Regulatory updates - Romania

The draft emergency ordinance extends the grace period from 31 March to 31 May. The sanctions for which the grace period applies are for not complying with the 5-working-days invoice reporting requirement of a taxable event/initial issuance of an invoice.

The draft legislation also clarifies the context in which the penalties will be levied. Previously, it was unclear if non-compliance sanctions would be applicable per invoice. Now, it is stated that for one or more invoices in each calendar month, the following penalties will apply:

• RON 1000 to 2500 (ca. EUR 200 to 500) – small taxpayers, legal persons, and ‘other’ legal entities;
• RON 2500 to 5000 (ca. EUR 500 to 1000) – medium taxpayers;
• RON 5000 to 10000 (ca. EUR 1000 to 2000) – large taxpayers.

While the draft law still needs to be approved, it is anticipated this will happen soon.

Reporting on the transportation of high-risk fiscal goods in the RO e-Transport system has been required since July 2022. The scope of required users and scenarios for use of the system has now been expanded to include instances of international transport, regardless of whether goods are considered high risk. International road transport encompasses transport to and from both Member States and third countries.

According to Emergency Ordinance 115/2023, as of 1 March 2024, the following goods will now be considered high fiscal risk:

• Meat and edible organs (CN codes from 0201 to 0210);
• Fish and crustaceans, molluscs, and other aquatic invertebrates (CN codes 0302, 0304 and 0306);
• Milk and dairy products; bird eggs; natural honey; edible animal products, not specified and not included elsewhere (CN codes from 0401 to 0407 and 0409);
• Unprocessed tobacco; raw tobacco and tobacco waste (CN code 2401);
• Other processed tobacco and tobacco substitutes; homogenized or reconstituted tobaccos; tobacco extracts and essences (NC code 2403);
• Tobacco products or tobacco and/or nicotine substitutes, tobacco intended for inhalation without burning; other products containing nicotine intended for the absorption of nicotine in the human body (NC code 2404).

For the transport of both high-risk fiscal goods and international transport, the requirement to obtain an ITU code remains, as well as the requirement to adhere to the telecommunication requirements associated with the system.

Penalties for non-compliance with the new RO e-Transport system requirements will take effect on 1 July 2024.

Discussion between Romanian Prime Minister Marcel Ciolacu and advocacy groups for SMEs has yielded a decision and progress toward developing a mobile application suited to address the recently implemented e-invoicing requirements.

Since the commencement of the first wave of the e-invoicing mandate, there have been ongoing discussions between taxpayers and the Ministry of Finance regarding improvement of the RO e-Factura platform. A mobile application is the third in a series of significant platform upgrades.

The previously implemented removal of duplicate invoices and the introduction of self-billing were large strides forward for the platform. The introduction of the mobile application continues to bolster the system.

As of 1 January, the requirements for issuing invoice data to the RO e-Factura began. The Ministry of Finance has proactively made improvements to the national e-invoicing system to address the concerns of taxpayers within the jurisdiction. These changes include removing the possibility of issuing duplicate invoices, which will be outright rejected, and introduce the option for self-billing. 

The introduction of self-billing allows taxpayers to apply under a wide array of use cases, including the ability for beneficiaries to invoice on behalf of their suppliers. 

Press releases on these updates can be found on the Ministry of Finance Website. 

On 14 December 2023, the Romanian government passed an emergency ordinance that included updated information on different aspects and requirements regarding the use of the RO e-Factura regarding the different obligations for taxpayers. While the timelines for reporting and transmission of electronic invoices remain the same, as well as those that exist for the grace period for the application of penalties, the following changes will now be introduced from 1 July 2024:

• Sanctions for non-compliance with the requirement to report invoices within 5 working days of a taxable event/initial issuance of an invoice, and no later than 5 days after the deadline to issue invoices, between 1000 to 10000 lei for legal entities depending on the taxpayer’s size;
  • 1000 to 2500 lei – small taxpayers, legal persons, and ‘other’ legal entities
  • 2500 to 5000 lei – medium taxpayers
  • 5000 to 10000 lei – large taxpayers
• Sanctions for non-compliance with the requirements to issue and receive invoices via the RO e-Factura platform equal to 15% of the total value of the invoice.

These remaining aspects are applicable as per the commencement of the e-invoicing obligations:

• Transactions with simplified invoices are exempt from transmission obligations;
• If the RO e-Factura system is not functional for more than 24 hours, transmission obligations are suspended until the platform is operational again; and
• Taxpayers may issue invoices based on Fiscal Code provisions while the RO e-Factura platform is not functional, provided that the electronic invoices are subsequently submitted to the platform.

The Romanian Ministry of Finance has also provided a user guide to further assist taxpayers in adapting to the requirements and using the platform to fulfill their obligations.

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.