E-invoice, the new imperative of invoicing in Romania29 November 2023
Starting from January 1, 2024, all companies in Romania will have to align themselves to a new tax administration standard: the electronic reporting of all invoices through the RO e-Factura system. This represents an important step in fiscal digitization, with a deadline for the use of traditional invoicing options until June 30, 2024. Thus, from next year, e-Invoice becomes mandatory for all B2B transactions for all taxable persons established in Romania, regardless of whether whether or not they are registered for VAT purposes. Penalties for non-compliant companies are differentiated according to the size of the taxpayers, but there will be a 3-month grace period until March 31, 2024, during which time they will not apply.
The Romanian authorities have developed and formalized the legislation for generalized electronic invoicing, a process started last year for goods with fiscal risk and business-to-government (B2G) relations. After receiving a derogation from EU VAT rules, Romania is now extending its electronic invoicing obligation to business-to-business (B2B) transactions carried out on its territory. The novelty was regulated by Law no. 296/2023, which establishes a concrete timetable for the implementation of e-Invoice expansion at the level of all B2B commercial transactions.
In the first stage, from January 1 to June 30, 2024, suppliers must report in RO e-Invoice all B2B invoices taxable in Romania. Invoices will be able to be issued both in XML format and on paper, and transmitted through the electronic system, with a deadline of five working days from issuance.
Failure to comply with this deadline will lead to the application of fines, the sanctions being differentiated according to the size of the taxpayers: large taxpayers risk fines from 5,000 to 10,000 lei, medium ones – from 2,500 to 5,000 lei, and small ones and individuals – from 1,000 to 2,500 lei.
However, the authorities have established a grace period of three months, until March 31, 2024, so that the sanctions for issuing companies that will not submit their invoices electronically through the e-Invoice system will only be applicable from April 1, 2024.
These new billing rules apply from January 2024 for:
- all companies established in Romania, as well as for non-resident entities that have fixed offices in Romania involved in B2B and B2G transactions (other than those already covered by B2G legislation in force before 2024);
- non-resident taxpayers, registered for VAT purposes in Romania for B2B invoices issued for supplies of goods or services with the place of taxation in Romania.
The second stage, scheduled for July 1, 2024, eliminates invoices in paper format or those in an alternative electronic format (e-mail or whatever other standards companies used until now in their invoicing process). The right to deduct VAT will be exercised exclusively on the basis of invoices issued electronically through RO e-Invoice, provided that the invoices considered original will be those from the national system, on which the seal of the Ministry of Finance has been applied.
Also from July 1, 2024, sanctions will also appear for the recipients of electronic invoices in B2B relations – if they receive and register unreported invoices in the e-Invoice, the fine will be equal to the amount of VAT entered in the invoice.
The year 2024 marks a new era of electronic invoicing, so to comply with these major changes, companies must find solutions compatible with their current accounting and invoicing systems and quickly analyze the implications and changes they need to implement, so that from July 1, they can fully switch to electronic reporting of invoices issued in the e-Invoice system. Failure to comply with these new regulations will attract significant direct penalties, but may also incur substantial risks of rejection of VAT deduction for traditional invoices. It is important to adapt to these new requirements in time to avoid legal and tax difficulties.
Article published in Bursa.ro
Tax & Transfer Pricing Partner