VAT refund from other EU Member State: A simplified guide for companies in Romania
In the complicated landscape of VAT reimbursement within the European Union, Romanian companies may find themselves navigating a maze of rules, conditions and procedures. To make this journey easier, we’ve created a comprehensive guide tailored to businesses looking to get VAT refunds from other EU member states.
Eligibility and Requirements for VAT refund
Firstly, who is eligible for a VAT refund in another EU country? Normally, a taxable person established in Romania may be entitled to such a refund for imports and purchases of goods/services made in another EU member state. However, there are specific eligibility conditions that must be met:
- The taxable person must carry out operations that give the right to deduction in Romania.
- The applicant must not be registered for VAT purposes in Romania as a non-taxable person.
- The applicant must not have delivered goods/services on the territory of the Member State where the purchases were made.
The application process
The procedure for obtaining a VAT refund is extremely important. To initiate the process, the taxable person established in Romania must submit an electronic refund request in the Member State where the purchases were made. This reimbursement request (code 318 in Romania) is submitted separately for each member state, and the requested amount must be detailed for each primary document, such as invoices or customs import declarations. In addition, the application must specify the nature of the goods and services purchased, using predefined codes such as fuel, transport, accommodation and others.
Terms and minimum thresholds
The refund request must be submitted through the electronic portal provided by the competent Romanian tax authority (ANAF), no later than September 30 of the calendar year following the refund period.
The reimbursement period is a maximum of one calendar year and a minimum of three calendar months. Reimbursement requests covering less than one calendar year but more than three months must exceed a minimum threshold (EUR 400 or the equivalent in the national currency of the state of reimbursement). For requests covering a full calendar year or the remaining period of a calendar year, the minimum threshold is lower (EUR 50 or equivalent).
Handling possible rejections
Understanding the reasons for rejection is essential. ANAF will not send the request to the member state for reimbursement if the applicant falls into certain categories, such as the fact that it is not a taxable person for VAT purposes or that it only supplies goods or services exempt of VAT without the right of deduction.
Practical recommendations
To optimize the VAT refund process, consider the following:
- Attach copies of invoices or import documents when their value exceeds specific thresholds.
- Provide a long-term valid email address for effective communication.
- Member States may determine the language of communication; be prepared for requests in the local language.
- Consider the assistance of a tax advisor in the refunding Member State, especially for material refund claims.
- Non-residents claiming VAT refunds in Romania should consider hiring a local consultant for representation; miscommunication can lead to delays or even loss of reimbursement.
- Taxable persons registered for VAT purposes in Romania and engaged in deductible transactions should review their cross-border activities and purchases from the previous year, eligible for VAT refunds.
Duration of the settlement of claims and disputes
The deadline for settling the refund request can vary, often exceeding a year in Romania. Disputes may arise and it is essential that you know your rights and dispute resolution procedures under the law of the Member State of reimbursement.
Although the EU VAT refund process can be complex, businesses can navigate it successfully with the right support and knowledge. Regardless of whether you are registered for VAT purposes in Romania or are a non-resident entity, our team can assist you with VAT refund applications from other member states. Use the opportunity to optimize your VAT management and claim the refunds that are due to you.
Article written by Valentin Alangiu, Accounting & Tax Partner – Nowium Tax&Finance
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