In the context of its tax practice, Costaș, Negru & Asociații team approaches intricate VAT matters on a daily basis, including questions arising from outside the European Union.
The issue of the refund of value added tax (VAT) entails numerous discussions, especially if the refund is requested by a taxable person who is not registered for VAT purposes in Romania and who is not a member of the European Union. In this context, we will analyze the conditions under which a taxable person from a third country can request a VAT refund in Romania.
In this context, it should be noted that under Article 302 para. 1 letter b) of the Fiscal Code, a taxable person who is not registered and who is not obliged to register for VAT purposes in Romania, not established on the territory of the European Union, may apply for a refund of the tax related to imports and purchases of goods or services made in Romania, if, according to the laws of the country where he is established, a taxable person established in Romania would have the same right to a refund in respect of VAT or other similar taxes or duties applied in that country.
In other words, we are talking about reciprocal advantages that the two countries offer each other. These are proven by the existence of reciprocity agreements or declarations signed by representatives of the competent authorities of Romania and the applicant country. In order to sign such agreements/declarations, the competent authorities of the countries concerned must contact the Ministry of Public Finances. The countries with which Romania has signed reciprocity agreements/declarations concerning the refund of value added tax will be published on the website of the Ministry of Public Finance.
At the moment, Romania has reciprocity agreements with Serbia, Norway, Turkey and from 2024 with the United Kingdom. In other words, if a taxable person who is located on the territory of one of the listed states will be able to submit a VAT refund claim, and it will be accepted without any problems if it fulfills the rest of the conditions.
It follows from the above-mentioned legal provisions that the first condition to be checked, if we are talking about a taxable person from a third country, is reciprocity. Only if the latter exists can the taxable person claim a VAT refund in Romania. In other words, at the moment, only Serbia, Norway, Turkey and the United Kingdom can obtain a VAT refund in Romania. Obviously, we are not talking here about the Member States of the European Union, in which case there is no such condition.
Further on, considering that there is a reciprocity agreement between the applicant state and Romania, we present another condition to be fulfilled, namely the appointment of a fiscal representative. In other words, if the taxable person from a third country fulfills all the conditions for obtaining a VAT refund in Romania, the refund will not be made directly, but through a fiscal representative. The taxable person in the third country is obliged to appoint a fiscal representative in Romania.
Further, we point out that the representative must fulfill the following obligations in the name and on behalf of the applicant:
a) Submit to the competent tax authorities an application, enclosing all original invoices and import documents, showing the tax for which refund is claimed;
b) Submit documents proving that the applicant is engaged in an economic activity which would entitle him/her to taxable status under Article 269 of the Tax Code, if he/she were established in Romania;
c) To submit a written declaration by the applicant that during the period to which the application for reimbursement relates, the person concerned has not carried out supplies of goods or services which took place or were considered as taking place in Romania, with the exception of the services referred to in Article 2.
Another important aspect concerns the deadline within which the refund application must be submitted. Therefore, the taxable person must submit the refund claim to the competent tax authority no later than 9 months after the end of the calendar year in which the tax becomes due.
The decision on the refund application shall be issued within 6 months from the date on which the application, accompanied by the documents necessary for the examination of the application, is received by the competent tax authorities. If the refund is refused in whole or in part, the competent tax authorities will state the reasons for their decision and the claimant will have the right to appeal against the decision.
Finally, please note that VAT refunds are made in lei in an account opened in Romania and indicated by the tax representative. Any bank charges will be borne by the applicant.
In conclusion, a taxable person who is located on the territory of a non-EU Member State can claim VAT refund in Romania only if there is a reciprocity agreement between the applicant’s state and Romania.
This article was prepared for the blog of the law firm Costaș, Negru & Asociații by atty. Loredana Feier, from the Cluj Bar Association.
Costaș, Negru & Asociații is a law firm with offices in Cluj-Napoca, Bucharest and Arad, which provides assistance, legal representation and advice in several practice areas through a team of 20 lawyers and consultants. Details of the legal services and the composition of the team can be found at https://www.costas-negru.ro.
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