A significant number of activities have been exempted from paying VAT since June 11 in accordance with Law 88/2023. Fiscal consultant Adrian Benza made a brief analysis.

It should be noted that by that time the rules of submission or the order of the Minister of State Finance regarding the effective submission procedure must be adopted.

Starting from June 11, 2023, Benza says, the following categories of services and supplies of goods are exempt from VAT with the right to deduct:

1. Services for the construction, rehabilitation, modernization of hospital units from the publicly available state network or if these units belong to and are operated by non-profit organizations that are registered in the public register of beneficiaries of sponsorship assistance;

2. Supply of medical equipment, instruments, appliances, products, accessories, means of protection, materials and consumables for sanitary use or goods used by persons with disabilities, respectively rental or leasing, repair or adaptation of these goods for hospital units or sub- entities that are not – profit registered in the register of beneficiaries of sponsorship assistance;

3. Supply of prostheses and their accessories with retention of VAT relief on dental prostheses. Exemption from VAT is maintained for dental prostheses, but without the right to deduct;

4. Delivery of orthopedic products.

For the exemption provided for in points 1 and 2, the fiscal consultant declares that he will follow the direct procedure of invoicing without VAT:

• If the beneficiary is a public hospital or subordinate to a public institution;

• If the beneficiary is a non-profit organization, the obligation to collect VAT in the invoice by the service providers remains with the obligation of the state budget to reimburse the non-profit institution for the collected VAT.

Note: for the supply of prostheses and the supply of orthopedic products, the legislator did not provide for a special procedure so that VAT is not paid in the sales document (fiscal check/invoice).

Examples of practical application of this new law

1. The sale of glasses, which are considered prosthetics for vision, is subject to VAT at the rate of 9% as of the date of this analysis.

From June 11, 2023, VAT is no longer charged when selling these glasses, and the business entity that sells these glasses has the right to deduct VAT from purchases made for the purpose of selling glasses;

2. If a developer registered as a VAT payer in Romania carries out the construction of a hospital subordinate to the Ministry of Health, after June 11, 2023, he will no longer collect VAT for construction and installation works.

Of course, the hospital is also not obliged to pay VAT to the developer. VAT is allowed to be deducted from all purchases for the construction of the hospital. Deductible VAT can be claimed at

refunds, and if VAT refunds are not made in due time, this company will have difficulties in financing the payment of VAT to suppliers;

3. A construction company registered for VAT purposes in Romania builds a hospital in Romania for the benefit of an association registered in the register of sponsorship beneficiaries maintained by ANAF. For construction services, the developer will charge VAT at the rate of 19%.

The association pays the entire invoice, including VAT, to the developer. The association has the right to claim a VAT refund in accordance with the provisions of the new law.