VAT on electronic services in Romania

The GEO No. 8/2014 indicating latest operations regarding Tax Code changes provides details related to future VAT regime on supply of electronic services which will modify from 1^st of January, 2015.

Starting with the next year, the present VAT regime for supply of electronic services provided by non-EU taxable persons will be extended to telecommunications, radio and television broadcasting services fields as well.  The newly introduced stipulations add important details concerning the location of the supplier and as well the place of the consumption. According to these terms, the taxable person in question is someone who is not a resident of EU area and who does not owe a business establishment within these borders, as well not having the obligation to be registered for VAT purposes for other operations but those included in the special regime. The registration member state is defined as the EU state chosen by the taxable person to declare the initiation of business operations, within EU borders. The member state of consumption is nominated as the EU member state where services are supplied. These services refer only to telecommunications, radio and television broadcasting. According to new stipulations valid starting with the 1^st of January 2015, any non-EU taxable person may benefit from a special taxation regime applying for telecommunications, radio and television broadcasting services provided to non-taxable persons, residents in an EU state. This special regime allows the registration in one single member state of the taxable person delivering these services to non-taxable individuals within EU borders. The specific regime will also apply to taxable persons, resident in an EU state, but another member state, different from the member state of consumption.

According to GEO No.8/2014, the taxable person in question, not a resident in the member state of consumption, refers to someone who possesses an establishment, headquarter for business activities on EU territory but does not owe such an establishment on the territory of the member state of consumption. The registration member state refers to either the EU location where is established the headquarter handling the business activity or the EU location where the person in question holds a secondary office. If the taxable person has several secondary offices allover EU territory, the registration member state is the state where the taxable person declared to apply the specific VAT regime. This is valid for the present year and for the two following years as well. The member state of consumption is the state where these services are supplied. New regulations explain that any taxable person that possesses an establishment handling business operations in Romania, or for the situation when the person in question does not owe a registered office on EU territory but it has an office in Romania, there is the chance to apply this special VAT service. The services in question are provided to non-taxable persons in EU member states provided that the supplier does not owe the office in the same member state. For any additional details feel free to contact our lawyers.