Law no. 296/2023 published in the Official Gazette No. 977 of October 27, 2023, brings multiple changes in the tax system in Romania, but also in other areas of activity of the public system.Our analysis in this circular will focus on the regulatory changes made to the Tax Code, regulatory changes regarding the regulation of cash payments, regulatory changes regarding the expansion of the RO electronic invoicing system, and other items with tax implications.
Three briefings have been communicated on this law, following exactly the structure of the normative act. In this part (Part III) we analyze the main changes regarding the VAT rates applicable in 2024 and the appearance of new products subject to non-harmonized excise taxes. If we are a simple producer of soft drinks with added sugars in amounts exceeding 5 grams per 100 ml of liquid, we become excise taxpayers, and this also applies to restaurants producing lemonade with sugar or honey.
The tax changes are taken from Part II:
32. Extension of the RO electronic invoicing system.
The legislature has regulated the extension of the RO electronic invoicing system in a non-unified manner, but in a similar manner, and these provisions can be found in Article LIX of the law, respectively LXV, and the regulatory texts are similar, but seem to be written in a non-unified manner.
At the first stage, the situation is regulated for the first 6 months of 2024, so that it seems only a limited application of the system for 6 months, and thereafter we return to the expansion of the system, but between the two regulatory texts , we find other regulatory provisions with other regulatory object.
Extension of the obligation to report invoices in the RO electronic invoicing system.
We know that with Decree No. 120/2021, the RO electronic invoice reporting system was regulated. At the time of this analysis, the system is mandatory for deliveries to some public contracting stations that usually have public procurement procedures (B2G – business to government) or for invoices issued by tourist units cashed through vacation vouchers. For the period January 1-June 30, 2024 (the legislature has set a limited period anyway), the obligation to report the invoice in this system also extends to other public entities.
Attention! It is used only for 6 months, but there is an extension of the obligation to report the invoice in the RO electronic invoicing system for all public entities listed by the Administrative Code.
The use of the RO e-invoice system becomes mandatory for B2B (business-to-business) relationship, i.e., business operator to business operator, again for a period of 6 months, starting January 1, 2024 and ending June 30, 2024.
Tax procedure: this regulation applies to all companies in Romania, whether registered for VAT purposes or not registered for VAT purposes, all natural persons carrying out independent activities or self-employment in Romania, all foreign entities that have a fixed establishment on the territory of Romania, analyzed from the VAT point of view, such as branches, workplaces, etc.
Although theoretically the obligation is limited to a period of 6 months, this obligation is implicitly unlimited, from the point of view of deducting VAT on the purchase, considering that the invoice has the quality of a supporting document after July 1, 2024 only if it is received in the RO e-invoice system.
33. Special cases regarding the use of the RO e-invoicing system in the case of exports, intra-Community deliveries, intra-Community purchases, imports.
Exports of goods, respectively intra-Community supplies of goods provided for in Article 294 of the Tax Code are exempted from the obligation to report invoices in the RO e-invoicing system. Regarding imports or intra-Community purchases of goods, the legislature makes no new changes, so only purchases of goods with fiscal risk, for which this obligation already exists, will be declared in the RO e-invoice system.
Tax procedure: the legislature maintains the obligation to report the invoice to the beneficiary, in the system already regulated by the Tax Code, for customers who are not registered in the RO e-invoice system. If customers are registered in this system, the only obligation to communicate the invoice is through the system. Applies from January 1, 2024.
34. The deadline for sending invoices in the RO e-invoicing system.
As a rule, the deadline for invoice communication in the RO e-invoicing system is 5 working days from the issuance of the invoice, but no later than 5 working days from the maximum possible deadline for the issuance of the invoice set by the Internal Revenue Service. Tax Procedure Code: we note that the legislature has set two seemingly contradictory deadlines, so we recommend sending the invoice in the RO electronic invoicing system within 5 working days of its issuance. However, we would like to remind you that both the Tax Code and the VAT Directive allow the invoice to be issued within 15 days from the end of the month in which the VAT-generating event occurred, and exceptionally, in the case of a claim, 5 working days are counted from this deadline.
From January 1 to March 31, 2024, no penalties will be applied for non-submission. The 5-day submission deadline applies from January 1, 2024.
35. Amendment of regulations on financial discipline – cash payments.
As of November 11, 2023, cash payments/collections are limited to the following ceilings:
a) Legal person to legal person – in the amount of 1,000 lei/person and 2,000 lei for cash&carry suppliers, not to exceed the amount of 2,000 lei/day;
Very important: the maximum daily amount is 2,000 lei for all cash payments to legal person suppliers.
(b) Legal person to natural person – in the amount of 5,000 lei/person until December 31, 2024 and in the amount of 2,500 lei/person after January 1, 2025. There is no upper limit to the maximum amounts payable daily to individuals, only individual limitations. The subject of these payments are amounts representing dividends, purchases of goods and services from individuals, debt payments or other entitlements.
(c) Advance payments (for expenses) within the limit of 1,000 lei per day per person receiving advances for expense reports.
(d) Payments from individuals to other individuals are limited to 10,000 lei per transaction until December 31, 2024, and to 5,000 lei starting January 1, 2025.
(e) Cash receipts are also limited as follows:
– Withdrawal from legal person to legal person – maximum 1,000 lei/person and 2,000 lei from cash&carry;
– Receipts from natural persons who do not have associate/administrator status – maximum 5,000 lei until Dec. 31, 2024 and 2,500 lei starting Jan. 1, 2025.
Very important!:
1. Loans made in cash by individuals who have the status of partners/members/directors/other creditors to legal entities are prohibited. These can only be reached through the financial system.
2. It is prohibited to fragment transactions to make cash payments within the limits stipulated in the new law.
3. The legislature allows the use of cash payments within the ceilings stipulated for payments in installment contracts, invoking the same wording “contracts entered into in accordance with the law.”
36. A new ceiling for holding cash in cash registers is reintroduced into the legislation, which amounts to 50,000 lei, and the format in which the law is written shows us that it refers to each cash register owned by the economic entity operator. Of course, an economic operator can decide individually, depending on the specifics of the business, how many cash registers to use.
There is an exception to this limit, for a period of 3 working days, when salary payments and other personnel entitlements are made.
In addition, if other payments are made to individuals, this ceiling is allowed to be exceeded, for a maximum period of 3 working days from the due date of payment of such obligations.
In the event that a trader collects sums exceeding this ceiling in cash, he is obliged to deposit these sums in bank accounts, within a maximum of 2 working days.
37. The penalty for failure to comply with the cash collection/payment limits or for exceeding the cash limit in the cash register is a fine equal to 25 percent of the amount exceeding the mentioned limits, but not less than 500 lei.
All provisions on the financial regulation of cash payments/cash receipts and cash balances shall be applied within 15 days after the publication of the law in the Official Gazette, i.e., from November 11, 2023.
38. The national RO e-seal system is regulated, which assumes that electronic seals representing electronic devices can be affixed on means of transport by the authorities for the purpose of their traceability at the roadside.
At present, the legislation only provides for the possibility of regulating this procedure, and within 60 days of the publication of this law the tax and customs authorities will adopt the procedure.
39. Other penalty provisions:
There has been a consistent increase in fines for:
(a) Failure to comply with the scheme of compulsory use of fiscal cash registers;
(b) Certain offenses under the Code of Tax Procedure;
(c) Carry out economic activities when suspended by the authorities;
(d) Carrying out illegal activities;
(e) Removal of seals from means of transportation;
(f) Failure to report the invoice in the RO electronic billing system beyond the statutory deadline when the act becomes a contravention;
(g) Registration and deduction of VAT on invoices not reported electronically (the penalty is equal to the VAT unlawfully deducted).
