The European Commission has approved Romania’s request, submitted in April this year, to continue the enforcement of the derogation measure from the common system of value added tax, which allows the exemption of VAT payment of taxable legal persons with an annual turnover not exceeding a specific threshold, the Finance Ministry (MFP) informs on Friday.
“The Ministry of Public Finance requested the European Commission in April 2017 to continue to apply the derogating from Article 287 of Directive 2006/112/EC on the common system of value added tax, allowing the exemption of VAT payment of taxable legal persons with an annual turnover not exceeding a specific threshold,” MPP informs.
At the same time, Romania requested derogation regarding the increase of the exemption ceiling from the equivalent of EUR 65,000 in national currency, calculated at the exchange rate on the day of accession to the European Union, i.e. RON 220,000, to the equivalent in national currency of EUR 88,500, calculated at the exchange rate on the day of joining the European Union, respectively RON 300,000.
Thus, the Decision 2017/1855 authorizing Romania to apply the requested measure was published in the European Union’s Official Journal no. 265, in October 2017.
The normative act through which this decision can be put into practice is debated by the Romanian Parliament. When the legislative process is completed, the Ministry of Public Finance will communicate to the public the date from which the decision can be enforced.
A higher threshold for the special scheme for small enterprises is a simplification measure as it can significantly reduce VAT obligations for small enterprises. Romania expects the measure to reduce the VAT obligations of several small enterprises. Also, this regime should relieve the tax administration of the task of monitoring the collection of small volumes of revenue from a large number of small enterprises, the decision published in the Official Journal of the European Union reads.