New legislative changes in June

I. Emergency Ordinance 59/2021 for the introduction of special VAT schemes

In the Official Gazette No. 630 of June 28, 2021, was published GEO 59 for the amendment and completion of Law No. 227/2015 regarding the Tax Code.

The present Emergency Ordinance introduces new special treatments and simplification methods in the for VAT.

Here are some general concepts and aspects that will help to understand the special schemes introduced.

• The concept of distance sales is replaced by “intra-Community distance sales” of goods. The concept of “distance sales of goods that are imported from third territories or third countries” is introduced.

• Rules for electronic platforms are provided, in the sense that the electronic platform is considered to have received and delivered the goods itself (i.e. it is a buyer and reseller) when:

• It facilitates the distance sale of goods imported from third countries with a maximum value of EUR 150,

• It facilitates the supply of goods to the European Union (domestic deliveries and intra-Community distance sales) by a taxable person not established in the European Union to a non-taxable person.

The taxable persons who make intra-Community distance sales have the option to apply the new VAT system in order to pay the VAT due in other Member States to only one Member State ('MS'), or they may register in each MS where the shipment of goods ends in order to pay the respective VAT.

The GEO 59/2021 mentions 3 special VAT schemes for distance sales:

1. NON-EU One Stop Shop (OSS) – Art. 314 Tax Code

• This special scheme is a simpler method for persons who are not established in the EU, to pay the VAT due in all EU Member States, to only one MS through a “one stop shop” (OSS). The alternative to this is for these persons to register for VAT purposes in each MS in which they owe VAT for the provision of services to non-taxable persons.

• The scheme is applied exclusively by taxable persons not established in the EU and only for services to non-taxable persons. Thus, the services to taxable persons will continue to have the same VAT treatment. In practice, from 1^st of July 2021, the special regime for telecommunications, broadcasting and electronic services ('TBE services') is extended also to other types of services.

• There are no minimum thresholds for this scheme, and the non-EU person owes VAT from the first supply in the European Union.

• In practice, if the non-EU taxable person will be registering in Romania, s/he will prepare a special return in euro that will include the net amount and VAT due in each MS, and then s/he will pay VAT for all MS to the Romanian tax authorities who will in turn transfer the corresponding amounts to each MS.

2. EU One Stop Shop (OSS) – Art. 315 Tax Code

• This is a special scheme for the declaration and payment of VAT in one MS, for services rendered and intra-Community distance sales for which VAT is owed in several MS

• Thus, the MOSS (Mini One Stop Shop) regime, which applied only to TBE services, now applies to other services, as well as intra-Community distance sales, becoming OSS.

• For these transactions there is a ceiling of EUR 10,000 (46,337 RON) for TBE services and distance intra-Community sales which applies as follows:

- If the ceiling is NOT exceeded, the place of supply is in the country where the taxpayer is established and therefore the VAT of that country is applied

- If the ceiling is exceeded, the taxpayer has 2 options: it registers in each MS where VAT is due or applies the OSS regime and pays VAT only in one state for all these transactions, and the respective MS will transfer the amounts to each of the other states in which the tax is due

• The above ceiling shall not apply to:

• TBE services supplied by non-EU providers
• intra-Community distance sales done by non-EU suppliers
• Distance sales of imported goods
• Services other than TBE, provided to non-taxable persons from the EU
• Local deliveries made by an electronic platform

• The registration for the application of the OSS scheme, generally, should be made in the State where the taxpayer is established. Those who are not established in the EU can choose one of the MS where they have a fixed establishment, and if they do not have one in the EU, they can choose one of the MS where the transport of goods begins.
• In Romania, the taxable person applying the EU OSS will draw up quarterly special return in euro which will include the net amount and VAT due in each MS, and then pay the VAT for all MS to the Romanian tax authorities which will, in turn, will transfer the corresponding amounts to each MS.
• The electronic platforms that facilitate distance sales must keep electronic records of transactions for a period of 10 years.

3. Import of low-value goods

• This special scheme (IOSS) was introduced to simplify the declaration and payment of VAT for the sale of low value goods imported into the EU
• The import VAT exemption for goods with a value of less than EUR 10 is removed, but the custom duties exemption for those with a value of less than EUR 150 remains (with some exceptions)
• A special scheme has been introduced for distance sales of imported goods - IOSS (Article 315^2) and also a special mechanism for declaring and paying import VAT (Article 315^3), applicable when the above special scheme does not apply. These arrangements are optional and there is still in place the normal procedure for paying import VAT.

3.1.     IOSS regime (art. 315^2)

• If the IOSS procedure applies, the place of delivery for distance sales of imported goods is the place where the transport ends, even if the import was made in another MS. Thus, when the import is made in a MS other than the one of destination, import VAT is not paid. The VAT is due on the subsequent delivery through IOSS (for this the person applying the procedure must have an IOSS code to communicate to the customs authorities).

• The applicable VAT rate is the one of the MS in which the delivery takes place

• The taxable person applying the IOSS will prepare a special return in euro on a monthly basis, containing the net amount and VAT due in each MS, and will pay the VAT for all MS to the Romanian tax authorities which will then transfer the corresponding VAT amount to each MS.

3.2.     Special mechanism for declaring and paying VAT on import (Article 315^3)

• If IOSS does not apply, the recipient of the goods is the person who is liable to pay VAT. But the person presenting the goods to customs (courier, transporter, postman, etc.) is the one who collects the VAT from the recipient and pays the tax

• The mechanism can be applied by customs officers, transport companies, couriers, postal operators, etc.

• They must submit a special VAT return to the customs authority on a monthly basis and pay the tax by the 16th of the following month.

II. Emergency Ordinance 51/2021 for the postponement of certain deadlines

• We remind you that through Law 295/2020 regarding the modification and completion of the Tax Procedure Code, the Article 272 of the respective Code has changed, in that the activity of resolving the appeals has been assigned from the ANAF structures to a specialized structure within the Ministry of Public Finances.
• At the time of publication (21 December 2020), Law 295/2020 set a 6-month deadline for the Ministry of Public Finance to take over this activity, which was on 21^st of June 2021.
• Through GEO 51/2021, this deadline is postponed until 1 October 2021.

Disclaimer

The information contained in this newsletter is intended to give you an overview of new legislation; the newsletter does not contain a comprehensive analysis of each topic. For further information on the topics covered please contact us. No responsibility is accepted for decisions or omissions following the use of the content of this newsletter. All Crowe newsletters can be viewed on the page: www.crowe.ro