Vat in Romania, micro company

[lionheart]

Hello

Consider a company that does online live lessons, mostly B2C and very little B2B.

I am reading:
"Romanian entities carrying out economic activities in excess of the small undertakings threshold of EUR €65,000 (approximately RON 220,000) are required to register and account for Romanian VAT. If the annual turnover is below EUR 65,000 such entity is not required to register for VAT purposes."

https://tra.org/wp-content/uploads/2016/01/Romania-VAT-Guidebook.pdf

So this means that if a company has total annual revenue of less than €65,000, it does not have to charge VAT to clients? Do I understand correctly?

And if this company has a client in Germany, it will not charge hom VAT, and will not return VAT to Germany?

 

[lionheart]

Actually, forget about the educational character of the company. I am trying to understand how VAT works, for any business with revenue less than EUR €65,000.

 

[Suzy Emerald]

Below 65 k revenue you do no need a vat number.

 

[Sols]

That's for domestic trade. If you sell to other EU countries, you're better off registering for VAT right away as you will be subject to those countries' VAT thresholds.

Electronically supplied services

Services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.

ec.europa.eu

 

[lionheart]

That's for domestic trade. If you sell to other EU countries, you're better off registering for VAT right away as you will be subject to those countries' VAT thresholds.

Electronically supplied services

Services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.

ec.europa.eu

Thank you very much Sols!

1) So if I sell to a German, I will have to calculate and charge the German VAT and give it to Germany. If I sell to a French, I have to calculate and charge the French VAT and give it to France. An so on, right?

2) And I have to do the above for all countries in the world (like USA, Canada etc)? And to make things more complicated, these are different states in canada, having different VAT:
Newfoundland and Labrador : 15% HST
Ontario : 13% HST
Manitoba : 5% GST
I have to take the address of the client and charge the correct VAT?

And Even if I have a company outside the EU, I still have to do all this?

 

[Sols]

Thank you very much Sols!

1) So if I sell to a German, I will have to calculate and charge the German VAT and give it to Germany. If I sell to a French, I have to calculate and charge the French VAT and give it to France. An so on, right?

You can probably use VAT MOSS:

VAT on digital services/MOSS: What services are covered? - Your Europe

Learn more about the MOSS scheme and if you need to register in an EU country you sell to. There are 2 schemes: Union & non-Union scheme.

europa.eu

Unless you have an accounting background, pay an accountant to help you with this. Try to solve as much as possible with software/automation, though.

2) And I have to do the above for all countries in the world (like USA, Canada etc)? And to make things more complicated, these are different states in canada, having different VAT:
Newfoundland and Labrador : 15% HST
Ontario : 13% HST
Manitoba : 5% GST
I have to take the address of the client and charge the correct VAT?

And Even if I have a company outside the EU, I still have to do all this?

VAT/sales tax outside of EU is normally not charged by EU sellers. Only times I've seen that have been when the seller also has a US or Canada subsidiary which fulfills the orders.

 

[lionheart]

You can probably use VAT MOSS:

Thank you, this is a great resource!

Try to solve as much as possible with software/automation

You mean something like this? Automated Sales Tax, VAT & GST Software - Quaderno
Which other software would you recommend?

VAT/sales tax outside of EU is normally not charged by EU sellers.

You mean they should but they do not do it because trhey can get away with it? Just like the non-EU companies should but they do not charge VAT?

 

[Sols]

You mean something like this? Automated Sales Tax, VAT & GST Software - Quaderno
Which other software would you recommend?

Something like that for example. The goal should be to minimize the amount of manual work required. Can't really make any recommendation since it depends on business. If you work with an accountancy firm, they might be able to make a more personalized recommendation.

You mean they should but they do not do it because trhey can get away with it? Just like the non-EU companies should but they do not charge VAT?

In EU, the law is clear. Anyone selling into the EU must pay VAT. Even non-EU companies are supposed to pay/charge VAT. Most still don't and EU doesn't have the reach and resources to go after everyone.

For other countries/regions, it's less clear. If any import duty is due on physical goods, it's often paid by the buyer upon receipt. For digital goods, none might apply at all.

 

[lionheart]

That's for domestic trade. If you sell to other EU countries, you're better off registering for VAT right away as you will be subject to those countries' VAT thresholds.

Electronically supplied services

Services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology.

ec.europa.eu

I just cleared this up. You are right if the product is 100% digital.

I was talking about online sessions, lessons or consultation via ZOOM. In this case, even with EU clients, the Romanian threshold for VAT is 60.000 euros. I would not need to register.
I just talked to a Romanian lawyer about this.

 

[Sols]

I just cleared this up. You are right if the product is 100% digital.

I was talking about online sessions, lessons or consultation via ZOOM. In this case, even with EU clients, the Romanian threshold for VAT is 60.000 euros. I would not need to register.
I just talked to a Romanian lawyer about this.

Excellent, good news, glad you checked it with a local expert!

 

[lionheart]

Excellent, good news, glad you checked it with a local expert!

And now the bad news, more conflicting info:
Romanian entities carrying out economic activities in excess of the small undertakings threshold of EUR €65,000 (approximately RON 220,000) are required to register and account for Romanian VAT. If the annual turnover is below EUR 65,000 such entity is not required to register for VAT purposes.
https://tra.org/wp-content/uploads/2016/01/Romania-VAT-Guidebook.pdf

The lawyer said 60.000, this doc says 65.000, BUT it seems this was the equivalent of the 220.000 RON.

However nowdays 220.000 RON is just 45.000 EUR. The concept seems correct, the figure is not clear yet.

I need to find the official legislation!

 

[all in]

The actual treshold is 300.000 RON starting 2018.
It’s a bit confusing when you research info but the original EUR amount was at the exchange rate when Romania became EU member.

 

[lionheart]

According to a source I have in Romania Reaching the VAT treshold: the 300.000 lei is tied to a set Euro exchange value (in this case the one registered when Romania joined EU: 3.3817 lei/eur). 300.000 Lei / 3.3817 = 88.700 euros. So this is the real VAT threshold ! I am still puzled.