6. Generating event and chargeability of VAT (Chapter VI, art 4 Generating event means the event by which the legal conditions necessary forthe charging of VAT. Chargeabilty of tax means the moment when the fiscal authorities become entitled based on k payment from persons liable to pay the ax, even ifthe payment of such tax may be deferred. Chargeabilty ofthe payment ofthe tax means the moment when any person is required to pay VAT! budget. This moment determines the moment from which a penalty for non-payment is to be interest is to be pad. 7. Generating event - Deliveries of goods and supplies of servic: 4341) ‘The generating event occurs when the goods are delivered or when the services are performed. 2) Inthe case of deliveries of goods based on a consignment agreement and inthe case of simiar ‘such as call of stocks and deliveries of goods on sight or on trial, the goods are considered to be 6n the date the consignee is seling them or, asthe case may be, the recipient ofthese goods and becomes the owner of them, 3) Inthe case of the delivery of immavablefmovable goods, the generating event shall be deemed to the date when the legal formalities are fulfled in order to transfer the propery tite from seller to or, if the transfer is operated via a leasing contractor by instalment payments, when the good is ‘over tots new beneficiary 4) With respect to supplies of services paid on the basis of statements of works, such as con ‘assembly, consulting, research, experts’ assessments and other similar works, the generating event on the date when the statements of works are issued or, as applicable the date when such state works are accepted by the beneficiary (i his is specified inthe agreement between the two parties), 5) In the case of deliveries of goods andlor supplies of services that ae made on a continuous basis giving to successive statements of account or successive payments, such as the deliveries and supplies of ‘928, water, telephone services, electrical energy and other similar operations, the goods are d ‘delivered or the services are deemed supplied on the last day of the period agreed between paris for payment or on the invoice date. However, this period cannot exceed one month for ICD of such ‘except (gas) or one year (forall other cases). {n the case of operations of rental, leasing, concession or leasehold of goods, on the date specified in contract fr the payment. 7) _In-case of ICAs when the client has to collect VAT and ifthe service is provided on a continuous basis there are no payments/statements of consumption between the partes for periods longer than one year, {generating event is at the end of each calendar year provided thatthe supply did not cease before, Not: Unless otherwise specified, al references in this course notes material are from the Fiscal Code as at 30 September 2012 2288. Chargeability of tax - Deliveries of goods and supplies of services (Art. 1342) ‘The chargeability of tax occurs when the generating event occurs. By way of derogation, the chargeabilty of tax occurs: a) The date when the invoice is issued if that cate is ‘earlier than the date of the generating event; b) In the case of the collection of an advance payment before the date of the generating ‘event, on the date when the advance payment is collected, to the extent covered by that payment, Advance payments are the partial or full payment of the countervalue ofthe goods or services, before their delivery or supply as appropriate. ©) In the case of @ delivery of goods or a supply of services realised through a vending, gaming or similar machine, on the date when cash is withdrawn from that machine. For intra-community deliveries, the chargeabiliy occurs at eater of (art 134°) 4) Invoice date (no matter ifthe invoice is for the total value or jst for advance payment) b) 15° of the month following the generating event Notes: We stil have a chargeabilty moment for exempt ICDs, even if, being exempt; there is no VAT to be callected for these delivery. ‘The necessity of chargeabilly moment is given by the deciarative obligations. ‘There is no obligation to issue invoices for advances cashed, so the advance does not affect the chargeability moment (unless an invoice is issued). 8.1 Chargeability of tax - the cash accounting scheme (OG 15/2012) Starting 1* January 2013, the chargeabilily of VAT may be delayed untl payment if several conditions are met 1. The persons allowed to apply the scheme are: i. The newly established companies registered for VAT ji, Those registered persons for VAT recording in the preceding year @ tumover of maximum 2,250,000 Lei starting with the 1# day of the second fiscal period from current year (Just those persons established and registered in Romania, the permanent establishment of a foreign ‘company does not qualify for cash accounting scheme) 2. Ifthe threshold is exoeeded in a fiscal period, the company has to: i. Notify the tax authority by 25" ofthe month following the fiscal period Note: Unless otherwise specified, el references inthis course notes material are from the Fiscal Code as al 30 September 2012. 2293‘i, Apply the cash accounting scheme one more fiscal period i, Cease to apply the cash accountng schome ater one more fiscal period 3. The cash accounting scheme may not be used by persons belonging to a fiscal, ‘group for VAT purposes 4. ‘The cash accounting scheme is ‘applicable only for DG/SS deemed to be placed in Romania except: |. Transactions for which reverse charge applies it, Exempt transactions iii, Partially/entirely cashed transaction with legal entities or with associations Wv. Transactions with affiliated parties ‘5. The chargeability of tax in cash accounting scheme occurs earlier of: ~ cashing date (in accordance with the % of Payment) as per bank statementicash receipt - 90 days after the invoice date (or after the legal term for issuing the invoice if different) 8. Im oder to apply the cash accounting scheme the taxable persons have tobe recorded inthe Registr of taxpayers applying the cash accounting scheme. 7. Inthe register of taxpayers aoplying the cash accountng scheme are recorded wihout application all new established companies registered for VAT, 8 The registered persons previously not qualified for cash accountng scheme but which subsequenty may {ely have to declare by 25” January the realised tumover inthe preceding year. no, such person wit be registered without application inthe Register of taxpayers applying the cash accounting scheme 3. The tumover considered inorder to be compared withthe threshold of 2.250,00 Lei shouldbe the sum of: ~ tax base ofall taxable transactions ~ Tax base of al ransactons exempt with deduction right e.g. ICD or exports) ~ Tax base of el corrections done in the analysed period Observation: The cash aocounting scheme system may start tobe apoted at registration January but may cease any time in the year depending ifthe turnover is exceeding the threshold/not Note: Unies otherwise specified, all references inthis course notes materal are from the Fiscal Code s at 30 September 2012, 230Illustration 8 Examples of transactions and their chargeabilty moments: Transaction Chargeabilty of tax | Chargeabiity of tax in cash accounting | without cash scheme ‘accounting scheme Sale of goods delivered and invoiced on 05,04 cashed on 10.05 | 10.05 05.04 Sale of goods delivered and invoiced on 05.04 cashed 40% on | For 40% on 10.05; | For 100% on 05.04 10.06 and 60% on 12,06, For 60% on 12.06 ‘Sale of goods delivered and invoiced on 05.04 cashed on 10.10 | 04.07 (90 days) | 05.04 Sale of goods to an affliated party delivered and invoiced on | 05.04* 05.04 05.04 cashed on 10.10 Supply of services in April noticed and invoiced on 10.05 cashed | 08.08 0 days) | 10.05 0n 23.10, Supply of services in April noticed and invoiced on 20.05 cashed | 13.08 (90 days atter | 20.05 0n 23.10 15.05 **) Intra-community acquisition of goods received on 04.05 (Invoice | 15.06 16.06 received on 20.06) paid on 03.07 of the next month te: Uniess othenvise specie, all references inthis cu 23 " the cash accounting scheme is nat applicable fr collecting VAT for transactions between affliated parties “by law any Romanian entity should issue invoices for its services supplied/goods delivered at the latest on 16 urse notes material are from the Fiscal Code as at 30 ber 2012.Lecture ‘example 7.4 Required ‘When shoul be collected the VAT in respec ofthe following transactions: @) Europa SRL received on 30, 3 goods on consignment from M Popescu SRL for cash paymer nt ‘Mr Vania bought from Teleshopping ‘SA equipment for 200 Lei on 15.04. The ‘equipment is sold $0 days money back guarantze, Mr Vania paying for he ‘quipment at delivery. Mr Vania approves ‘equipment and keeps it ir lonescu and sold them on 15 ») ‘A gas suppliers reading the consumption ‘month in the last working day of the month, ‘acco SA installed a coffee machine in the offices of Payment and Tacco is colectng the coins each Friday. Mama SRL is seling socks. In April Mama Private nursery) and gloves amounting 50,004 Of its clients twice per month and is issuing the invoice ec @) " Precious SRL. The machine is working by SRL sold socks amounting 30.000 Lei to Papa SRL ( 0 Lei to Sister SRL (a cosmetic practice) and on 05 Papa SRL and of 50,000 Leito Sister SRIof a geabity xPlanation ‘scheme or not client agrees them), even if the invoice is issued later, ‘he period agreed forthe paymentinvoice of gas (continous supply) applicable or not 93.08, $0 days after the invoice date because wasn't paid in this period when goods are delivered = earlier of (date of invoice; 15" ofthe month following the chargeable event) = earlier off17-May; 15-May} = 15May nates Specied al references in his couse nots materi are fom the Fiscal Code as at30 ber 2012, 297 the regime of consignation implies that the goods belongs to their inal owner (Mr {Greseu) unt they ae sold, and because the payment is dane in cash on 1504, tho chargeabilty moment is 15.04 no mater if Europa SRL i applying the cash ‘accounting Because Mr Vania is paying the equipment at delivery, the chargeabliy moment 15 04 (the date ofthe payment) no mates the cash acoounting scheme is applicable or ne Toillele and Douche has @ turnover above 2,250,000 and may not apply the cash accounting scheme. The chargeablty moment's at the eatler behreen plans’ Submission and invoice, so when the plans for one room are delivered (considering the Considering that a natonal gas supplier has a tumover far above 2.250,000 Lei and the cash aocountng Scheme isnot appicabl, the chargeabilly moment is atthe ase day of Together with the collection of money, no matter if the cash ‘accounting scheme is Mama has to apply the cash accounting scheme, so the invoice to Papa SRL is chargeable when the payment is done and the invoice to Sister SRL is chargeable on9. Chargeability - Intra-Community acquisition of goods (Art 135) In the case of an intra-Community acquisition of goods, the generating event occurs on the date ‘that would be the date of the generating event had those ‘goods been delivered in the Member State ‘where the acquisition is made, The chargeatility ofthe tax onan itra-Communty acquston occurs on the 15° day ofthe month following the date when the generating event occurs By way of derogation from par.(2), the chargeabilit ofthe ax occurs on the earlier of: ~ the date of invoice as stipulated inthe legislation of the other member state + the date of the setfinvoice + 15° of the month following the date when the generating event occurs Lecture example 7.5, Required State when the generating event occurs and when s the VAT chargeable in the folowing case ‘Mama SRL bought croissants from Mere SA for 10,000 Euro. Allthe croissants were ordered on 05.04 and delivered on 10,04, The related invoice was issued on 17.05 Solution Note: Unless otherwise specified, al references in his course notes material are from the Fiscal Code as at 30 ‘September 2012. 23310. Chargeable event and chargeability - Import of goods (Art. 136) (er imported goods ae, subject to customs dues, to agricultural levis rt charges braving equivalent effect Calablshed under a common poly, the generating event andthe chargeablly ofthe VAT ctem anes the ‘generating event and the chargeabilly for those Community duties occur {nthe case of an import thats nat subject othe Community duties the chargeable event and the chargeabilty of VAT occur when, if the import was subject o those duties, the chargeable event and the chargeabilty for those Community duties would occur. When goods are, on impor, placed under a temporary admission arrangement, the chargeable event and the chargeabilly ofthe VAT occur onthe date when they cease to remain subject to that regime. SO, Unless othennsespetiog al references in is course nots mae ar fom he Fiscal Code as at 30 September 2012, 234Lecture example 7.6 ‘The company ABC SRL provided in 2012 services to @ non EU company as follows: 2, Restoration of real estate located in Romania . Transport of furniture from client county tothe real estate from Romania 4. Assembly and installation of transported furniture in the real estate from Romania, , Publicity for that real estate Required 8) Explain for which services should ABC collect Romanian VAT? b) Considering that all the above services were provided to a Brazil resident person, explain again for which services should ABC collect VAT? vaT collection (YesiNo) Expla n of real estate placed in | for that real estate of fumiture from client to the real estate from and installation of furniture in the real estate ia collection | Explanation (YesiNo) VAT | of real estate placed in that real estate ‘of furniture from client the real estate from and installation of furniture inthe real estate otherwise specified, all references in this course notes material are from the Fiscal Code as at 30 2 235Solution 7.6 ') All transactions are services between two taxable persons (B28), vat Transaction collection | Explanation (fesiNo) Restoration of a rel estate placed in | vag ‘Att 133 (4) letter a (or exception 1 from both) (p Romania ‘servioe is where the immovable property is) Publicity for that real estate ne Itis no exception, the place of service isthe client ‘outside EU, so itis an export which is exempt from Vi Transport of furniture fom client | Itis no exception, the place of service isthe client country to the real estate from | N° Outside EU, so itis en export which is exempt from VAI Romania | Assembly and instalation of | v4, Art 139 (7) letter a (or exception 2 from B2B), place transported furiture inthe real estate service is Romania from Romania |) Alltransactions are services between a taxable persons and a consumer from outside EU (B2C). VAT Transaction collection | Explanation (Yes/No) Restoration of a real estate placed in | va Art 133 (4) letter a (or exception 1 from both), place Romania ‘Service is where the immovable property is Publicity for that real estate Art 133 (6) letter e4 (or exception 6.3 from B2C), tt No place of service is the client place, outside EU, so it is an export which is exempt from VAT Transport of furniture from client Art 133 ( 5) letter b (or exception 3 from B2C), the place country to the real estate from Yes of transport service is where the transport is actually Romania vartiall performed having regards to the distance performed, so Partially | the place of service is Romania for that pat of ‘transport from the Romanian border to the real estate address. Assembly and installation of Art 133 (5) letter d (or exception 4 from 82C), the place transported furniture in the real estate | Yes of service is where the service is physically carried out, from Romania in Romania AQ Note: Unies otherwise specified, all references inthis course notes material are from the Fiscal Code as at 30, September 2012. 29892. 2102 Jequiaidog: O61 52000 fos 9 woy ae eUReU Saou esnco sng seve Ie ‘peypeds esau ssetup ‘jon, payiddns saoiies so Paleniiap $po06 Jo anyen-saquncg oe yPeeiel Pe Youn ‘sunowe fue ae ynowe eer ort oy BepnIaK® aq 0} JON ‘syue} soe ga ROBEY 2 2%0 pasodu se sunoue aig ‘toned FeNenU09 jo juawyry-uoU feed 40 189) ©1820} pasenbey sunowe Jay pue sayeved ‘suo une (Puy Aq paysigerse seisiursebeweg —(q 21240 Aqee6seyp 019 yo oun aye sioweysno 1 MP94p Sond fq eB exe wy suogonpe sod sas nok ‘Weued {ues 10 sunodsip‘sejeqay —(@ nu) }0u Se0p juncwe aigexey ouy rectal 21 Pen00 69 pmoys 1¥A vow Buona 2q 819 94) wou pexer0081 99 0} uouaRy) 341 lh 801185008 J0 soud uy w pepnout ju 6) ‘$S/90 94H 6} peroeuue9 Apap (exe}008, ees) xe) 2 ‘uonemesqo EPSP nea 0 uondeoxs ai yn ‘ssvayo apd jou seo ‘mel 94141830) pue sonnp ‘sexe; (@ ‘Sepnjou! unowe agexey ayy malas 4a ed 29 01 sey sosuadio asou, uowaaste pautig 24 0 Burpoooe‘y Kuo uoypesuen Atunuwoo-equy ue Jo 28eq 1¥A ou u pepnou ae (22 800 soueinsy ayy os 0) sesvadee yodsuey au ony pnbe 24 uonesreuy ayo} dn suowed Bupuessno "O14 SYA 404 eseq aut (sxquow 2} ue exow sno) use| eoueuy uBo peunboe spood jo aso a 4 ‘woueduoo 18 40 suoqipuco sepun goyes 10 pod awes 24 ueigo 0} S20)M98 Jo Aiddns yeuy Buoyed “Sr osiod get & fq auiog sesuadke Jo unowe ayy ‘seonvas 40 Ans e 69 0) pawap suogerado ou soy Suonetedo Yons Jo 2oud exo} pu Apooup oa SovePISAS 24 BuPNOU ‘ued puny e 40 Aueyou0g {2seyaind oy) Woy Jeyddns eu fq poueigo 24 015140 uo09 Seu tq uedzunoo e saimpsuoo uy Buying ‘soaring 9 Sajeddns pue spoo6 Jo sauenon Jo, UeL wy) smojoy se peuyop 81 gsing 40 9829 UI LWA 10} a8eq eyqexe) ays 4-4, (WA s2}deu9) uopexe) jo aseg +p)Interest, applied after the time of delivery or supply, for late payments 4) The value of packaging that circulates between the suppliers of a commodity and customers, by ‘exchange, without invoicing ) Amounts paid by a taxable person on behalf of another taxable person that are later reimbursed or ‘amounts reoelved in the name and forthe account of another person. Lecture example 7.7 Monday SRL is a supermarket. ) On 15.01.2012 it was discovered that goods costing 500 Lei were missing. The goods were not insured ‘and the police did not find the thief. The goods were received on 30.10.2009 in bulk and were packed at a | ‘cost of 60 Lei on 15.03.2011. Monday SRL applies a 10% margin for is merchandise (over total cost). { b) On 16.02.2012 Monday is giving working uniforms to 5 new employees. According to the working agreement, the employees are paying for 50% of the cost of their uniforms when received. Those uniforms are products acquired by Monday for 100 Leilunit which are normally sold for 130 Leiunit ) Monday has several acquisitions of trucks through financial leasing agreements. In March 2012, Monday decided to finalise some ofthese agreements 1. For the frst agreement all 60 monthly instalments were paid and the leasing company invoiced Monday with the fees for termination of contract of 1,000 Lei 2. For the second agreement, all 60 monthly instalments were paid and Monday has to pay a residual amount of 30,000 Lei and the fees for termination of 1,000 Lei 3. For the third agreement Monday paid 40 out ofthe 60 monthly instalments of 15.000 Lei each. | There is no residual value for this agreement and the fees for termination ae still 1,000 Lei fin Apri 2012, Monday decided to get rd of 2 assets: 1. A truck, B 79 MON, which has the fiscal (and accounting ) value of 150,000 Lei and its aocumulated tax depreciation is 160,000 Lei, but the accounting accumulated depreciation is 100,000 Lei and Monday scrapped without receiving any consideration 2. A computer which has the fiscal (and accounting ) value of 15,000 Lei (net of VAT @19%) and its accumulated tax depreciation is 12,000 Lei, but the accounting accumulated depreciation is 14,000 Lei. This computer had a tax useful life of 4 years. 3 years have been passed but the ‘computer has been scrapped without receiving any consideration, wise specified, al references inthis course notes material are from the Fiscal Code as at 30 237|) The cost of goods stolen = 600 + 50 = 550 Lel .ccordance with art 128 (4) letter d, and 1 theft qualifies as a deemed sale in a eg algo art 137 (1) letter ¢ ~ tax base Before 1% January 2013, the 7 jo IAT of B50°2H% = 132 Lei (8 consequently, Monday should collect V for losses), ation i not qualify 2s deemed sale anymore, but Monday iced VAT in respact of goods sold (of 800 I) i. the this would happen after 18 January 2013, tt wil adjust ts input VAT withthe previously dedu ent will 24%"500 = 120 Lel VAT of 2494"50%'5"100 = 60 Jeesing transactions the supplier should colect VAT as fllows: For the termination fee, VAT = 24%"4,000 = 240 le For the residual amount plus the termination fee, VAT = 24%6"(30,000 + 1,000) = 7.440 Lei For the outstanding instalments plus the termination fee, input VAT = 24% * (20°15,000 + 4,000) = 72,240 Lei trucks, Monday should collect VAT as follows: “The truck is fully depreciated from fiscal point of view, So No ‘output VAT for it (or no adjustment Sebe done if ths is happening afer 1* January 2013) Because this is happening before 1% January 2013, the elimination of computer from the ‘business should be considered deemed sale, and Monday should collect output VAT = 24%4°(15,000 - 12,000) = 720 Lei happen after 1# January 2013, Monday would have to adjust its input VAT with the deducted ‘acquisition of computer (for that part of computer which is taken out from taxable business), nt on input VAT would be 19%"15,000 *(3,000/15,000) = 570 Lei specified, al references inthis course notes material are trom the Fiscal Code as at 30 299Lecture example 7.8 ‘The company Mastodontul SRL is selling an equipment of 54,000 Lei to Furnica SA. The seling agreement, signed on 10" May 2012, stipulates the folowing: ‘The equipment has to be sent to the cient before 15" June 2012 together with the invoice for the full amount, The client will have to pay forthe equipment in two equal instalments on 16% June and on 16% July. If the client pays all amounts due by 10" July, he will receive a discount of 3% from the value of the equipment. ‘The equipment has 2 years guarantee, starting from installation date, and in case of repairs needed in the Quarantee period, ifthe client is doing the reparations itself, he will be ented to recaver its expenses from the supplier. Fumica SA pays on 8 July the full amount Lei to Mastodontul SRL On 10* July, Mastodontul SRL installed the equipment at Furnice’s premises and agreed with Furnica that he ill not further charge it forte instalation in exchange forthe early payment discount due (On 12" September, the equipment broke up. Furnica SA made the necessary reparation spending 12,500 Lei |i agreement wth the contractual clauses, Fumica SA asked for an equivalent refund from Mastodontul SRL. Other facis: Both companies are registered for VAT purposes, Required Comment on the correctness of this transactions from VAT point of view and state the correct VAT implications if Mestodontul SRLIFumica SA have/have not to apply the cash accounting scheme. Solution Nole: Unless otherwise specified, al reerences inthis course notes material are rom the Fiscal Code as at 30 ‘September 2012. 238Solution 7.8, The date of selling contract has no implication for VAT point of view The date ofthe invoice = the date of delivery = the generating event, ‘So, Mastodontul SRL should issue the invoice collecting the VAT of 24% * 54,000 = 2,462 Lei in the VAI ‘etum of the month of June if it not applies the cash accounting scheme or should delay the chargeabil until earlier of {payment; 90 days after 15% June} if it applies the cash accounting scheme, so: = Without cash accounting scheme: Mastodontul collect output VAT of 2,462 Lei in VAT return of. June + With cash accounting scheme: Mastodontu! collect ‘output VAT of 2,462 Lei in VAT return of July ‘The date of the two instalments has no implication for VAT point of view ‘The date of payment determine the chargeability moment for the invoice issued by Mastodontul for the VAT to be collected by Mastodontuifithas to apply the cash accounting scheme AA the payment date (or by 15% of the next month), Mastodontul should issue credit note forthe discount ‘which is chargeable when issue, no matter ifthe cash accounting scheme is applicable or not ‘So Mastodontul should collect VAT = - 24%"39%"54,000 = -389 Lei in the VAT return of July (@ payment) The date of instellation is the generating event for the installation service and at that date Mastodontul ‘should issue an invoice for installation collecting VAT at 24% which will be chargeable when issued no matter if cash accounting scheme is applicable or not (because itis considered paid) ‘So Mastodontul should collected VAT = 24% * 3% * 54,000 = 389 Lei in the VAT return of July For the repair of the equipment Furnica SA is not entitled to ask for refund, Fumica SA should issue an invoice to Mastodontul SA as Fumica did service for Mastodontul SA and collect the VAT of 24% * 12,500 = 3,000 Lei which is chargeable when issued if Fumica does not apply the cash accounting Scheme or on earlier between payment and 11 December (90 days) if Furnica SA applies the cash ‘accounting scheme, Note: Unless otherwise specified, al references inthis course notes material ae from the Fiscal Code as at 30 September 2012 300jemounts paid by a taxable person on behalf of another taxable person that are later reimbursed or in the name and for the account of another person, we may have diferent situations 5S wien Company A is invoicing Company B for a normal DGISS, but the invoice is paid by name of B. ‘=mounts paid, C may issue a refund invoice to B, but ths is not mandatory. efund invoice, it wil not collect VAT on that invoi (Aor B. ice and C has no right to deduct the VAT for the }ceduict the above VAT and it will attach the refund invoice (itany) tothe original one. stuation is described in the following illustration: for VAT purposes in Romania is selling some goods to client B, registered for VAT ‘The seling agreement stipulates thatthe client has to transport the goods to its premises 'S in Hungary, he asked the supplier to find someone to transport the goods on his behalf. engaged C to transport the goods on B's behalf, “Erie to A for the transport of goods from Romania in Hi place of service = place of A) lungary with Romanian VAT (relation 4o 'ssue an invoice to B without VAT because the place of service i in B place = Hungary, So B VAT and apply “reverse charge’. 2201¢ illustration were a Romanian registered company, then A would invoice him collecting VAT VAT wil not affect A's cash flows. 's when @ real estate company is renting an office building, In the case were there is no the tenants and the utiles’ suppliers, the utilities are invoiced in the name ofthe real estate has to recover them from its tenants, ‘those utities are consumed by the tenants, agreement it is clearly stipulated that the rental price does not include the utlties and just in this estate company will be entitled to re-nvoice the value of uilties to his tenants (epplying the structure) otherwise no, ‘voicing, by commissioner structure, the generating event is considered to be the date of the i specified, all references inthis course notes matevial are from the Fiscal Code as at 30 239Lecture example 7.9 ‘The company L'Expert SRL located and registered for VAT purposes in France is seling advisory se ‘company Incepatorul SRL located and registered for VAT purposes in Romania The agreement stipuiates that L'Expert SRL will send 3 of his experts to Romania in order to provide. ‘on a production issue. Once the issue solved, Incepatorul SRL will have to sign the acceptance of solution and to agree rhumber of hours spent by the 3 French experts. ‘The agreed price for an hour of expertise is 300 Euro. Both companies agreed that the travel and living expenses ofthe 3 employees of L’Expert should be Incepatorul SRL which will recover them from L'Expert SRL subsequently, Feels: On 10% February the 3 experts arived in Romania, (On 20 February the issue is solved, Incepatorul SRL signs the acceptance as well as the statement of spent by the 3 experts for 120 hours. (On 22% February the 3 experts left Romania and Incepatorul SRL received and paid the invoice of 4,000. (on Incepatorul’s name) from a local transporter which took care of the transportation of the 3 experts Romania, On 27% February Incepatorul SRL received and paid the invoice (on Incepatorul's name) of 40,000 Lei for hotel and 7,000 Lei for meal expenses for the 3 experts. On 28" February Incepatorul SRL sent an invoice of 12,143 Euro to L’Expert SRL. to recover the travel a ‘accommodation expenses of the 3 experts ‘On 20" March, Incepatorul received the invoice of 36,000 Euro for advisory services from L'Expert SRL. Note: Allthe above amounts ae net of VAT. The exchange rate to be used is 4.6 LeliEur. Required For ll the above transactions identiy: ~ The moment of generating event = The chargeabilty moment = The place of the transaction = Who should collect the VAT ~The VAT base. Nol: Unless otherwise specified, all references inthis course notes material are from the Fiscal Code es at 30 September 2012, 240Solution Note: Unless othenise specified, all references inthis course noles material are from the Fiscal Code as at 30 September 2012, 24lution 7.9 y i transaction representing consultancy “The transaction between L'Expert and Incepatorul is a B2B intra-community a service, and because no exception apples to this type of transaction, the place of transaction is the client place (Romania) and the cash accounting scheme is not applicable. ‘+ When the experts arrive there is no implication for VAT purposes ‘= When the timesheet were accepted, itis the generating event for advisory service, ie. 20% February ‘The chargeabilty date = earlier (15" March; invoice date = 20% March} = 15 March For the invoice for local transport of experts: the generating event is when the transport was performed, but the chargeabiity moment isthe invoice date (provided that it is issued when the service was accomplished ‘and its paid in thet date also). The place of service is, by exception no 2 from both rules (art 133 (4, letter b) where the transport was physically carried out, in Romania, so the invoice will be issued by the transporter collecting VAT for 4,000 Lei When receives the invoice for hotel and meals of experts, being a continuous service, the generating event {s when the invoice was issued and accepted. The payment being done in the same date, the chargeabilty moment will be as well 22% February: ‘+ The hotel services, being in connection with an immovable property (the hotel) is deemed to be supplied \Where the immovable property is laceted by exception no 1 from both (art 133 (4 leter a), in Romania, So the hotel will issue invoice collecting Romanian VAT for 40,000 Lei. The restaurant services, by exception 4 from both rules (art 133(4) letter d) is placed were the service ‘was carried on, ie. Romania, so the restaurant will issue invoice collecting Romanian VAT for 7,000 Lei. On 28" February, Incepatorul is re-invoicing L'Expert fr the experts’ travel and accommodation expenses the generating event (and the chergeabllty moment because the cash accounting scheme does nat apply on intre-community services) isthe invoice date (or reinvoicng) ‘* For local transport: it is a B2B, the place of transport is the place where its effectively performed for passengers transport (exception no 2 from both rules), ie. Romania, so Incepatorul should collect Romanian VAT for 4,000 Let '* For hotel services: it is B2B, the place of service is where the hotel is (exception no 1 from both rules), ite. Romania, so Incepatorul should collect Romanian VAT for 40,000 Lei For restaurant services: it is B2B, the place of service is where it was effectively carried out (exception ‘no 4 from both rules), i.e, Romania, so Incepatorul should collect Romanian VAT for 7,000 Lei the invoice for advisory service was received, it will be attached to the self-invoice done on 15! ch. sles specie, al eterenes nhs couse ois mater are fom tho Fiscal Code as 230 30111.2 Adjustments on the VAT base (Art. 138) ‘The VAT base may be decreased if: - ‘After the invoice date, the related transaction has been cancelled (totally or partially) before D : Discounts/rebates are received after DGISS related to defective products/services : When the client was declared bankrupt, and the bankruptcy procedure is declared closed - Ifthe packing materials which were included in invoice and taxed are returned 11.3 Taxable amount for an intra-Community acquisition (Art. 138") The taxable amount for an intra-Community acquisition shall be established on the basis ofthe same el a those used to determine the taxable amount for a delivery of the same goods within the territory of Ror The taxable amount includes any excise duty paid or payable in a Member State other than Romania person making that inir-Community acquisition on the goods acquired, However, when that excise refunded to the person who makes the intra-Community acquisition, the value of the intra-Community acqui ‘made in Romania is reduced proportionately 11.4 Base of taxation for import (Art. 139) The taxable amount is the custom value of the goods, determined according to the customs legislation in to which are added any taxes, levies, duties and other charges due outside Romania as well as those due reason of the import of those goods into Romania, with the exception of the VAT to be collected The taxable amount i to include ancillary expenses, such as commissions, packaging, transport and insurar costs, which are incurred up to the first place of destination ofthe goods in Romania, to the extent that expenses are not alteady included in the taxable amount. The fist place of destination of the goods is destination indicated on the transport document or any other document that accompanies the goods when goods enter Romania, or, in the absence of such an indication, the first place in Romania where the goods Unloaded. ‘The taxation base is NOT to be adjusted if the adjusting elements are not included into an official adjusting document issued by the custom authors. In the case where the goods imported (by a Romanian taxable person) are suffering modificationsvaluations ‘outside EU, the place of such services isto be established by general B2B rule (Le. the place = Romania) which means thatthe counter value of such services (which was already taxed in Romania) is not to be included in the custom value of these goods. Similar, if in the above situation, the importer is not a taxable person, then the place of service would be established by general B2C rue (Le. the pace of service =the place where the service was physically caried out ‘> Romania) which means that the counter value of such services SHOULD BE INCLUDED in the taxable value of these goods Note: Unless otherwise specitied, all references inthis course notes materia are fram the Fiscal Code as at 30 ‘September 2012. 24241.5 Exchange rate (Art. 138") If the elements used to determine the taxable amount of an import of goods is expressed in a foreign currency, the exchange rate is determined in accordance with the Community provisions goveming the calculation of the value for customs purposes. ifthe elements used to determine the taxable amount of an operation other than an import of goods is expressed ina foreign currency, the exchange rae is the last indicative rate published by the National Bank of Romania or the exchange rate used by the bank by which the offset is caried out, atthe time ofthe chargeabilty ofthe tax for the respective operation. IMustration 10 In August Company A receives 1,000 Euro from Company B as advance payment for @ small vehicle. (both ies are registered for VAT). The foreign exchange rate at the date of the advance payment was 4.2 | ‘The tax base forthe advance is 424,000 = 4,200 Lei and Company B should issue an invoice forthe advance | (of 4,200 Lei + VAT. ‘After 5 months the vehicle is delivered and the fll price ofthis vehicle Is 5,000 Euro. The foreign exchange rate at the date of delivery was 4.3 Lel/Euro. ‘The company B should issue an invoice canceling the amount ofthe advance (and the related VAT) and writing the fll value of the vehicle: The tax base being: 4,000°4.2 + 4,000°4.3 = 21,400 Lei Lecture example 7.10 ‘ABC SA, a VAT payer, makes sales to a customer ZYX of 14,000 Lei for which transport is also provided {amounting to 850 Lei). During transportation an accent occurs and 10% of the goods were damaged. ABC possesses insurance for such an event and replaces the damaged goods. In addition, because the customer 2YX paid immediately, ABC grants @ commercial discount of 3%. The VAT rate applicable is 24%, ABC S.A. cashed an advance from WZT SRL of 1,000 Euro, The goods were cispatched with the final invoice of | the equivalent of 3,000 Euro after 2 weeks. The fx rate at the advance date was 4.2 Lel/Euro and the fx rate at the dispatch date was 4.1 Le/Eur. ‘ABC deduct VAT for als acouistions. Required Calculate the VAT collected by ABC with respect to these transactions (ABC pricing policy is cost + 20% and ABC's cost structure is 90% materials and 10% labour) Note: Unless otherwise specified, al references in his course notes material are from the Fiscal Code as et 30 Sepiember 2012. 243Solution 7.10 1) ABC toZVX Transaction Base VAT | In accordance with: Sale 14,000 3,360 | Aut. 137, paragraph 1, letter a Transport 850 204 | Art 137, paragraph 2, letter b Discount 3% (446) (107) | Art 138, letter TOTAL for the related invoice 14,404 3487 Before 1 January 2013, for the 10% of goods destroyed, being insured, there is no deemed sale, But after 1* January 2013, ABC will have to adjust the input VAT deducted forthe lost goods j.e. ABC will have to adjust its input VAT with 249410%"[90%*(1034"14,000)/120%] = 252 Lei. ‘The goods being replaced there is no adjustment to be done on the ABC invoice to its client. 2) ABC to WZT For the invoice for advance the tax base = 1,000*4.2 = 4,200 Lei (and the invoice, being paid, it is chargeable when issued) For the final invoice, the tax base = 1,000°4,2 + 2,000°4,1 = 12,400 Lei (for this invoice, cash accounting scheme ‘may be applicable forthe outstanding amount, if ABC qualifies) Solution 7.14 ‘According to the article 140, paragraph 21, letter c, the sale of an apartment qualifies for a VAT reduced rate of 5% if = the surface of the apartment is bellow 120sm— OK = the allocated piece of land is below 250sm - OK ~ the apartment isthe first property for the couple as well as for both spouses - may be considered OK = the value of the apartment should not be higher than 380,000 Lei - NOT OK The sale ofthe apartment did not qualify for the reduced rate. The VAT rate should be 24%, Note: Unless othenise specified, al rferences inthis course notes material ae from the Fiscal Code as at 30 September 2012, 302Rates (Chapter VIII) (Art. 140) fed isthe one applicable at the chergeabilty date, but the VAT regime applicable is that one sthe generating event date (art. 1342 (3) ‘of taxis before the generating event (in cases when the invoice date is before DG/SS or when payment before DGISS) (art. 134 (4)(7}) ‘At the chargeabilty moment, the taxis collected at the VAT applicable regime from that time ‘Atthe generating event date, IF AND ONLY IF the VAT collected was NOT for the full amount, ‘he amount collected at the chargeabilty moment should be deducted and the full amount ‘should be collected. IS equal to 24% and is to be applied to the tax base (as described before) for any taxable ‘exempt from tax or that isnot subject tothe reduced rates. is applicable tothe taxable amount fr the following supplies of services andlor deliveries of sight of admission to castles, museums, memorial houses, historical monuments, architectural xchzeological monuments, 2008, botanical gardens, fairs, exhibitions and similar cultural jor facilities, cinemas ry of books, newspapers and magazines, school manuel (code ISBN and ISS), withthe ‘of those intended exclusively or substantially for publicity or for e-booksle-newspapers sseivery of prostheses of any type and accessories to them, with the exception of dental of orthopaedic products ‘of mecicines for human and veterinarian use cof accommodation services within the hotel sector or within sectors with a similar ‘ncluding the rental of land prepared for camping. The reduced cote is extended over the value if his is included in the room price. is applied to the transfer of houses and related land in the soope of social policy. The the scope of socal policy includes: buildings including related land to be used as houses for retired persons ‘buildings including related land to be used as houses for abandoned children or children Belneeds ‘bulcings including related land to the municipalities in order to be rented to persons or social needs of a home (by an individual or a family) including related land with a surface of 4420 sqm with a value below 380,000 Lei (the land should be less than 250 sqm per home) ‘an intra-Community acquisition of goods is the rate applied to the delivery of the same and in force at the time ofthe chargeabilt ofthe tx. 24 all references inthis course notes material are from the Fiscal Code as at 30 24513, Exemptions for operations inside Romania (Art. 141) 13.1 Tax exempt without deduction right: |) activities performed in the public interest (Art, 141 (1)) 4) hospital treatment, medical treatment and closely-related operations carried out by units aut for such activities, regardless of the form of organisation, such as: hospitals, sanatoriums and units authorized to carry out such activities; ) supplies of services performed as part of their profession by dentists and dental technicians, as as the delivery of dental prostheses; ©) transport of sick or injured persons in vehicles specially designed for this purpose by en authorized to carry out such activities; 4) deliveries of organs, blood and mik, of human origin; ©) educational activities provided by the Law on education no. 84/1995, carried out by auth Public institutions and other units, including the vocational training of aduts, 2s well as supplies services and the deliveries of goods closely related to such activities; 4) private lessons performed by the teachers from fields of school, pre-university and univer ‘education; 9) supplies of services andlor deliveries of goods closely related to socal assistance, socal prot andlor the protection of children performed by public institutions or other entities recognised as having a social characte, including those provided for eldery living in specialised institutions; 1h) supplies of cultural services andlor deliveries of goods closely related to such services performed by public institutions or other cutural bodies without a patrimonial purpose, recognized as such by the Ministry of Culture and Religious Affairs; services performed in exchange of a fixed membership fees by ONG (political, religious, unions, etc) 1) services related to physical education provide by ONG's cultural activities and related deliveries organised by public institutions or by other cultural ONGs recognised by The Ministry of Culture |) Services related to broadcasting ofthe public radio and television channels, other than commercial activities; 'm) public postal services, as well as the supply of goods in connection with such services, as well as the sale of postal stamps for their nominal value 1) supply of services for their members by ONG's in exchange for membership fees and in accordance with their statute ©) rental of personne! by religious or philosophic institutions to help for organising some of the activites ised above Note: Unless otheruise specified, all references in this course nates material ae fom the Fiscal Code as at 30 ‘September 2012, 248