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. If you're looking for ways to become a freelancer in Romania, check this guide out!
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.
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.
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.
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:
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.
Once you register for VAT, you should ensure that:
You should keep clear and complete records of your document for at least ten years. The specific documents you’re required to maintain include:
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 ;)
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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!