VAT refund in Romania – practical guide for companies

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VAT refund in Romania

Do you own a business in Romania and have to pay value added tax (VAT) to the Romanian state? Did you know that more than 50% of the Romanian companies use the VAT refund rights to optimize their cashflow?

From this point of view, it is very important that you know your company can recover the VAT paid for certain goods and services purchased.

To understand what the VAT reimbursement procedure entails, but also what the applicable rules are for VAT refund in Romania, we have prepared an informative and practical short guide for you.

In short, what is a VAT refund?

The process of VAT refund in Romania involves the reimbursement of already paid VAT (value added tax), at the request of the companies, in situations where the amounts of VAT collected from sales are lower than those paid as result of purchases made. The refund of VAT can be requested by companies through tax returns 300 or 318, from the Romanian State Budget.

In Romania, according to the tax legislation in force, there is a standard VAT rate of 19%. At the same time, the Romanian state established special quotas of 9% for food, non-alcoholic beverages, medicines, prostheses, respectively 5% for publications, hotel and accommodation services, audiobooks, firewood and home purchase.

How is the amount of refundable VAT calculated?

As a basic formula, the amount of VAT for which a company has the right to be reimbursed is calculated as the difference between the total VAT paid as part of services and goods purchased from third parties, on one side, and the VAT collected on services and goods sold to own customers, on the other side.

Following the above described calculation, the tax inspectors will determine whether the applicant company still has a difference in the amount of payment to the budget or whether there is already VAT that should be reimbursed to them.

How do you know if your business is eligible for a VAT refund?

According to art. 316 of the Romanian Tax Code, any company, based in Romania or abroad, that subject to this tax and registered for VAT purposes, may request a VAT refund. Reimbursement can be requested quarterly or monthly, whenever there are negative amounts to be settled by the tax office. The request for a VAT reimbursement must be submitted using tax form 300 or alternatively form 318, the latter being applicable in the case of international transactions (for the refund of VAT on imports and purchases of goods or services made in other member countries of the European Union).

VAT refunds may be required for a range of goods and services purchased, such as: fuel, rental of transportation, tolls, access and use of roads, travel expenses, accommodation, restaurant expenses, various luxury goods, access to fairs, exhibitions, as well as entertainment activities or shows.

Companies that are not subject to VAT, but also those with negative amounts (to be reimbursed from the budget) of less than 5,000 lei, cannot apply for a VAT refund. If the amount to be reimbursed is less than 5,000 lei, it will be carried forward to the next tax reimbursement period.

In cases where the company is recorded in the tax files of the authority with deeds sanctioned as crimes, or when the procedure of voluntary liquidation or insolvency has been initiated, or the central tax authority has found that there is a risk of undue reimbursement, the VAT refund is approved only after an advance tax inspection takes place.

For other taxpayers, the VAT refund is granted after the first negative VAT return is filed with the refund option, or when the balance of the negative VAT amount comes from a number of periods greater than the number of reporting periods used in a calendar year.

What is the VAT refund decision and who issues it?

The refund decision is the document by which a company’s VAT refund application is approved. It is issued by the competent tax authority, i.e., by ANAF.

After the application for reimbursement is submitted by the companies with low fiscal risk (companies that do not request amounts higher than 45,000 lei), the reimbursement decision is generally issued within five days. For other companies, the issuance of the decision varies depending on the duration of the advance tax inspection (if the case).

The VAT refund decision can be challenged within 45 days from the date of communication, under penalty of forfeiture, according to the legislation in force.

How can you check the status of your VAT refund application?

The latest status of your VAT refund requests can be checked on the ANAF’s website. The status of your request is easy to check. You need to have the tax identification code, the amount requested for reimbursement, but also the month and year of the statement, in order to be able to identify the request in the ANAF register.

Is there a deadline within which ANAF must solve the VAT refund request?

VAT refunds are usually solved within 45 days. There are situations in which the refund is solved within 90 days, when the settlement of the return involves an early tax inspection.

However, the initial period may be extended up to a period of six months if further evidence is needed to resolve the application and to take a decision accordingly. The request for VAT refund can be made whenever there is a surplus of VAT resulting in the related calculations, but only when the amount is higher than 5,000 lei.

How can you request a refund of VAT on international trade?

If you own an international trade business within the EU, you can apply for a VAT refund as well. The application can only be requested if you practice:

  • import operations for which VAT is paid in another EU Member State;
  • purchases of goods and services from other EU member states and payment of VAT at the time of purchase.

The intra-community VAT refund procedure involves completing a refund request (Form 318), electronically and submitted to the competent Romanian tax authority. The application must be submitted no later than 30 September of the calendar year following the repayment period and must contain a series of information, including:

  • the full name and address of the applicant, as well as an e-mail address;
  • description of the economic activity for which the goods and services were purchased;
  • repayment period;
  • a statement from the applicant / company that he / she assumes that he / she has not delivered goods or services that are deemed to have been delivered in a Member State of reimbursement during the reimbursement period. Transport and ancillary transport services, which are exempted under Articles 144, 146, 148, 149, 151, 153, 159, 160 of Directive 2006/112 / EC;
  • the registration code of the applicant, for VAT purposes;
  • bank account data, along with IBAN and BIC codes;
  • identification data and full address of the supplier;
  • VAT registration code / supplier ‘s tax registration code, excluding imports;
  • the prefix of the Member State of reimbursement, excluding imports;
  • the date and number of the invoice or import document;
  • the taxable amount and the amount of VAT expressed in the currency of the Member State of refund;
  • the amount of VAT deductible in the currency of the Member State of refund.

After completing the application, the tax authorities in the country will verify that the company is registered as a VAT payer in Romania during the period in which the purchases were made and will redirect the refund request to the competent authorities of the Member State where you carry out the procurement operations.

What is the minimum amount that can be claimed in the case of intra-Community VAT refunds?

If the refund period is less than one calendar year but more than three months, the refund of the VAT that can be claimed must not be less than 400 EURO. If the repayment period is one calendar year or the remaining period of one calendar year, the amount of VAT charged must not be less than EUR 50.

Picture of Razvan Popovici

Razvan Popovici

Business adviser & entrepreneur

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