Tax Free Authorization / VAT refund to natural persons residing outside EU
Summary:
Individual buyers who do not have a permanent residence in the European Union can benefit from VAT reimbursement for goods purchased in Romania, according to Order 101/2016. This facility is available for purchases made in the network of stores authorized to carry out sales of goods that give the right to request a VAT refund.
Supporting documents, such as the invoice and refund document endorsed by the customs office of exit, are very important to be able to get the refund.
Tax Free authorization can be a competitive advantage for shops, especially those located in tourist areas.
Keywords: VAT reimbursement to non-EU consumers; tax free authorization
VAT Refund Procedure for Individual Consumers Who Are Not Established in the European Union
Individual consumers who do not have a permanent residence in the European Union are eligible for VAT reimbursement for the goods purchased in Romania, in accordance with Order 101/2016. This facility is available for purchases made within the network of authorized stores selling goods eligible for VAT refund claims, which display the Tax-Free logo.
Conditions for VAT Refund
- The buyer must have a permanent residence outside the European Union, as noted in their passport or other identification documents.
- Purchased goods must be transported outside the EU within three months from the date of purchase.
- The minimum purchase amount (including VAT) must exceed the RON equivalent of 175 euros. The refund entitlement is granted only for individual invoices that meet this threshold; invoices with lower values cannot be combined.
- The store from which the purchase is made must be authorized for sales that allow VAT refunds.
- Proof of export is provided by presenting the invoice endorsed by the customs office upon leaving the European Union.
Steps Required by the Authorized Store
- Issue an invoice in accordance with Article 319 of the Fiscal Code.
- Issue and complete the form “VAT Refund Document for Buyers Not Established in the European Union” in duplicate format. The refund document, along with the original invoice, will be handed to the buyer, while the second copy remains with the authorized store.
Buyer’s Obligations at the EU Exit
- The buyer must present the purchased goods at the EU customs office of exit along with necessary documents: original invoice, payment proof for the goods, and VAT refund document.
Important: If the details do not match, customs officials may refuse to certify the goods’ exit from EU. Without customs certification, VAT reimbursement is not possible.
Location of the Relevant Customs Office for Document Endorsement
- If the buyer’s destination is a non-EU country, and he/she leaves directly from Romania, the documents must be endorsed at the Romanian customs office of exit.
- If the final destination is a non-EU country but the buyer is transiting through another EU member state, endorsement should be obtained at the last EU member state customs office of exit.
VAT Refund Process
VAT refund can be made:
- Directly by the Authorized Stores: Stores can directly refund VAT to the buyer, free of charge, based on the endorsed refund document and a copy of the invoice. The store then recovers the refunded VAT from the state budget via the VAT return submitted to tax authorities (ANAF).
- Through Specialized Units: These can be based in Romania or another EU member state and may charge a fee for the service. Necessary documents are forwarded to the selling store to recover VAT from the state budget.
Store Authorization
Stores seeking to offer this service must obtain authorization from the relevant tax authorities. This authorization is valid for five years, allowing the store to display the “TAX FREE” logo.
Publication
ANAF publishes on its website a list of authorized stores for VAT refund to non-EU buyers.
Conclusions and Final Comments
The Regulation of VAT refund procedures for non-EU buyers aligns with European practices and also enhances the attractiveness of Romanian merchants for foreign tourists and individuals residing outside the EU who are eligible for VAT refunds on goods purchased in Romania and transported outside EU.
The interest of major retailers in obtaining TAX-FREE authorization is significant and can be a competitive advantage in the market.
However, the conditions for obtaining a VAT refund can sometimes be discouraging. In this regard, we note the relatively high minimum threshold (175 euros) and the fact that smaller purchases cannot be combined to meet the threshold. Last but not least, the disadvantage of Romania’s specific formalism must also be highlighted, as an additional document is required to be issued by the store, which must be signed by the customs authorities and finally, must arrive back at the store, in original, together with invoice. Only the invoice endorsed by the customs authorities or the acceptance of a scanned version of these documents could have been accepted. From these considerations we can say that there are also factors that make it difficult to recover VAT, as the state has no real interest in reimbursing these amounts.
Regarding the lists of authorized stores, these are very difficult to find on the ANAF website. We identified some lists on regional ANAF sites or on the Large Taxpayers Directorate’s site, in various PDF formats. There is no consolidated list or a central registry of all stores authorized for Tax-Free sales.
Apart from these issues, we consider the option for merchants to obtain Tax-Free authorization viable, providing an additional benefit for non-EU consumers who meet the refund conditions.
Article written by Valentin Alangiu, Accounting & Tax Partner – Nowium Tax&Finance
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