Legislative summary - April 2019
In this issue:
· Excise duties
Opinion of Advocate General in Case C-291/18 Grup Servicii Petroliere
On 10 April 2019 the Court of Justice of the European Union (CJEU) delivered the opinion of Advocate General Hogan (AG) in this Romanian referral asking whether Article 148 (c) of the VAT Directive, in conjunction with Article 148 (a) is to be interpreted as meaning that exemption from VAT applies, in certain circumstances, to the sale of offshore jackup drilling rigs.
For more details, you may consult the Tax Alert no. 9 of 12 April 2019.
CJEU’s Decision in the case C-691/17 POOR Epitesi Kft.
On 11 April, the CJEU issued the judgment in Case C-691/17 POOR Epitesi Kft., which refers to the principles of proportionality, fiscal neutrality and effectiveness, and whether they should be interpreted as precluding a practice whereby, in circumstances not involving tax evasion, the tax authority of a Member State, refuses to calculate the tax and the right to deduct that may be exercised on the basis of an invoice in which the VAT was established in accordance with the ordinary taxation regime. It considers that the invoice for the transaction concerned ought to have been issued in accordance with the reverse charge procedure and also considers it ought to have been examined whether the issuer of the invoice can reimburse the recipient of the invoice the amount of VAT paid unduly, or whether the issuer of the invoice may lawfully (within the national legal framework) regularize that invoice by means of self-correction.
Since PORR did not comply with a substantive requirement of the reverse charge scheme and the VAT it paid to the service providers was not due, that company could not claim a right to deduct VAT.
Under those circumstances, if the provider can claim reimbursement of VAT and the beneficiary may open a civil action against the provider for the recovery of amounts unduly paid, the principles of neutrality and effectiveness would be respected. Only if the VAT recovery by PORR, from the service providers in question in the main dispute, of the VAT invoiced without being due is unreasonable or excessively difficult, especially in the event of the insolvency of those suppliers, should PORR be able to make a direct application for a refund against the tax authority. However, such an application would be distinct from the VAT deduction application, which is the subject of the main proceedings.
It follows from the foregoing considerations that Directive 2006/112 and the principles of fiscal neutrality and effectiveness must be interpreted as not precluding a practice of the tax authority that, in the absence of suspicion of fraud, that authority refuses an undertaking to deduct VAT without being owed, to the supplier of those services on the basis of an invoice drawn up by that undertaking in accordance with the rules of the ordinary taxation regime, while the relevant transaction is covered by the reverse charge mechanism.
Those principles require, however, if the return of the VAT invoiced to the customer without being owed, is impossible or excessively difficult, in particular in the event of the supplier's insolvency, that the recipient of the services is entitled to submit a refund request directly to the tax authority.
CJEU’s Decision in the case C-5214/18 PSM K
On 10 April 2019, the judgment in Case C-214/18 PSM K was published, in which it is debated whether the fees charged by bailiffs may already include VAT when, under national law, VAT cannot be added to the amount of the fees and, secondly, essentially whether the principle of proportionality precludes the VAT being included in the value of the fees.
The Court has held that where a bailiff carries out a service such as that at issue in the main proceedings in so far as that supply does not fall within the scope of the exemptions provided for in the mentioned directive, he is liable to pay VAT for this operation. At the same time, the directive does not contain any express rule as to whether the bailiff's fees should include or not the VAT payable. It is therefore up to the Member States to deal with this issue
In the light of all of the foregoing considerations, the answer to the referred questions must be that the provisions of Directive 2006/112 and the principles of neutrality and proportionality of VAT must be interpreted as not precluding an administrative practice of the competent national authorities, such as the one at issue in the main proceedings, that VAT on the supply of services provided by a bailiff in a forced execution procedure is deemed to be included in the fee charged by him.
· Excise duties
Case C-567/17 Bene Factum UAB
On 15 April 2019 a request for a preliminary ruling on the applicability of the exemption from excise duty to ethyl alcohol not intended for human consumption (found in cosmetics or personal care products) but consumed as such by people as alcoholic beverages was published in the Official Journal of the European Union.
For more details, you may consult the Tax Alert no. 12 of 23 April 2019.
CJEU’s Decision in the case C-638/17 Skonir ir kvapas
On 11 April 2019, the European Court of Justice (ECJ) published the judgment in Case C-638/17 Skonis ir kapapas which refers to whether do rolls of tobacco with an outer wrapper of natural tobacco partially covered by an additional paper layer fall within the category of cigarillos or cigarettes, within the meaning of article 4 paragraph (1) letter a) of Directive 2011/64/EU?
For more details, you may consult the Tax Alert no. 11 of 18 April 2019.
Law no. 60/2019 for amending and completing the Law no. 227/2015 regarding the Fiscal Code, as subsequently amended and supplemented
On April 17, 2019 Law no. 60/2019, which amends and supplements the Fiscal Code was published in the Official Gazette no. 296.
This law transposes the provisions of Council Directive (EU) 2016/1065 amending Directive 2006/112 / EC as regards the treatment of value vouchers and Article 1 of Council Directive (EU) 2017/2455 amending Directive 2006/112 / EC and Directive 2009/132 / EC as regards certain VAT obligations for the supply of services and the sale of goods at a distance.
For more details, you may consult the Tax Alert no. 13 of 23 April 2019.
Order no. 857/2019 of the NAFA President regarding the amendment of NAFA President's Order no. 4.156/2017 for the approval of the information contained in the national register of electronic fiscal cash registers installed in the counties and in the districts of Bucharest Municipality, as well as the methodology and procedure for their registration
For tax year 2019, the register and the methodology for keeping the evidence of fiscal electronic cash registers were updated.
Among others, the institutions that will carry out this order and the situations when the users will inform the competent fiscal authority regarding the changes made to the fiscal electronic cash register are amended.
Official Gazette no. 273/10 April 2019
Order regarding the establishment of the procedure for the implementation of the provisions of art. II, points 1-13 of the Law no. 145/2018 for the approval of Government Emergency Ordinance no. 18/2018 on the adoption of fiscal-budgetary measures and on the amendment and completion of some normative acts
The non-resident entities organizing the 2020 European Football Championship Tournament should confirm the foreign legal entities including the non-resident subsidiaries of the organizing entities, the Romanian legal entities and the non-resident individuals involved in the preparation, organization and conduct of the tournament within 30 days of the conclusion of the agreement or act proving their involvement in tournament activities. The confirmation shall be made by the organizing entities by filling in a form published in this order and by sending it by post or filing at the registry of the Tax Administration for Non-Resident Taxpayers within the Regional Public Finance of Bucharest and, as the case may be, to the income payer from Romania, Romanian legal person.
In the situation of non-confirmation of the information by the non-resident entities organizing the tournament, the provisions of the Law no. 227/2015 regarding the Tax Code, with subsequent amendments and completions and of Law no. 207/2015 on the Tax Procedure Code, as subsequently amended and supplemented will be applicable.
Official Gazette no. 274/10 April 2019
Order amending the Order of the President of the National Agency for Fiscal Administration no. 819/2019 approving the Procedure for the organization of the Register of Entities / Establishments for which tax deductions are granted, as well as the model and content of certain forms
The procedure for organizing the Register of Entities / Establishments for which tax deductions are granted changes, among other things, the deadline for solving the application, respectively for sending of the request to the specialized department changes from 10 days to 5 days, respectively from 3 day to 1 day.
Official Gazette no. 303/18 April 2019
On April 25, 2019, the Organization for Economic Cooperation and Development ("OECD") published the full version of the Model Tax Convention on Income and on Capital as of 2017, which includes significant changes due to BEPS action.
Amendments to Law 52/2011 on exercise of occasional activities by day-laborers
The Emergency Ordinance 26/2019 published in the Official Gazette no. 309 / 19.04.2019 brings the following changes to Law 52/2011:
- The new working areas where day laborers can be used are: organization of exhibitions, fairs and congresses, advertising, support activities for artistic interpretation and showroom management activities, event catering activities, restaurants, bars and other beverage service activities, landscaping maintenance activities, planting, care, and maintenance of parks and gardens, zoological, botanical and nature reserve activities.
- The work beneficiary must pay mandatory pension contributions for the day laborers. The pension contributions (25%) are applied to the gross income received by day laborers.
- A day laborer can not provide services for the same beneficiary over a period of more than 90 days cumulated over a calendar year. Exceptions include those who provide activities in the following areas: agriculture, animal husbandry extensively through the seasonal pasture of sheep, cattle, and horses, as well as seasonal activities in the botanical gardens under the accredited universities and in the wine sector. In the case of exceptions, the maximum period is 180 days aggregated over a calendar year.
- The amount of gross hourly remuneration established by the parties may not be less than the hourly amount of the minimum gross basic salary guaranteed and it must be paid at the end of each working day or at the end of each week.
- Establishment of an electronic record keeping register by 20 December 2019.
- Optionally, day laborers can be insured in the public health system through the Unique Declaration submission. The insurance status is obtained from the date of declaration submission and is kept for a consecutive 12-month period unless a new statement is submitted for the following period.
Alex Milcev, Partner – Head of Tax&Legal
Niclas Butan – Manager, Indirect Taxes
Alexandru Grecu – Manager, Direct Taxes
Geanina Ciorata – Manager, People Advisory Services
Ernst & Young SRL
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