The government has approved new VAT Norms that come into effect on 27 November 1996. The major changes effect VAT "reverse charge" and VAT on export of services. This is a preliminary assessment of the changes as some of the amendments are not clear. However, the following may require urgent action.
REVERSE CHARGE VAT
For registered VAT payers, it appears that the reverse charge is to be included in the monthly VAT return after invoice is received. This would mean that only the net of input and output would need to be paid on the 25th of each month.
However, a separate section in the Norms requires that VAT on reverse charge must first be paid to be reclaimable. We are seeking clarification of this apparent conflict.
For juridical persons that are not VAT registered (banks etc) the VAT on import of services becomes payable within 7 days of receiving the invoice from abroad.
EXPORT OF SERVICES
It would appear that for VAT to apply the service must be used in Romania. For VAT to be zero rated the service must be provided to a beneficiary with the head office abroad for the following services: leasing, concessions and assignments of copyrights etc, publicity, consultancy service (lawyers, engineers and accountants), processing of data and provision of information, provision of personnel.
If the service is not "used in Romania" it would appear that it may fall outside the scope of VAT. In such instances we would expect that input VAT would not be reclaimable. Obviously this is significantly different to the earlier concept of an export service being used abroad.
We shall issue further information as it becomes available.
The above information is a short summary of recently published information and is not intended to be advise on any particular matter. Price Waterhouse expressly disclaims any responsibility to any person in respect of anything done in reliance of the contents of these publications.
Further information can be obtained from:
Ron Barden or Anca Troaca-Dragoman
Price Waterhouse Romania
Union International Center Etaj 3
Strada Ion Campineanu Nr 11
Bucharest 2 Romania
Telephone: 40 1 311 2455
Fax: 40 1 312 3334