public network, as well as construction, rehabilitation, modernization services of hospital units, provided to non-profit entities registered in the public register organized by ANAF;
• supplies of medical equipment, apparatus, devices, articles, accessories and protective equipment, materials and consumables for health use, normally intended for use in the field of health care or for use by disabled persons, as well as the adaptation, repair, rental and leasing of such goods, made to hospital units in the public state network, as well as those made to non-profit entities registered in the public register organized by ANAF.

As regards non-profit entities, the VAT exemption is applied by refunding the tax related to the purchases of goods or services made by these entities, according to the procedure below:

Refund procedure of VAT:

According to MF Order no.2438/2023, the VAT refund is made by the competent tax authority  in whose tax records the non-profit entity entitled to claim the refund is registered.

For VAT refund, the non-profit entity must submit to the competent tax authority  an application for VAT refund, according to the annex which is an integral part of this procedure, accompanied by the following documents:

a) a statement containing, in chronological order, for each purchase, the following information: name, number and date of the document, value excluding VAT, VAT value, value including VAT;

b) copies of the invoices showing the goods and services purchased for which a refund is claimed;

c) copies of customs import declarations, in the case of imported goods;

d) copies of receipts whose individual value, including VAT, does not exceed EUR 100; where this value is exceeded, applicants must submit copies of invoices.

e) documents proving that the goods/services purchased for which VAT refunds are claimed are intended for hospital units owned and operated by the non-profit entity, if the goods/services purchased are intended for this purpose;

f) documents showing that the goods/services purchased for which VAT refund is claimed are donated/ made available free of charge to hospital units in the public state network, i.e. the donation/making available free of charge contract and the handover/receipt report, if the goods/services purchased are intended for this purpose;

g) the affidavit of the legal representative of the non-profit entity stating that the goods are normally intended for use in the field of health care or for use by people with disabilities, essential goods for the compensation and overcoming of disabilities.

Non-profit entities may request a VAT refund within 90 days of the end of the calendar month for which the refund is requested, as follows:

• for goods that have been delivered to them or services that have been rendered for their benefit during the month for which the refund is claimed, if the goods/services purchased are intended for hospital units owned and operated by the non-profit entity;
• for goods that have been delivered to them or services that have been rendered for their benefit, which are donated/put free of charge at the disposal of hospital units in the public state network during the month for which the refund is claimed, if the goods/services purchased are intended for hospital units in the public state network.

As an exception, in the case where non-profit entities have not submitted the application for VAT refund and/or the related documentation within the deadline, at their request, the Director General of the Regional General Directorate of Public Finance may approve the VAT refund, if the application is submitted within 5 years from 1 January of the year following the year in which the right to VAT refund arose.

Thus, on the basis of the above-mentioned documents submitted by the applicants, the competent tax authority will draw up a report signed by its head, which will show that, although the refund applications were submitted late, the conditions for granting the value added tax refund have been met, which will be submitted to the Director General of the Regional General Directorate of Public Finance for approval of the value added tax refund.

The VAT refund applications are settled according to the procedure established by the order of the President of the National Tax Administration Agency.

Non-profit entities must justify compliance with the destination of the VAT amounts refunded from the state budget, including the amounts that have been offset against the entity’s tax obligations, with documents proving the subsequent purchase of goods/services as referred to in Article 294 para. (5) letter (a) and (b) of the Tax Code.

[Extract from Order 2438/2023 REQUEST FOR REFUND of VAT on purchases of goods or services made by non-profit entities, for which the exemption provided for in Article 294 para. (5) lett. a) and b) of Law no. 227/2015 on the Fiscal Code]

Name of the nonprofit ……………………..

Tax identification code ………………………

Address …………………………………………………..

Phone …………………………………………………..

Registration number ……………………………………

REFUND REQUEST

In accordance with Article 2 of the Procedure for the refund of VAT on purchases of goods or services made by non-profit entities, for which the tax exemption applies under Art. 294 para. (5) letters a) and b) of Law no. 227/2015 on the Code approved by Order of the Minister of Finance No. 2.438/2023, by

hereby request the refund of value added tax in the amount of

…….. lei, for the goods/services purchased which are:

|_| intended for hospital units

owned and operated by the non-profit entity, respectively:

…………………….. (name,

address of hospital unit)

…………………….. (name,

hospital unit address)

|_| donated/ made available free of charge

hospital units in the state public network, respectively:

…………………….. (name,

address of the beneficiary hospital)

…………………….. (name,

address of the beneficiary hospital unit)

We request the refund to the account no.

….., opened at ………………………….., branch …………

Legal basis:

– MF Order no.2438/2023 for the approval of the VAT refund procedure for purchases of goods or services made by non-profit entities, for which the tax exemption is applied according to art. 294 para. (5) letter  a) and b) of Law no. 227/2015 on the Tax Code;

– Law 88/2023 amending and supplementing Law No 227/2015 on the Fiscal Code.