July 2023
EU proposes approval of Romania’s request to proceed with e-Invoicing mandate
Romania has moved a step forward in its plan to mandate e-Invoicing, with a proposal from the European Commission to grant derogation from the EU VAT Directive.
The Romanian Senate first made the application on 14 January 2022, but subsequently modified it on 30 September 2022. This has pushed back the date of the derogation to 1st January 2024, and it would apply until 31st December 2026.
The main objectives discussed in Romania’s request are to combat tax fraud and increase the efficiency of tax collection, while also reducing administrative costs both for the tax administration and taxpayers. Romania historically has maintained one of the highest VAT Gaps within the EU, 35.7% in 2020, which they admit is a fundamental problem and requires urgent and sustained action, of which e-Invoicing will likely be just one component.
The requirement for this derogation process remains in place since the current VAT directive effectively prohibits member states from imposing a mandate due to the following two elements. First, article 232 of the VAT Directive states that the use of an electronic invoice remains subject to acceptance by the buyer – effectively allowing the buyer to refuse an electronic invoice if they do not have the technical means to accept it. Second, article 218 states either paper or electronic invoices must be accepted as long as they meet the other conditions of the directive.
While the ViDA proposal discussed here would remove the need for governments to request such derogation, this proposal remains to be ratified. Once ratified, the derogation Romania has been granted would become redundant, but it is required for them to proceed in the meantime.
The existing “RO eInvoicing” system, which came into effect in November 2021, targeted business-to-government (B2G) e-Invoicing and is expected to become the basis for the new mandatory e-Invoicing system. The existing platform is already designed to support B2B transactions and will remain available for use on an optional basis for non-established economic operators.
The proposed system already uses an invoice format compatible with the European Norm e-Invoicing standard (EN16931), which is in line with the ViDA proposal. However, the way the system currently performs semantic checks as well as structural and syntax checks on invoices before certifying the invoice with a Ministry of Finance electronic seal, does not align with one of the key intentions of ViDA. Romania has stated its intent to adapt the system as of 1 January 2026 in order to comply.
While the derogation is not simply a formality, given that all EU members thus far have succeeded in their application, and given the tone of the proposal, it seems highly likely they will be allowed to proceed.
For the original text of the European Commission decision, see here.
