Case description
A Romanian company (CAEN 4520, 4532) performing car repairs and selling auto parts provides repair services in Romania to EU or non-EU clients.
Question: What is the correct VAT treatment for these services?
- Foreign client with a fixed establishment in Romania
If the service is provided for the benefit of a fixed establishment in Romania belonging to a taxable person from another EU or non-EU country, the place of supply is Romania.
Under Article 278 (2) of the Fiscal Code, the service is subject to Romanian VAT at the standard rate (21%), and the foreign taxable person must register for VAT purposes in Romania (Article 316 (2)).
A “fixed establishment” is defined (Implementation Rules, point 14 (2)) as having:
“a sufficient degree of permanence and appropriate human and technical resources to receive and use the services for its own needs.”
- Foreign client without a fixed establishment in Romania
If the beneficiary is not established in Romania and has no fixed establishment, the service is not taxable in Romania.
According to Article 278 (2), the place of supply is where the client has its business establishment.
For EU clients, the operation qualifies as an intra-Community supply of services, provided the client communicates a valid VAT number (verifiable in the VIES system).
The invoice is issued without VAT, including one of the following notes:
“Not taxable in Romania according to Art. 278 (2) of the Fiscal Code”
or
“Not taxable in Romania according to Art. 44 of Directive 2006/112/EC.”
Reporting:
- Tax return (Form 300): line 3
- Recapitulative statement (Form 390 VIES): symbol P
- Invalid VAT number
If the beneficiary’s VAT number is invalid or missing, the service becomes taxable in Romania, even if used abroad.
Under Article 278 (3), the place of supply is considered to be Romania.
Reporting:
- Form 300: line 9 (taxable operations)
- Form 394: section E
- Fixed establishment of a foreign client in Romania
If the service is used by a fixed establishment located in Romania of an EU or non-EU client, the invoice must include Romanian VAT (21%).
Reporting:
- Form 300: line 9
- Form 394: section C
- Beneficiary established in a non-EU country
If the beneficiary is established outside the EU and has no fixed establishment in Romania, the service is not taxable in Romania.
Reporting:
- Form 300: line 3
- Form 394: not applicable.