VAT Guide for Freelancers in Moldova

While Moldova is not a part of the European Union, Moldova still abides by some EU VAT policies like the “destination principle policy,” VAT threshold of 15%, and “reverse charge” policies. Under the destination principle, VAT is payable to the country of consumption. Under the reverse charge policy, VAT is paid only by the consumer and not the supplier. Therefore, regardless of where you’re located, you have to deal with Moldovan VAT rules if you are running your freelance business in Moldova.

The standard VAT rate in Moldova is 20%, which is administered by the Moldovan State’s Fiscal Department. In addition, Moldova’s Ministry of Finance publishes and updates information online related to the management of the Moldovan VAT system. If keeping up with all the VAT rules as a freelancer seems overwhelming, we’ve got you. This guide provides all the information you need to know about the Moldovan VAT system. Let's get started!

Moldova VAT Rates

What are the different VAT rates in Moldova? The Moldovan government levies four VAT rates, and freelancers must charge the amount that applies to their products and services.

  • The Standard Rate - You must always charge 20% VAT for products and services that do not fall under the reduced rates or zero rate categories.
  • The Reduced Rate of 12% - The reduced rate of 12% applies to food, accommodation, beverages by hotels and restaurants, etc.
  • The Reduced Rate of 8% - The reduced rate of 8% applies to milk and dairy products, transport, distribution of natural gas, biofuels used in household tax, horticultural and zootechnical products, etc.
  • Zero Rate - Services charged at a 0% VAT rate include cross-border transactions, international carriage of goods, air and water transport of passengers, etc. You should still record sales of these goods and services and create a report based on your returns.

When should you register for VAT in Moldova?

If your yearly turnover is equal to or exceeds 1.2 million MDL, VAT registration is mandatory. In addition to the VAT threshold, these are the other situations that determine when you are liable to register for VAT.

Non-resident freelancers providing services through electronic networks to Moldovan residents must register for VAT through the State’s Fiscal Department’s electronic system. You must first check if your products or services meet the VAT liability conditions.

As a freelancer, you need to report the VAT quarterly without exceeding the 25th day after the end of each quarter. However, based on your yearly turnover, the Moldovan State’s Fiscal Department can also ask you to report VAT monthly, quarterly, or annually.

How to register for VAT in Moldova

Freelancers or self-employed individuals are expected to pay the VAT on their income as well. If you are a sole proprietor having to register for VAT in Moldova, you require the following documents:

  1. Standard application form 
  2. Information of your taxpayer status
  3. Tax identification numbers obtained in Moldova (if you are an expat freelancer)

VAT registration in Moldova can be completed by submitting the application forms and relevant documents to the State’s Fiscal Department electronically through the Ministry of Finance's website or directly by visiting their office. You will receive the VAT certificate with the VAT number in a few days.

After registration, you are liable to pay VAT to the State Fiscal Department every quarter.

Alternatively, you can hire an accountant (or agency) to handle your VAT returns and dealings with the Moldovan Fiscal Department. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

Financial Obligations of VAT Registered Freelancers in Moldova

After you register for VAT, you should ensure that you charge the correct VAT rate from anyone you provide your services to. You are also liable to file VAT returns and pay the correct VAT amount owed to the Moldovan Fiscal Department every quarter. Moreover, you should maintain detailed VAT records and a VAT account.

In addition, you should:

  • Keep records of all your purchase and sales activity and financial transactions
  • Ensure that all your VAT invoices include: your and your client’s VAT identification number, clear description of the goods or services exchanged, exact amount subjected to VAT, the appropriate VAT rate for that amount, and VAT included total amount.

How to Maintain Financial Records

As a freelancer, you should record every transaction you perform, electronically or physically, for around ten years. It is your responsibility to maintain proper documentation of your transactions in a legible, complete, and understandable format. You must also maintain a record of the following:

  • Printed copies of the invoices you send out,
  • Received invoices
  • Agreements on sell-billing.
  • The self-billing vendors' names, addresses, and VAT numbers.
  • Notes (debit/credit)
  • Records of imports and exports.
  • Records of bank statements, check stubs, cash books, till rolls, and paying-in slips in addition to your VAT account.

Additionally, you cannot claim VAT on records of items that have already been received and sent.

Feeling overwhelmed? Xolo’s got your back! We future-proof your records by automatically generating, sending, and storing all your invoices for you, so you won’t have to worry about ever missing any steps or misplacing any documents ;)

How Xolo Can Help

Learning all the Moldovan tax guidelines can be challenging, especially if you’re a sole proprietor and in charge of several aspects of your business. Luckily, at Xolo, we offer a range of solutions that can handle all the paperwork and legal jargon, allowing you to focus on your core competencies.

  • Xolo Go is a quick and efficient way for freelancers who may or may not have a registered LLC or sole proprietorship to invoice clients legally. 
  • Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
  • We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.
  • Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
  • We offer different tiers of service depending on the solopreneur's (or as we call them, Xolopreneur's) individual needs.
  • Once you get your business set up with Xolo Leap, you can run it from anywhere in the world! So whether you’re a freelancer looking to gain access to the EU market or a digital nomad who can’t be tied down - this is the place for you! 

 

Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Moldova in no time!