Regulatory updates - Romania

On 26 October 2023, President Klaus Iohannis signed into force fiscal-budgetary measures for ensuring Romania’s long-term financial stability. The legislation largely includes VAT and other tax-related matters, but importantly, makes the future issuance and reception of electronic invoices obligatory.

The timelines stipulated in the draft law remain the same with the new published legislation as follows:

• Phase 1: Effective 1 January 2024 - B2B e-reporting for both established and non-established companies
• Phase 2: Effective 1 July 2024 - B2B e-invoicing (centralized CTC approach) for established companies while non-established ones remain subject to e-reporting.
• Grace period: No penalties will be levied from 1 January to 31 March 2024.

The deadline for submitting invoices during Phase 1 is 5 days from the date of issuance or taxable event with administration of an invoice.

Penalties for non-compliance levied against taxpayers can range from 1000 LEI to 10000 LEI (ca. EUR 200 to EUR 2000 ).

The draft law, which Romanian legislators announced on the Ministry of Finance website, introduces how they plan to implement the countrywide e-invoicing CTC mandate after receiving derogation from the European Commission. As previously notified by Pagero, this derogation allowed Romania to start a countrywide obligation from 1 January 2024 but required domestic legislation.

The draft law proposes to establish the following important milestones:

• 1 January 2024 – The use of RO e-invoice system (Clearance-type CTC approach) becomes mandatory for all taxpayers established in Romania that already are subject to the existing e-Transport obligations
• 1 January 2024 – The use of RO e-invoice system (Clearance-type CTC approach) becomes mandatory for all established and non-established in Romania, having RO VAT registration (referred to as “e-reporting” obligation)
• 1 April 2024 – Sanctions and penalties become applicable for non-compliance.
• 1 July 2024 – The mandatory exchange (send and receive) of e-invoices through the RO e-invoice system (Centralized Exchange-type CTC approach) for all B2B transactions and all taxpayers established in Romania.

These timelines are unprecedently short, and businesses have very little time to comply; however, further discussions and amendments are still possible. As Romania has previously stuck to short timelines, we encourage businesses to prioritize this project and not leave it at the bottom of the drawer.

On 27 July 2023, the European Commission approved Romania’s derogation request to implement a B2B e-invoicing mandate. While the mandate is set to commence on 1 January 2024, ANAF, the Romanian Tax Authority, will soon divulge further information about the date the mandate will begin and other pertinent information surrounding the obligation.

Previously, Romania had made issuing electronic invoices in the B2G sector obligatory and for those transactions in the B2B sector that involved “high-risk fiscal goods”. The upcoming mandate will now be all-encompassing, requiring all invoices to be issued and received through the RO e-factura platform. Taxpayers must also issue invoices in the RO_CIUS format conformant to EN 16931 standards.

On 14 January 2022, Romania sent a request to the European Commission to obtain a derogation from Articles 178, 218, and 232 of the VAT Directive to implement mandatory electronic invoicing for all transactions carried out between taxpayers established in the territory of Romania.

The incentives to adopt e-invoicing are to combat tax fraud and evasion, make the collection of VAT more efficient, and reduce administrative costs for taxpayers and the tax administration. This will be achieved by requesting taxpayers to report invoice information to the tax administration in real time.

Furthermore, on 23 June 2023, the European Commission published the proposal to authorize Romania to introduce special measures derogating from Articles 218 and 232 of Directive 2006/112/EC on the common value-added tax system.

Initially, Romania will request that invoices are cleared and made available to the recipient through the RO e-factura platform. Romania claims that the national electronic invoice system RO e-factura is compatible with the European standard on electronic invoicing.

According to the above claim, Romania should be aligned with EC regulations without any major changes. This will be highly likely applicable in the early stages at minimum.

Romania has already regulated the e-invoice system in the public sector since 1 July 2022. With the EC approval, the mandate will extend to the private sector. However, the obligation applies only to taxpayers established in Romania, meaning that those who are not established in Romania would not be obliged to adhere to the RO e-system.

If approved, e-invoicing could be mandatory in Romania from 1 January 2024. Please see the European Commission’s official announcement for more details.

As reported in previous updates, since July 2022, Romania has mandated the use of the national e-Factura infrastructure to issue electronic invoices to public entities (B2G) and also for companies that issue invoices for the supply of products of high fiscal risk to other businesses (B2B).

There have been some rumours in the market that B2B e-invoicing will become mandatory for all businesses in the country by 2024. As of now, there has been no official legislation in place in this regard. Therefore, it seems the 2024 timeline is unlikely to happen.

However, it is worth mentioning that last year Romania applied for a derogation from the EU commission to implement a countrywide mandate but hasn’t received it yet. This is probably because the current CTC model in Romania is not in line with the VIDA initiative.

Pagero is closely monitoring the developments in Romania and will update the stakeholders with any upcoming official announcements.

The Romanian government has issued a draft emergency ordinance, postponing fines for non-compliance with the RO e-transport mandates. The penalties will now be imposed as of 1 January 2023.

Furthermore, the validity timeframe of e-transport documents for intra-community transactions has been increased from 5 days to 10. All other transactions, however, will still hold validity only for 5 days.

To learn more about RO e-transport in Romania, click here.

As previously mentioned by Pagero, Romania has implemented the RO e-Transport system since 1 July 2022. Certain taxpayers were obliged to adhere to the nationwide monitoring system for the transport of goods with high fiscal risk by validating the dispatch advice with this system prior to shipment of the goods.

As the implementation deadline was approaching, many taxpayers faced penalties for not yet having their compliance solutions up and running. Romanian authorities published an Emergency Ordinance on 30 June 2022 to deal with this issue. Effectively pushing the introduction of the penalties to 1 October 2022.

Please note that this postponement of the penalties does not mean a general delay of the reporting obligation, and usage of the e-Transport platform is still mandatory.

On 17 May 2022, Law no. 139/2022 was passed, approving Government Ordinance 120/2021 which focuses on the administration, functioning, e-invoicing, and implementation of the RO e-factura system.

Government Ordinance 130/2021, which addresses electronic invoices in the private sector, will not be impacted by the new law. The timelines for both government ordinances are similar.

Timelines for the new requirements

Beginning 1 July 2022, taxpayers will have to adhere to the following:

• Taxpayers established in Romania will be required to issue e-invoices for the B2G transactions via the RO e-Factura national platform.
• Taxpayers trading in high-risk fiscal products in the B2B relationship will also have to exchange electronic invoices via the national platform.
• Taxpayers trading in high-risk fiscal products will be required to use the RO e-transport system to monitor the transport of these products. We describe this system below.

What is RO E-Transport System?

It is a national system for monitoring the transport of goods with high fiscal risk. The RO e-Transport system has been optional to use since 1 April 2022 but will become mandatory as of 1 July 2022.

The system requires suppliers to register the transportation of the goods in it a max of 3 calendar days before shipping. The following information needs to be provided:

• Name of the consignor, beneficiary, or consignee;
• Quantities and value of the transported goods;
• Places of loading and unloading;
• Details on the means of transport used and carrier;
• Date declared for the start of the transportation.

After the above information is processed in the RO e-transport system, a unique code (ITU Code) will be generated, and a physical copy of the code will have to be included with the goods before shipping.

The Romanian Chamber of Deputies announced a draft law on 20 April 2022, which is set to amend Government Ordinance 120/2021. This ordinance focuses on the administration, functioning, e-invoicing and implementation of the RO e-factura system.

The system has been available for voluntary use since November 2021. The proposed changes in the draft law will mandate B2G e-invoicing, beginning 1 July 2022.

As previously mentioned, the Government Ordinance 130/2021 required the issuance of electronic invoices via the RO e-factura system for B2B suppliers of high-risk fiscal products as of 1 July 2022. This draft law will now await a derogation decision from the European Commission. Once obtained, the tax authority (ANAF) will establish the categories of taxable persons and when they will need to use the RO-eFactura system for invoices issued in the private sector.

Based on the proposed amendments, it is expected that the implementation of e-invoicing for all types of transactions will take a short time. Namely, the Romanian Ministry of Finance states 2023 as a timeline in their announcement.

In Romania the use of the Ro e-factura system to issue e-invoices is nowadays voluntary. The main requirement to exchange e-invoices via RO e-factura is that both parties (supplier and buyer) are registered in the “RO e-factura registry”.

The Romanian Government published on 18 December 2021 the Emergency Ordinance no. 130/2021 with more information regarding the issuance of e-invoices. In particular, In article XXXVII of the ordinance states that B2B suppliers of high fiscal risk products will have to start issuing electronic invoices through the national platform RO e-factura.

• From 1 April until 30 June it will be voluntary for these taxpayers to issue e-invoices, even though the buyer is not registered in the RO e-Invoice registry
• From 1 July 2022, these taxpayers will be required to issue e-invoices through the RO system on a mandatory basis.

It is still to be determined what a high fiscal risk product is, as the name says, they are products with a high risk of tax fraud and evasion. The National Agency for Fiscal Administration (ANAF) will be publishing soon the list of products in this category. However, it is worth mentioning that the list is periodically re-evaluated.