• Type: Video
  • Date: 1/17/2014
  • Length: 02:55 Minutes

Perspectives on Taxation - January 2014 Conference 

The most important VAT developments


Alin Negrescu, VAT Senior Manager, KPMG Romania, talks about the most important VAT developments, such as the latest amendments to VAT cash-accounting system, adjustment of the VAT taxable base for transactions performed between affiliates, amendment of the VAT adjustment rules and amendment of the VAT refund procedure to EU non-residents.

VAT cash-accounting system

Following pressure from the business community as well as a recommendation from the European Commission, two significant amendments have been made with respect to the cash accounting system with effect from 1 January 2014. The system has now become optional and the mandatory 90 day term for collecting VAT has been eliminated. Under these new circumstances, it will be interesting to see how many companies decide to continue to apply the cash-accounting system and how many will opt to leave it. Given the practical difficulties that the application and the management of this system caused both for businesses which were required to apply it and for those from outside it, we can expect that most companies will decide to leave the system.


Transactions between affiliates

Last year the Romanian tax authorities introduced specific rules which, under certain circumstances, entail the adjustment of the VAT taxable base of the transactions performed between affiliated parties. These rules aim to clarify the situations where an adjustment of VAT can arise and thus to discourage the tax authorities from challenging the VAT charged on transactions performed between affiliated entities solely on the basis that the price of the transactions appeared not to reflect their market value.


VAT adjustment rules

Until last year, as a general rule, taxpayers were required to proceed with the adjustment of the input VAT related to goods that had been destroyed, unless they could point to specific cases of natural disasters and/or force majeure. These rules have been amended, and now the specific cases where the adjustment of VAT is not required have been extended beyond cases of natural disaster and/or force majeure to include any situation where the destruction of the goods can be economically justified.


VAT refund procedure applicable to taxable persons established in other EU member states

Romanian legislation on the VAT refund procedure for EU resident taxpayers has finally been amended and aligned with the EU VAT refund Directive (nr. 9/2008). Consequently the condition requiring proof of payment of the input VAT requested for refund has been eliminated. This was one of the main issues that contributed to unjustifiable delays in VAT refunds to non-residents.     


The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. The information presented in this video was last updated at 20 January 2014. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.