The Romanian economy and fiscal legislation are much more complex than the government realizes. From 2024 Electronic account it is binding in relations between companies, including for PFA. This is stated in the new tax law of the Çolaku government (L296/2023).

The Chamber of Fiscal Advisers (CCF) has sent a document to the Ministry of Finance asking for clarification on a number of practical aspects related to interpretation, and some things show that the New Taxes Act is not complete with regard to the application of electronic invoicing. This is in conditions where there is still a month and a half before the application is submitted.

The problem with invoices that contain non-VAT items

For example, in the RO e-Invoice system, it is a problem to issue invoices that contain items outside the scope of VAT. It is advisable to follow the rules established by GEO 120/2021, that is, the technical characteristics and the use of the main elements of the electronic invoice, as provided by the European standard.

According to the Chamber of Fiscal Consultants, compliance with these technical specifications appears to result in duplicate invoices containing both taxable or exempt transactions and non-VAT (outside VAT) transactions. issued to taxpayers in such situations as:

• issuing the cost of meal vouchers (the transaction is not subject to VAT) and the commission for issuing vouchers (the transaction is taxable);
• invoicing for restaurant services and corresponding tips (for one tax receipt/invoice);
• invoicing for the provision of services or delivery of goods and the corresponding guarantee of due performance;
• invoicing for accommodation services and hotel fees charged by the supplier on behalf of the local public authority;
• water billing and municipal waste water tax charged by the utility provider on behalf of the local public authority
• issuance by the telephone service provider of the tariff for the subscription together with possible fines for the consumer, etc.

Thus, compliance with the technical specifications and specifications for the use of the main elements of an electronic invoice, as provided for in the European standard, leads to the issuance of two invoices for transactions of the type indicated above (taxable transactions and/or VAT-exempt transactions and transactions , which are not subject to VAT):

1. the first invoice for a taxable transaction (ie the cost of drinking water consumed/the cost of the commission for issuing meal tickets/the cost of restaurant services… etc.), which will contain the Seller’s VAT identifier

2. a second invoice for a non-VAT transaction (i.e. counter value of municipal sewage tax/counter value of meal vouchers/counter value of tips… etc.) which will not contain the Seller’s VAT ID, although the invoicing entity is registered for VAT purposes in Romania.

The problem of issuing invoices in the RO e-Invoice system by taxpayers whose VAT code has been canceled by the tax authorities

According to the Chamber of Fiscal Consultants, the legislation currently does not determine whether taxpayers whose VAT code has been canceled by the tax authorities are required to issue VAT invoices for taxable transactions.

Consultants want to know whether these people will be required to issue invoices in the RO e-Invoice system and, if so, what VAT category code (S – normal/reduced rate or O – VAT exempt) should be used by the supplier/provider to create an electronic invoice to be validated by the system.

Issuance of invoices by the beneficiary on behalf of and at the expense of the supplier or a third party

In the technical specifications, the consultants do not find specific rules/specific operating conditions for situations where invoices are issued by the beneficiary/or a third party on behalf of and on behalf of the supplier/supplier based on an agreement signed in advance or after notification sent to the competent tax authority.

The Ministry of Finance is requested to indicate whether beneficiaries/third parties can issue e-invoices (XML files) on behalf of and on behalf of suppliers/providers, and if so, what technical specifications such e-invoicing should meet and what is the effective way sending such an invoice.

Disproportionate punishment for e-Invoice: the act is not punished / The size of the fine: unlimited

The penalty applicable to the beneficiary, a taxpayer established in Romania, is introduced from 1 July 2024 and is equal to the amount of VAT shown on the invoice issued by the business entity established in Romania, which is otherwise received and registered by the beneficiary. than through the RO e-Invoice system.

“We consider it reasonable and fair from a legal point of view, levy a fine for the offense committed, regardless of the amount established by the bill, the amount of which is determined in accordance with the circumstances and circumstances of its commission, according to the degree of public danger of the act, unless otherwise provided by the general principles governing offenses. (Art. 5 OG 2/2001). Or, in this case, the penalty applied to the beneficiary is proportional to the amount invoiced by the supplier, so the action is not sanctioned, but rather governed by another mechanism that may give the false impression that VAT is not deductible,” says the CCF. .

The CCF established that the will of the legislator consisted precisely in non-compliance with the basic principles of determining the amount of the fine, therefore, in the newly introduced article (LXV reference 13^2 OG 120/2021), it departs from Art. . 8 para. (2) lit. a) of OG 2/2001 regarding the legal regime of infringements, so that the level of this fine may even exceed the maximum level of the infringement fine of 100,000 lei provided for in this letter a).

In fact, the amount of the fine equal to the amount of VAT in the invoice is practically unlimited.

“Considering, however, that a derogation from another, which provides for the possibility of the violator paying half of the minimum amount of the applied fine, was not made within 15 days from the moment of notification of the protocol, the application of this article remains unchanged. it is unclear, especially since

it is also unclear whether the minimum level of the fine in the amount of 25 lei (provided in Article 8, paragraph (2) of the operative part), from which there was no deviation, as well as the provisions of Article 13^3, recently introduced, which establishes that all other provisions of OG 2/2001, from which no express derogations have been made, apply in the event of a violation of Article 13^2 OG 120/2021,” the CCF said.

To the extent that this provision is retained, CCF understands from the text of the Act that the penalty will apply to any person paying the tax, whether a small business or a person registered for VAT purposes, which of course , can cause great harm to small businesses, for whom it is more difficult to comply with tax obligations, if we take into account the access to digitization, including the Internet in some regions of the country, as well as their limited ability to allocate material and human resources to comply with the tax law requires in this case .

Double fine for some entrepreneurs

In addition, in the case of persons entitled to the deduction in full, this measure represents a double penalty.

On the one hand, by confirming the provisions newly introduced from 1 July 2024, it could be interpreted that they are deprived of the right to deduct VAT (even if they meet the essential conditions for the exercise of this right, according to the consistent case law of the CJEU).

If they do not deduct the VAT, they will be fined double and by applying a penalty equal to the amount of VAT shown on the invoice (assuming they received the VAT invoice but not through the RO e-invoicing system).

However, we emphasize that the right to deduct cannot depend only on the content of the invoice or the method of its transmission by the supplier, respectively received by the beneficiary, as this would grossly contradict the jurisprudence of the Court of Justice of the EU.

See a full letter with e-invoice issues sent to the Ministry of Finance for resolution

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