The change in the VAT rate: in-depth study

The new Tax Code as introduced by the Law no. 227/2015 (Lege 227/2015) and latest amendments provided for changing the VAT rate from 24 percent to 20 percent effective 1.1.2016.

The question arises of concretely predicting from when services and supplies of goods will have to be subject to 20%.

Article 281 of the new Tax Code perfectly identifies the conditions that must occur to crystallize the moment from when the tax obligation to pay the tax and the right to deduct arises.

This moment is constituted by the date on which the “chargeable event of VAT” takes place, which is defined in Article 280 as that circumstance through which the legal conditions necessary to require the chargeability of tax are realized.

The general rule reported in Article 281 is that“the operative event occurs on the date of delivery of goods or the date of rendering of services, with the exceptions reported thereafter.”

Exceptions include but are not limited to:

– paragraph3, goods transferred for the purpose of being tested; in such a case, only on the date of acceptance of the goods by the customer does the taxable event occur;

– paragraph 7, services that provide for reports or payments after the performance such as consulting, expert reports, research; in which case only on the date of issuance of the report of the service performed or (if provided for in the contract) upon approval by the client;

-comma 9, for leasing, renting and in any case relating to a property, the service shall be deemed to be performed on the date stipulated in the contract for payment for the service.

Last clarification: services have as the date on which the operative event occurs the date of provision of the service (general rule), i.e., following the exceptions (contractual date, acceptance date, issuance/submission of the statement); however, if the invoice for the service is issued or the consideration is paid before this date, the operative event is fulfilled upon payment, issuance of the invoice (Article 282).

We remain available for clarification