Romania has taken a significant leap toward modernizing financial transactions with the implementation of the mandatory RO e-invoicing system. Since July 2022, the system named e-Factura has become a pivotal structure in business-to-government (B2G) transactions, as well as in high fiscal-risk business-to-business (B2B) interactions. With a continuous advancement towards complete digital invoicing, January 2024 marks a landmark when all B2B transactions will require e-invoice compliance. The broader implementation of e-invoicing encapsulates not just a compliance milestone but also unlocks the potential for cost and time efficiencies, enhanced interoperability, and improved security in business transactions across Romania.

As Romania embraces this digital transition, understanding the National System of Invoicing and Fiscal Information (NIF) becomes crucial for businesses to adapt successfully. The RO e-invoicing system serves as a centralized platform ensuring invoice clearance, and non-compliance carries severe penalties, emphasizing the gravity of this legislative change. The upcoming sections will explicate the journey of e-invoicing in Romania, delving into the phased approach from real-time invoice reporting to the mandatory use of the eFactură platform, while also addressing the exemptions and special provisions. This article aims to guide businesses through the preparations for the transition, ensuring they are well-versed in the operational intricacies of the mandatory e-invoice system.

Understanding NIF Romania

The Număr de identificare fiscala (NIF), or the Romanian Fiscal Identification Number, is a critical component in the country's taxation system, serving as an identifier for taxpayers in various tax-related matters. With the advent of RO e-invoicing, the NIF assumes a significant role in ensuring accurate and efficient tax reporting:

1. NIF and E-Invoices:

• The NIF is anticipated to be a mandatory element in e-invoices for both identification and tax-related purposes.
• While the specific details of how the NIF will be integrated within the e-invoice structure are not explicitly outlined, its inclusion is essential for streamlining tax processes and preventing errors.

1. RO e-Factura System:

• The RO e-Factura system is Romania's centralized platform for electronic invoicing, which facilitates the electronic issuance and receipt of invoices.
• To utilize the system, taxpayers must register through the Virtual Private Space (SPV) website, which is a prerequisite for invoice submission.

1. Registration and Access:

• Taxpayers are required to create an SPV account with the National Agency for Fiscal Administration (ANAF) and register in the RO e-Factura system.
• The registration process involves submitting Form 084 to ANAF, with approval granted on the first day of the subsequent month.
• Once registered, taxpayers can access the RO e-Factura platform via their SPV account to manage their e-invoicing needs.

  Incorporating RO e-invoicing into business operations necessitates a clear understanding of these components. The NIF's integration into the e-invoice system underscores the importance of having a robust framework for tax compliance. As Romania progresses towards a fully digital invoicing environment, the RO e-Factura platform stands as a testament to the country's commitment to modernizing its tax infrastructure, with implications for both resident and non-resident VAT-registered companies.

Phase 1: Near Real-Time Invoice Reporting (Jan 2024 - June 2024)

Beginning January 1, 2024, Romania initiates Phase 1 of its comprehensive B2B e-invoicing regime, marking a crucial period for businesses to align with new fiscal reporting practices. This phase, extending to June 30, 2024, is characterized by the following key aspects:

Real-Time Reporting Obligation:

1. All businesses, including local entities, foreign entities with a fixed establishment, and VAT-registered foreign entities in Romania, are mandated to report domestic supplies within five working days of invoice issuance.
2. The reporting mechanism is facilitated through the Virtual Private Space (SPV) on the RO e-invoice system, requiring invoices to be submitted in XML format.

Compliace and Transition:

1. The initial grace period until March 31, 2024, provides businesses with the opportunity to adapt to the new system without the risk of penalties for non-compliance.
2. Post-grace period, non-compliance will incur penalties ranging from 1,000 to 10,000 lei, depending on the size of the taxpayer.
3. The transition involves preliminary e-reporting from January to June 2024, before shifting to full mandatory e-invoicing for Romanian established businesses starting July 1, 2024.

Invoice Format and Submission:

1. Invoices must conform to the RO_CIUS format, which is in compliance with European e-invoicing standards, ensuring consistency and interoperability within the EU.
2. The CIUS_RO format includes UBL 2.1 or CIN standards, which are crucial for the transmission of invoices.
3. Invoice details are required to be submitted within five working days from the taxable event, aligning with the e-reporting obligation.

   The implementation of Phase 1 is a strategic move towards enhancing fiscal transparency and efficiency, leveraging the RO e-invoicing system to modernize the country's financial infrastructure. It is imperative for businesses to understand these requirements and integrate them into their operational procedures to ensure seamless compliance with Romania's evolving digital invoicing landscape.

Phase 2: Mandatory E-Invoicing via eFactură Platform (From July 2024)

In the context of Romania's digital transformation, the second phase of the RO e-invoicing system, beginning in July 2024, represents a significant milestone for businesses. This phase introduces mandatory pre-clearance of electronic invoices through the eFactură platform, with key operational changes:

• Mandatory Pre-clearance:
  • Electronic invoices must be submitted to the eFactură platform for validation and authorization in real-time.
  • Each e-invoice will be equipped with a digital signature and a unique QR code to ensure authenticity and facilitate easy verification.
• Validation and Compliance:
  • The eFactură system conducts basic validation checks to confirm the correctness of information and adherence to the specified e-invoice format.
  • Businesses failing to comply with the e-invoicing mandate will face penalties, including fines ranging from 500 to 10,000 RON for reporting violations and up to 15% of the total invoice amount for not issuing or receiving e-invoices through the platform.
• Operational Requirements:
  • All Romanian established businesses are required to issue, exchange, and transmit electronic invoices via the RO e-Factura system to other Romanian established recipients.
  • The e-invoicing process mandates the use of the RO_CIUS format for all invoices, ensuring uniformity and compliance with European e-invoicing standards.

    To facilitate this transition, the Romanian Ministry of Finance has provided extensive guidance for businesses, which includes:

• User Guidance Manual:
  • Detailed instructions for registration and accessing the eFactură platform.
  • A free invoicing application to assist in generating XML invoices.
  • Guidelines for downloading invoices, converting them to PDF, archiving, and addressing frequently asked questions.

    In preparation for Phase 2, businesses must familiarize themselves with these guidelines and ensure their invoicing systems are compatible with the RO e-invoicing requirements. The RO e-Invoice platform's support for both B2G and B2B transactions necessitates that invoices are generated in the XML format, aligning with the RO_CIUS standard. This transition not only aligns Romania with European e-invoicing standards but also reinforces the country's commitment to enhancing fiscal transparency and combating tax evasion.

Exemptions and Special Provisions

While the implementation of RO e-invoicing represents a significant advancement in Romania's digital financial infrastructure, it is important to note that there are specific exemptions and special provisions under this regime. These exemptions are designed to streamline the process and ensure that the e-invoice system remains focused on transactions that require stringent compliance and monitoring. The following points outline the key exemptions from the mandatory use of the RO e-invoicing system:

• International Transactions:
  • Supplies to taxable persons not established or VAT registered in Romania are exempt, including exports and intra-Community supplies of goods.
  • Services that fall outside the scope of Romanian invoicing rules, such as certain cross-border services, are not subject to the e-invoicing requirements.
• Simplified Invoices:
  • Transactions for which simplified invoices are issued are not required to be reported through the RO e-invoicing system. Simplified invoices typically relate to retail sales or other minor transactions where full invoicing details are not necessary.
  • The issuance of simplified invoices itself is recognized as an exemption, allowing for a more efficient invoicing process for smaller transactions.
• Specific Goods and Services:
  • Deliveries of goods and services to entities that are neither established nor VAT-registered in Romania are not required to use the e-invoicing system.
  • Deliveries of goods pursuant to art. 294 para. 1. a-b and para. 2, which may include specific tax-exempt goods or transactions, are also exempt from the e-invoicing requirement.
• Non-Established Suppliers:
  • Suppliers who are not established in Romania will continue to submit invoice details via e-reporting, rather than through the RO e-invoicing system. This provision ensures that non-resident suppliers comply with reporting obligations without the need to fully integrate into the domestic e-invoicing platform.
  • In understanding these exemptions, businesses can better navigate the complexities of the RO e-invoicing system and ensure compliance where necessary. It is crucial for entities involved in these exempt transactions to maintain awareness of their obligations and to continue adhering to the standard invoicing practices that apply to their specific circumstances. As Romania's e-invoicing landscape evolves, staying informed of these special provisions will be integral for businesses to operate effectively within the country's regulatory framework.

Preparing for the Transition

To ensure a seamless transition to RO e-invoicing and e-reporting systems, businesses should consider the following strategic steps:

1. Adopt an "Excel First, API Later" Approach:
   • Begin with Excel-based invoicing to maintain compliance with minimal disruption.
   • Transition to an Application Programming Interface (API) for a more integrated, automated invoicing process.
2. Preparation and Assessment:
   • Conduct a thorough review of current resources and assess the company's readiness for the transition to e-invoicing.
   • Select an e-invoicing provider that offers flexibility to adapt as regulations evolve.
   • Avoid delaying the implementation of a new e-invoicing solution; early adoption is key to ensuring compliance and avoiding penalties.
3. Understanding Penalties for Non-Compliance:
   • Be aware that significant fines will be imposed for failing to comply with e-invoicing requirements.
   • Penalties are tiered based on company size and the nature of non-compliance, underscoring the importance of adhering to the mandate.

     In addition to the above steps, businesses should leverage available technologies to facilitate compliance:

4. Utilizing VATify for Compliance:
   • VATify, a VAT reporting software by Marosa, enables the validation, sending, and receiving of e-invoices directly to Romanian tax authorities.
   • This solution simplifies the compliance process, ensuring businesses meet the mandate requirements.
5. E-Reporting Obligations:
   • Invoice details must be submitted to the tax administration within five working days from the taxable event.
   • VATify's capability to directly interface with Romanian tax authorities streamlines this process, reducing the risk of non-compliance.

     By following these guidelines and utilizing the right technologies, businesses can confidently navigate the transition to the RO e-invoicing system, ensuring compliance and minimizing the risk of financial penalties. It is imperative to stay informed and proactive in adopting these new digital invoicing practices.

Conclusion

As the mandatory RO e-invoicing system takes root in Romania, companies are at the forefront of a significant digital transformation that promises enhanced tax compliance and streamlined financial operations. Embracing these changes necessitates a comprehensive understanding of the intricacies involved—from the crucial role of the NIF in e-invoices to the operational nuances of the phased implementation of the e-Factura platform. The journey thus far highlights the unyielding commitment of Romanian authorities to a modernized, efficient, and transparent economy.

Looking ahead, the implications for businesses extend far beyond mere adherence to new regulations. The digitalization of fiscal processes embodies a leap towards greater accuracy and security in transactions—benefits that ultimately serve the collective goal of reducing tax evasion and fostering a more robust economic environment. As Romania aligns with European e-invoicing standards, stakeholders are encouraged to remain informed and proactive, capitalizing on this pivotal era to reinforce their operational resilience and collaborative ethos within the digital financial landscape.

Call to action

Do not hesitate to contact us for NIF application, Digital Signature applications assistance and e-invoicing assistance. Mail at frjacobs@telenet.be