Government Emergency Ordinance no. 59/2021 for amending and completing the Fiscal Code

In detail

Government Emergency Ordinance no. 59/2021 transposes into the national legislation the provisions of art. 2 and 3 of Directive (EU) 2017/2455 and Directive (EU) 2019/1995 on certain value added tax (VAT) obligations for the provision of services and distance sales of goods.

Distance selling – new definitions

Intra-Community distance sales of goods are defined as those deliveries of goods dispatched or transported by or on behalf of the supplier, including where the supplier is indirectly involved in the transport or dispatch of the goods from one Member State to another, and concludes the shipment or transport of the goods to a taxable person, a non-taxable legal person not registered for VAT purposes or to any other non-taxable person (final consumers).

Distance sales of goods imported from third territories or third countries are defined as those deliveries of goods dispatched or transported by or on behalf of the supplier, including where the supplier is indirectly involved in the transport or dispatch of the goods from a third territory or third country to a final consumer in a Member State.

When goods are offered for sale through an electronic interface, such as an online marketplace, platform, portal or other similar means, the electronic interface becomes a buyer-reseller from a VAT perspective in the following situations:

• It facilitates the distance selling of goods imported from third countries or third territories in batches with an intrinsic value of up to EUR 150 (low-value goods) by suppliers established or not established in the European Union (EU) to final consumer customers;

• It facilitates the delivery of goods within the EU (domestic deliveries and intra-Community distance sales of goods) by a non-EU taxable person to final consumer customers. In the case of intra-Community distance sales, the single delivery from the supplier to the final consumer is divided into two deliveries, as follows:

  • The delivery from the non-EU supplier to the electronic interface is exempt from VAT with the right of deduction;

  • The delivery from the electronic interface to the final consumer customer is taxable.

For imports of low-value goods, a single delivery from the supplier selling goods via an electronic interface to the final consumer is divided into two deliveries:

• The delivery from the established or non-established supplier in the EU to the electronic interface is treated as a delivery without transport and is outside the scope of VAT in the EU;

• The delivery from the electronic interface to the final consumer customer is the delivery for which the shipment is allocated and is a taxable delivery.

Special non-EU OSS regime

Taxable persons not established in the EU owe VAT in each Member State where the services of electronic, telecommunications, broadcasting and television services are taxed, as well as other services which are taxable in the EU (e.g. accommodation, access to events, real estate services, short-term rental of means of transport) to non-taxable persons in the EU. The taxable person has to register for VAT purposes in each Member State of consumption for the declaration and payment of VAT.

A non-EU taxable person performing such services may opt to apply a special regime by which it is registered for VAT purposes in a single EU Member State in order to declare and pay VAT for all electronic, telecommunications services, broadcasting and television services, as well as other services that are taxable in the EU (e.g. accommodation, access to events, real estate services, short-term rental of means of transport) to non-taxable persons in the EU, through the one-stop-shop (OSS). The special regime for taxable persons not established in the EU is called the special non-EU OSS regime.

EU OSS Special Regime

The current ceilings for distance sales applied by EU Member States with values ​​of EUR 35,000–100,000 have been replaced by a single ceiling of EUR 10,000 for setting the place of taxation of intra-Community sales of distance goods. That ceiling covers both intra-Community distance sales of goods and the provision of electronic, telecommunications, broadcasting or television services to non-taxable persons in all EU Member States.

Intra-Community distance sales of goods and/or the provision of electronic, telecommunications, broadcasting or television services is subject to VAT in the Member State of dispatch/establishment of the provider when the ceiling of EUR 10,000 is not exceeded. If that threshold is exceeded, the transactions are subject to VAT in the Member State of destination of the goods/place where the beneficiary of the services is a non-taxable person (Member State of consumption).

As of 1 July 2021, the special VAT return and payment scheme applicable to the provision of electronic, telecommunications, broadcasting and television services by taxable persons established in the EU to non-taxable persons established in other EU Member States (the Mini One-Stop-Shop) ) becomes the one-stop-shop (OSS).

For taxable persons established in the EU, the special scheme is called the special EU OSS scheme and is optional. Thus, a taxable person with registered office of economic activity in Romania can declare and pay in Romania the VAT due in other Member States for the following operations:

• Intra-Community distance sales of goods, including those facilitated by an electronic interface for the taxable person not established in the EU;

• Services other than electronic, telecommunications, broadcasting and television services provided to non-taxable persons in the EU under the Tax Code (e.g. accommodation, access to the event, real estate services, short-term rental of means of transport) in EU Member States other than Romania;

• Internal deliveries to non-taxable persons in Romania facilitated by electronic interfaces for taxable persons not established in the EU.

A taxable person not established in the EU may choose Romania as a Member State of registration for the application of the EU OSS regime for intra-Community distance sales of goods, electronic, telecommunications, broadcasting and television services, as well as for other services that are taxable in the EU (e.g. accommodation, access to events, real estate services, short-term rental of means of transport) provided to non-EU taxable persons, which must apply the special non-EU OSS regime.

If the EU OSS is not being applied, the taxable person is required to register for VAT purposes in each Member State of consumption after exceeding the single ceiling of EUR 10,000, or for other services delivered in a Member State other than the provider, carried out with non-taxable persons in the EU (for which there is no registration ceiling).

The taxable person who chooses to apply the special EU OSS regime is required to submit a special VAT return on a quarterly basis by the end of the month following the end of the quarter.

The VAT due in other Member States is paid in Romania, into a Euro account indicated by the tax authority, by the deadline for submitting the special declaration (the tax authority subsequently transfers the amounts to the Member State of consumption). The electronic interfaces that facilitate the sale of goods at a distance and certain internal deliveries have to keep electronic records of the operations performed.

VAT regime for distance sales of goods imported from third countries or third territories – IOSS

As of 1 July 2021, the VAT exemption for the import of goods with an intrinsic value of up to EUR 10 has been eliminated, with all imported goods now being subject to VAT in the Member States of consumption, but the person obliged to pay VAT is:

• the supplier/electronic interface for low-value imported goods if the special VAT declaration and import one-stop-shop (IOSS) payment regime applies;

• the person presenting the goods to customs for imported goods with an intrinsic value exceeding EUR 150.

Taxable persons which deliver goods imported from third countries or third territories to EU final consumers may apply the special one-stop-shop (IOSS) scheme, which allows them to register for VAT purposes in a single Member State (Member State registration) for the declaration and payment of VAT due in all Member States of consumption.

The IOSS regime can also be used by EU-based suppliers, as well as by the EU-based or non-EU-based electronic interface which facilitates the distance selling of imported goods under certain conditions.

The supplier or the electronic interface can appoint an intermediary to act in its name and on its behalf. The intermediary is then obliged to pay the VAT and fulfill all the obligations incumbent under this special regime. The designation of the intermediary is mandatory for suppliers / electronic interfaces not established in the EU if their state of establishment has not concluded a mutual assistance agreement with the EU on VAT.

The taxable person opting for the application of the special IOSS regime receives a special registration code for VAT purposes which is communicated to the customs authorities. The electronic interfaces that act as a buyer/reseller obtain their own IOSS code, which they will communicate to the suppliers for which they facilitate the distance sales of imported goods (the supplier of the goods no longer has to obtain IOSS code in this case). The taxable person using the special IOSS scheme (suppliers or electronic interfaces which are buyers/resellers) or the intermediary acting on their behalf declares when the activity starts or ceases under this special regime, or when the activity is modified so that the necessary conditions are no longer fulfilled for using the special scheme. That information has to be communicated electronically.

In addition to the IOSS code, intermediaries obtain a special code identifying them as intermediaries. They subsequently act like a tax representative in obtaining an IOSS code for each supplier they represent and fulfilling all the obligations arising from their mandate.

The taxable person applying the special IOSS scheme must submit special VAT returns on a monthly basis stating the supplies made. They are also required to pay their VAT in the Member State of registration by the date on which the special return has to be submitted.

If not applying the special IOSS regime, the person presenting the goods in customs on behalf of the non-taxable person recipient on the Romanian territory may use the special mechanism for declaring and paying VAT on imports of low-value imported goods, based on an authorisation issued by the competent customs authority and subject to the establishment of a guarantee, in the case of goods for which the shipment or transport ends in Romania.

The special VAT declaration and payment mechanism involves:

• the person receiving the goods being obliged to pay VAT;

• the person who presents the goods to customs on the Romanian territory collecting the VAT from the receiver of the goods and paying the tax. Declarants must ensure that they do not hand over the goods if the customer does not pay VAT;

• the standard rate of VAT being applied to imports of goods subject to this special mechanism.

If Romania is the importing Member State, the person presenting the goods to customs must submit to the competent customs authority, a special VAT return in electronic format containing information on the total amount of VAT collected in the calendar month. 

VAT is paid to the customs authorities based on the special declaration by the sixteenth day of the month following that in which the special declaration was drawn up.

Billing for distance sales and services

The legislation provides for a simplified method of invoicing, in the sense that, if suppliers/providers opt for the special VAT regimes presented above, their invoices are subject to the application rules in the Member State where they are registered. 

It is not obligatory to invoice for intra-Community distance sales or distance sales of imported goods.

Source: [GEO no. 59/2021 for amending and completing the Fiscal Code, as published in the Official Gazette no. 630 dated 28 June 2021]

The takeaway

Romanian companies selling goods to consumers in other Member States will have to re-analyse those intra-Community distance sales based on the new ceiling. They will also have to adapt their IT systems in line with the new VAT obligations for low-value imported goods.

Companies that already have VAT codes in other Member States and operate within the current distance selling ceilings may consider using the special EU OSS regime for intra-Community distance sales of goods. The use of the special IOSS regime may also be considered for low-value imported goods delivered to EU final consumers.

Companies operating electronic interfaces need to review the list of merchants selling goods in the marketplace and implement a buyer-reseller marketing structure for distance selling if the conditions are met.

Companies in Romania or those established outside the EU that choose Romania as a Member State of registration for special EU OSS, non-EU OSS or IOSS regimes need to keep records of distance sales/services provided, so as to allow the authorities to conduct inspections regarding the VAT amounts due.