Value added tax (VAT) is a general tax applicable to all economic activities involving the production and distribution of goods and services. This tax is borne by the final consumer of the respective good/service and is received cumulatively by each economic operator participating in the economic cycle of the development of a product or provision of a service subject to taxation. After exercising the right of deduction, taxable economic operators who participated in the economic cycle transfer the amount of the VAT balance to the State budget.

Pursuant to Article 316(1)(a) or (c) of the Fiscal Code, registration for VAT purposes of companies having a business established in Romania in accordance with Law No 31/1990 on companies, as subsequently amended and supplemented, is carried out before commencing the economic activity:

• if they declare that they expect to achieve a turnover reaching or exceeding the exemption threshold of RON 300 000;
• if they declare that they expect to achieve a turnover below the exemption threshold of RON 300 000, but opt to follow the normal tax arrangements;

(RON 300 000 is the threshold turnover for the application of the special exemption scheme for small undertakings and is defined in Article 310(2) of the Fiscal Code and in the implementing rules published in the application of this article).

In these cases, on the same day that they submit to the Trade Register Office the application for registration in the Trade Register, companies submit to the fiscal body the application for registration for VAT purposes (Form 098).

In accordance with Order No 631/2016 of ANAF, applications are submitted by the applicant, as the legal representative of the company for which registration for VAT purposes is being requested, by an associate thereof or another person empowered by law, to the registry of the competent fiscal body or by registered letter.

In accordance with Article 316(1)(c) of the Fiscal Code, companies can apply for registration for VAT purposes after they commence their economic activity if their turnover during a calendar year is lower than the exemption threshold of RON 300 000, but they opt to follow the normal tax arrangements. In this case, companies submit the statement of particulars for legal persons, associations and other entities without legal personality (Form 010) to the competent fiscal bodies.

In accordance with Order No 3725/2017 of ANAF, the statement is submitted either directly (by the legal representative) or by an agent to the registry of the competent fiscal body or by registered letter.

After a company has submitted the application for registration for VAT purposes, (Form 098 or 010, where applicable), as described above, the fiscal body will issue a decision on VAT registration and registration will be deemed to be valid from the date of notification of that decision (Order No 521/2016 of ANAF).

With effect from 14 May 2020, the date of entry into force of Government Emergency Order No 69/2020 amending and supplementing Law No 227/2015 on the Fiscal Code and establishing certain fiscal measures, companies applying for registration for VAT purposes, in the cases referred to above, are no longer subject to an assessment, for registration purposes, based on the tax risk assessment criteria (the fiscal body conducts risk assessments on a later date, in the course of business and for those posing a high tax risk, they cancel the VAT registration number).

Taxable persons who apply for registration for VAT purposes by option after commencing their economic activity, more specifically persons who apply for registration after exceeding the exemption threshold, within the legal time limit (10 days from the date when that threshold has been reached or exceeded), are entitled to adjustment of VAT.

These persons are entitled to the adjustment of the deductible tax in respect of:

• goods in stock, unused services and fixed tangible assets in progress, ascertained as per the inventory, at the time of transition to the normal tax arrangements pursuant to Article 304 of the Fiscal Code;
• capital goods for which the deduction adjustment period has not expired and which are owned by the taxable person concerned at the time of transition to the normal tax arrangements pursuant to Article 305 of the Fiscal Code;

Capital goods are all fixed tangible assets, including the transformation or refurbishment of immovable property or parts thereof, excluding repairs or maintenance work on them, even when such operations are performed by the beneficiary of a rental contract, leasing or any other type of contract under which immovable property or parts thereof is/are made available to another person, provided that the value of each transformation or refurbishment is at least 20% of the value of that immovable property or part thereof after transformation/refurbishment. Immovable property is deemed to be capital goods regardless of whether it is recorded as inventories or tangible assets in the accounts of taxable persons.

Fixed tangible assets are any depreciable tangible assets, i.e. buildings and lands of any kind, which are held in order to be used for the production or supply of goods, or the provision of services, to be hired out to third parties or for administrative purposes.

• Fixed tangible assets that were not considered capital goods until 31 December 2015, which were manufactured or purchased by 1 January 2016 and which are not fully depreciated on transition to the normal tax arrangements pursuant to Article 306 of the Fiscal Code;
• Purchases of goods and services that are to be obtained, namely for which tax has become chargeable pursuant to Article 282(2)(a) and (b) of the Fiscal Code before the date of transition to the normal tax arrangements and in respect of which the chargeable event, namely the supply/provision, occurs after that date.

Pursuant to Article 305(1)(a) and Article 266(3)(1) of the Fiscal Code, and point 83(11) to (14) of the implementing rules for Law No 227/2015 on the fiscal code, invoices for the purchase of goods/services supplied/provided before the taxable person concerned has registered for VAT purposes do not have to include the statement that the VAT registration number is assigned to the taxable person concerned pursuant to Article 316 of the Fiscal Code.

Adjustments are recorded in the first VAT return submitted after registration for VAT purposes or, where applicable, in a subsequent return.

Information on the ex officio cancellation of the VAT number and on registration for VAT purposes after the ex officio cancellation of the VAT number can be found here.

You can find information in the Fiscal Code (Title VII, Chapter VII) on how undertakings should calculate their taxable amount for the VAT.

The VAT rates in force in Romania are applied and calculated in accordance with Article 291 of the Fiscal Code.

VAT exemptions are applied in accordance with Title VII, Chapter IX of the Fiscal Code.