September 2023
Romania – further steps along the road to mandatory e-Invoicing
In recent years, Romania has been making significant strides in refining its electronic invoicing regulations. These changes promise benefits for both businesses and the government, ranging from increased efficiency in transactions to enhanced transparency.
The journey so far – from B2G to B2B
The journey toward mandatory e-invoicing in Romania began with the introduction of B2G (Business-to-Government) e-invoicing through the RO e-Factura system in September 2021. This system, managed by the National Agency for Fiscal Administration (ANAF), provided a platform for reporting, storing, and downloading invoices.
The pilot program for B2G e-invoicing commenced on October 1, 2021, under Ordinance no. 120/2021. It marks the initial step toward e-invoicing integration in the country.
By December 2021, Romania had approved technical specifications and basic elements for e-invoicing, known as RO_CIUS. It remains optional for B2B (Business-to-Business) transactions, contingent on both the sender and recipient being registered in the e-Factura registry.
January 2022 marked a significant shift in Romania’s e-invoicing landscape. B2B taxpayers dealing in high tax risk products must use electronic invoices via the RO e-Factura system starting from July 1, 2022. These high-risk products included items such as fruit and vegetables, alcohol, construction materials, mineral products, clothing, and footwear.
As we reported in July 2023, Romania applied to the EU Commission for a derogation to the EU VAT directives. The EU approved this derogation, paving the way for their mandate.
The road ahead – the updated e-Invoicing timeline in Romania
As of the latest update, Romania’s e-invoicing timeline is as follows:
- January 2024: Established taxable persons and VAT-registered entities must submit invoices in the RO e-Factura system within five days of issuance for reporting purposes (e-Reporting).
- April 2024: Fines will be applicable to non-compliant taxpayers.
- July 2024: The system shifts to a full invoice clearance system that also transmits invoices to Romanian-registered trading parties – similar to the Italian model.
Preparing for the changes
As businesses in Romania prepare for these forthcoming e-invoicing changes, it’s crucial to take proactive steps:
- Review Your Resources: Conduct an internal audit to assess your current resources, technical capabilities, and awareness of regulatory changes. Optionally, consider partnering with an expert provider like OpenText who can help you assess your readiness for the impending changes.
- Avoid Short-Term Thinking: Choose a flexible e-invoicing provider that can adapt to evolving requirements, as e-invoicing regulations are expected to become more complex. E-Invoicing is very much an integration problem, and one that is a core part of the overall order-to-cash and procure-to-pay process. Ensure you consider a partner who can help you digitize the entire buying and selling process, not just the invoice.
- Don’t Procrastinate: Avoid postponing the implementation of a new e-invoicing solution. Last-minute decisions can lead to poor choices.
Romania’s e-invoicing journey landscape is gaining pace, with mandatory e-invoicing for B2B transactions approaching in less than a year from today. Businesses need to be proactive to ensure they not only comply with the new requirements but also enhance their operational efficiency and competitive advantage in the digital age.
The full draft legislation (in Romanian) can be found on the Ministry of Finance website here.
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.
