Romania Steps Towards Country-wide B2B E-invoicing

Just a bit less than two months after obtaining the favorable decision from the European Council, which gave Romania the green light to introduce the mandate of B2B e-invoicing for domestic transactions, the Romanian Ministry of Finance has published the draft version of the new budgetary law, in which between other relevant fiscal measures has given proper space in addressing the topic of e-invoicing. 

The Ministry of Finance is meticulously implementing the e-invoicing mandate for B2B transactions. This move is mainly based on the necessity to reduce the national VAT gap, and as the statistics show, e-invoicing and e-reporting tools are significant mechanisms when integrated properly to combat taxpayers’ tax evasion and illicit behavior. 

Timeline

The preliminary timeline, defined in the draft version of the Budget Law, is the following one: 

• The E-Invoicing mandate should be operative for B2B transactions starting from January 1, 2024;

• The first three months should be allocated to the establishment of the invoicing reporting system and the IT infrastructure and making sure that everything works properly due to the complexity of the project;
• Ministry of Finance proposes that the period between January 1, 2024, and March 31, 2024, should be treated as the grace period for taxpayers obliged to report invoices to the RO e-Invoice system;

• Starting from July 1, 2024, all taxpayers to whom the reform refers must be able to transmit the e-invoices to the clearance system as defined by law.

Impact

Based on the draft version of the Budgetary Law for 2024 and the accompanying explanation regarding the E-invoicing reform within Romania, the broadness of the mandate can be noticed when it comes to groups of taxpayers who must comply with it.

The proposal is that the following categories of taxpayers will be covered by the electronic invoicing mandate and accompanying digital reporting obligation: 

• Domestic taxpayers registered for VAT;

• Domestic taxpayers non-registered for VAT;

• Foreign companies registered for VAT(even if they are simply registered for VAT without a physical presence in the state when the taxable supply of goods and/or services is taxable under Romanian VAT rules).

Looking at the potential spectrum of mandated taxpayers, which could be under the soon-rolled-out e-invoicing mandate, we can state that the digitalization reform will cover most businesses conducting taxable operations within Romania. 

If these provisions from the draft bill become enforceable through amendments to the VAT act, we can straightforwardly state that the digital reporting mechanism in Romania will go beyond when compared with similar legislation in other countries regarding the category of taxpayers that must respect it. 

This shouldn’t be judged as an entirely surprising move, considering that Romania enforced a digital reporting liability for foreign firms simply registered for VAT when it comes to preparing SAF-T files. 

Also, one of the strict measures that the mandate could bring regards the deadline for submission of a subset of invoice data to the RO e-invoice platform, which is five days after the invoice issuance and/or obligation to issue the invoice in question. 

The plan is to make the RO e-invoice platform a central clearance hub for domestic transactions, and after clearance, only then will the buyer be able to download the invoice. 

If the Ministry of Finance and other responsible authorities can follow the indicated preliminary deadline, in just a few months, new – very rigid obligations will become applicable for the taxpayers in Romania. 

In the following weeks, we can expect significant updates.

Businesses operating in Romania should be aware of the importance of upcoming changes for which they need to prepare, as well as the complexities of the soon-to-be-operative reform. Even though the Finance Bill is still in draft form, it could be assumed that within 2024, the expanded B2B mandate will be implemented. Based on the preliminary version, the Non-Resident companies registered for VAT could also be impacted by the reform.

Aleksandar Delic
1stopVAT Indirect Tax Researcher (Global Content)