New VAT rules starting 1 January 2010

5 Octombrie 2009

MAZARS CONSULTING S.R.L.

 

Why VAT matters to your business

Any business buying, selling, investing or employing staff in one or more countries is confronted with indirect taxes, such as VAT (Value Added Tax). VAT is a tax charged on most business-to-business and business-to-consumer transactions throughout the EU (European Union) and in a growing number of other countries. In the Member States of the EU national VAT laws are based on Community legislation. VAT however does not only exist in the EU. Many other countries all over the world now operate a similar VAT system.

The complexity of the VAT legislation is a growing concern for businesses. Proper management of VAT and other indirect taxes is essential, especially for companies involved in international trade, as they invariably encounter cross-jurisdictional issues and increasingly complicated tax risks. Therefore, obtaining expert advice is key to managing VAT, as this can positively influence your company's financial position in the long term.

In the Member States of the EU the following transactions are subject to VAT:

• importation of goods from non-EU countries;
• the supply of goods by a trader within the territory of the country;
• the supply of services by an entrepreneur within the territory of the country;
• intra-community acquisitions of goods.

Companies established outside the EU need to be aware of the potential requirement to register for VAT in those Member States in which they do business.

If a company imports or supplies goods or services in different Member States within the EU this may create a requirement to register for VAT in each of those countries, whether or not the company has a physical presence there.

 

What is changing ?

We are pleased to inform you that the year 2010 brings together important changes in the VAT field at the European level.

On 12 February 2008, the European Union Council adopted the so-called „VAT Package". This includes the followings: Council Directive 2008/8/EC, Council Directive 2008/9/EC and the Council Regulation (EC) No 143/2008 and will be transposed into the domestic VAT legislation of each Member State, including the Romanian one. However, the VAT Package will be implemented gradually: 1 January 2010, 1 January 2011, 1 January 2013, 1 January 2015.

Hereinafter, we will expose the main changes which enter into force on 1 January 2010 due to the VAT Package.

1. The place of supply of services

 Under the general rule, the place of taxation becomes the place of consumption

 The recipient - taxable person will be obliged to account for the VAT under the reverse charge mechanism

 The services supplied to non-taxable customers remain taxable according to the current rule- at the place where the supplier is established

 If these services are provided from a fixed establishment in another country, the place of supply is where that fixed establishment is located

 All recipients- taxable persons shall be considered as taxable persons for all services received

 Non-taxable legal persons which are registered for VAT shall be considered taxable persons for services received.

2. New compliance requirements for the intra-Community services

There will be introduced the requirement to file a new recapitulative statement, in which:

 the suppliers of taxable services shall fill in the recipients of their services and their specific VAT identification numbers and also the total amount of the services rendered to each of these customers

 it will be declared only the services which are effectively taxable in the Member State of the beneficiary.

3. New procedures for VAT refunds to taxable persons acquiring goods or services outside the member state where they are established

The refund claims shall be submitted as follows:

 directly in the Member State of their establishment

 electronically

 within nine months from the end of the year in which the VAT becomes chargeable, compared to six months as in present

The tax authorities are required to make the reimbursements in four months as opposed to six months as in present. If not, they will also have to pay penalties.

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