Apart from the list of NC codes, which we informed you about in the last Newsletter the Government Decision no. 367/2015, published in Official Journal no. 373 of 28 May 2015 also includes important clarifications with respect to …
Apart from the list of NC codes, which we informed you about in the last Newsletter the Government Decision no. 367/2015, published in Official Journal no. 373 of 28 May 2015 also includes important clarifications with respect to the application of the reduced 9% VAT rate, as follows:
- The reduced 9% VAT rate also applies to “all inclusive” accommodation services, even if such services include supplies of alcoholic beverages;
- The 9% VAT rate applies throughout the entire supply chain, from producer to end consumer, except for the supply of certain categories of goods, which by their nature are susceptible to be used got other purposes than preparation of food for human and animal consumption. In the case of such excepted goods, the supplier must be able to prove that the goods sold are supplied for use in food preparation in order to apply the 9% VAT rate, otherwise the standard 24% rate applies.
- When goods are supplied in packages containing standard-rated and reduced-rated categories of goods, the reduced rate can apply only to the alimentary goods, as long as their price can be separately identified in the package. Otherwise, if the price of the goods sold in a package cannot be separately identified for each item, the whole package would be standard-rated at 24%.
VAT regime of tips
A very controversial piece of legislation also recently introduced in Romania (as of 1 May 2015) has brought all forms of tips into the scope of taxation, making it mandatory under law for retailers, restaurants and all other businesses selling directly to consumers to issue fiscal receipts for the tips received. The notion of tips was deemed to include even the change that was not picked up by the customers at the counter. The law left it to each company to set under its own policy whether the tips are kept with the company or are attributed to the employees, but until now nothing was said of the VAT treatment applicable to the tips.
Among the new provisions brought by Government Decision 367/2015 published today, tips is expressly deemed subject to VAT at the standard rate of 24% (tips left by the customer are deemed to include VAT), but only in the case where it is decided under the company’s policy that the tips is kept with the company. In our opinion, this provision is clearly not in line with the EU VAT Directive and the jurisprudence of the Court of Justice of the European Union, as (1) tips cannot represent remuneration of a given service and (2) there is no valid reason to apply a different treatment when tips is left with the employees as opposed to when retained by the company. It remains to be seen how long it will take before someone challenges the government approach in this respect.