VAT Guide for Freelancers in Romania

The VAT registration threshold in Romania is EUR 88,500, so if your annual sales turnover exceeds this amount, you are liable to register for VAT. The standard VAT rate is 19%; however, the government also imposes reduced rates of 9% and 5% based on the type of products. If you are a freelancer providing goods and services to Romania, you must know this information. 

Since Romania is part of the European Union, it follows the EU's directives regarding VAT registration. And as per the EU's destination principle, VAT must be paid to the country of consumption. It doesn't matter where you're supplying from; if you have clients in Romania, you are liable to pay VAT to the Romanian government.

Locally, Romania's National Agency of Fiscal Association is accountable for VAT, and you can check their website for VAT information and regular updates. Unfortunately, the website is only available in Romanian, and some pages are inaccessible from other countries. But don't worry! We created this guide to address all your VAT-related concerns and share everything you, as a freelancer, need to know about VAT in Romania. 

Romania VAT Rates

What are the different VAT rates in Romania? The 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 19% VAT on all products and services that do not fall under the reduced rates or zero rate categories.
  • The Reduced Rate of 9% - Charged on some agriculture-related product deliveries, local utility services, prosthesis supply, supply of medicines for human and veterinarian use, supply of food, domestic animals and livestock, etc.
  • The Reduced Rate of 5% - Charged on school supplies, entertainment events, hotel accommodations, catering and restaurants, books, newspapers, transportation, amusement park entrance, etc.
  • Zero Rate (0%) - Medical, welfare, finance, insurance, educational activities, intra-community and international transport are subject to a 0% rate. You should still record these transactions and create a report based on your returns.

When should you register for VAT in Romania?

If your annual turnover reaches or exceeds EUR 88,500 per annum, you must register for and pay VAT in Romania. This threshold was increased from EUR 65,000 on 1st January 2018. 

If you are based in another EU member state and sell goods over the internet to Romanian customers, the VAT registration threshold applicable for you is EUR 23,830 per annum.

Besides the registration threshold, the Romanian government also specifies other cases when you must register for VAT.

How to register for VAT in Romania

In Romania, freelancers must pay VAT on their income. Depending on your yearly turnover, the National Agency of Fiscal Association (ANAF) provides different registration forms. If your turnover exceeds 300,000, you need to submit forms 098 and 088 to the Trade Register. Otherwise, you need to fill out form 099 for VAT registration.

If you wish to register your freelancing business and register for VAT simultaneously, you can use forms 010 and 088. You may also have to submit an official declaration indicating that you do not have criminal charges. 

Additionally, Romania conducts an in-depth VAT risk analysis before granting you a VAT status? Your registration is scored on a scale of 1 to 100 to determine if you are eligible for VAT registration. If your application falls below 51, you are considered a high financial risk, and your VAT registration will likely be rejected.

Note that this rigid risk analysis is conducted only for Romanian freelancers. If you are an expat freelancer from other EU member states, the Romanian tax authorities won't be so tough on you.

Your application for registration should include the following:

  1. All the required forms 
  2. The Trade register extract showing you fulfill VAT conditions
  3. Identification details
  4. The long-term visa/certificate for non-EU freelancers 
  5. A power of attorney for the fiscal representative (if you are from a non-EU country sending a fiscal representative on your behalf)
  6. Affidavits declaring you do not have criminal records and you have met all the conditions
  7. A copy of the document indicating twelve-month income translation

All these documents must be appropriately stamped, certified, signed, and inserted in a rail file. You can then submit the file to the Romanian tax office. Usually, you should receive your unique VAT number in two weeks. After you get your VAT number, you should start charging and filing returns on your VAT.

If you are not from an EU country, you require a local fiscal representative for all VAT-related activities.

Freelancers who conduct business in multiple EU countries also have access to an easier method of registration for VAT. The Mini One-Stop Shop (MOSS) is an online portal that allows you to simplify your VAT payments by consolidating all your transactions across several EU countries in one place. You can submit all your VAT returns here without having to register in every country individually.

Alternatively, you can hire an accountant or agency to handle your VAT returns and dealings with the Romanian 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 Romania

Once you register for VAT, you should ensure that:

  1. You charge the correct VAT rate from consumers you provide your services. 
  2. You file VAT returns and pay the correct VAT amount owed to the Romanian Revenue Agency every year. 
  3. You maintain detailed VAT records and a VAT account.
  4. Keep records of all your purchase and sales activity and financial transactions.
  5. Ensure that all your VAT invoices are properly formatted with: you and your client’s VAT identification number, sequential invoice number, customer’s data, 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.
  6. Keep self-billing invoices for purchases from non-resident entities.

You should keep clear and complete records of your document for at least ten years. The specific documents you’re required to maintain include:

  • Printed copies of the invoices you send out
  • Received invoices
  • Agreements on self-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

Sounds overwhelming? 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 Romanian 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 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! 

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.

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 Romania in no time!