Reverse taxation simplification

Beginning with 2008, and according to the article 160, 2nd paragraph from the Fiscal Code, with the further modifications and addings, the goods and the services for the delivery of which the simplification procedures regarding reverse taxation are applied include:

1. the offal’s and the secondary raw material, resulted from their capitalization, such as they are defined by the Government’s Urgent Disposition no 16/2001 regarding the administration of the recycling industrial offal’s, republished, with the further modifications.
2. the goods and/or the performed services by or for the persons for whom the insolvency procedure was started, excepting the goods furnished within the retail trade;
3. the wooden material, in agreement to the norm stipulations.

In accordance with the point 82 from the Methodological Stipulations:

Beginning with 2008, and according to the article 160, 2nd paragraph from the Fiscal Code, with the further modifications and addings, the goods and the services for the delivery of which the simplification procedures regarding reverse taxation are applied include:

1. the offal’s and the secondary raw material, resulted from their capitalization, such as they are defined by the Government’s Urgent Disposition no 16/2001 regarding the administration of the recycling industrial offal’s, republished, with the further modifications.
2. the goods and/or the performed services by or for the persons for whom the insolvency procedure was started, excepting the goods furnished within the retail trade;
3. the wooden material, in agreement to the norm stipulations.

In accordance with the point 82 from the Methodological Stipulations:

The essential condition stipulated in the article no 160, first paragraph from the Fiscal Code, for the application of the simplification measures, respectively of the reverse taxation, is that the supplier/performer as well as the beneficiary should be registered for VAT purposes according to the article no 153 from the Fiscal Code and the mentioned process has to be imputable. The measures of simplification are applied only for processes finalized within the country such as the article 125 from the Fiscal Code defines.

The goods that are part of the wooden material category, stipulated in the article 160, second paragraph, c letter from the Fiscal Code are the wooden mass as well as the wooden material established by the Minister of the Finance and Economy.

In the case of the deliveries/performing stipulated in the article no 160, second paragraph from the Fiscal Code, including the already collected advances, the suppliers/performers emit invoices without VAT, but with the mention of “reverse taxation”. The tax is calculated by the beneficiary and is written in the invoices and in the purchasing journal, being considered as collected VAT, as well as deductible VAT in tax deduction. The accountant, the beneficiary will register during the fiscal period 4426=4427 with the due VAT. The accountant’s registering 4426=4427 at the buyer is called self-liquidation VAT, the collecting of the VAT at the level of the deductible VAT is assimilated with the payment of the VAT to the supplier/performer. The stipulations of this paragraph are valid for any other types of situations in which “reverse taxation” is applied.

The persons subject of taxation with mixed regime that are the beneficiaries of some acquisitions submitted to reverse taxation, in accordance to the article no 160 from the Fiscal Code, will deduct the tax in the tax deduction in the limits and the conditions established at the article no 145, 146, 147 and 1471 from the Fiscal Code.

The suppliers/performers that are persons subjected to taxation with mixed regime will take into account the prorate, as taxable operations, the value of the delivery/performing for which reverse taxation is applied.

The non application of the simplification measures stipulated by law will be sanctioned by the fiscal institutions through the obligations of the suppliers/performers and of the beneficiaries at the rectification of the operations and the application of reverse taxation according to the stipulations from the present norms.

In the situation in which the competent fiscal institutions, having made the necessary search, establish that for the operations stipulated in the article no 160, second paragraph from the Fiscal Code, the measures of simplification stipulated by law haven’t been applied, they will oblige the beneficiaries at the canceling of the deductible tax by the intermediate of the supplier’s account, the making of the accounting registration 4426=4427, the registration in the VAT deduction made at the end of the fiscal period in which the control was finalized, at the regularizations. In the situation in which the beneficiaries are persons subjected to mixt taxation, and the acquisitions are destined to the realization of deductible, as well as non deductible operations, the amount of the deductible tax will be determined on the basis of prorate from the date of the acquisition of the goods subjected to reverse taxation and it will be registered within the range of the deduction regularizations, which is no longer affected by the application of prorate from the current period.

Any situations in which the application of reverse taxation implies difficulties regarding registering of the goods or the respective stipulations of the article 160 from the fiscal code will be solved by the Central Fiscal Committee.

To conclude, starting with 01/01/2008, measures of simplification are no longer applied in the following cases:

• building deliveries, parts of a building and the plots of land of any type, for the delivery of which the taxation regime was applied
• Construction works.