2024 B2B e-invoicing regime in Romania: New Guidelines and Penalties

Romania has recently implemented new regulations and penalties for its upcoming B2B e-invoicing regime, which will be launched in two phases in 2024. The government emergency ordinance 115/2023 introduces several amendments, including exemptions for simplified invoices, exports, non-resident counterparties, and B2C transactions. Additionally, the grace period for fines has been extended until July 2024. In this article, we will delve into the details of Romania's e-invoicing regime, discussing the launch phases, requirements, penalties, and the user guidance manual issued by the Ministry of Finance.

Phase 1: Near Real-Time Reporting (January 2024 - June 2024) for Romania's B2B E-invoicing

The first phase of Romania's B2B e-invoicing regime is set to commence in January 2024 and will focus on near real-time reporting of domestic supplies. During this period, businesses will be required to report their invoices within five working days of issuance using the XML format in addition to the traditional paper invoice. The reporting will take place on the Virtual Private Space (SPV) on RO e-invoice system. It's important to note that this requirement applies only to domestic supplies, and exports and intra-community supplies are exempted.

To encourage smooth adoption, the Romanian government has decided not to impose fines for non-compliance until after March 31, 2024. This grace period allows businesses to adjust to the new reporting system and ensure compliance without the fear of immediate penalties. However, it's crucial for businesses to familiarize themselves with the new guidelines and start implementing the necessary changes as soon as possible.

Phase 2: Pre-Clearance Electronic Invoice Submissions (July 2024) for Romania's B2B E-invoicing

The second phase of Romania's B2B e-invoicing regime will be fully implemented in July 2024. During this phase, businesses will be required to submit pre-cleared electronic invoices via the eFactură platform. Paper invoices will no longer be acceptable for tax compliance purposes. To ensure compliance, invoices must be sent in the CIUS_RO format, which is based on the UBL 2.1 or CIN format, to the government's portal for clearance. The submission will undergo basic validation checks to verify the accuracy and format of the e-invoice.

It's worth mentioning that the requirement for government pre-clearance checks may be dropped from January 2026 to align with the proposed ViDA (VAT Information Exchange System) requirement of eliminating government pre-clearance checks altogether by 2028. This potential change reflects the global trend of moving towards live-reporting or draft sales invoices sent to tax authorities for recording and basic validation checks.

Penalties and Exemptions

Under the new B2B e-invoicing regime, Romania has introduced penalties for non-compliance. However, to provide businesses with sufficient time to adapt, the grace period for fines has been extended until July 2024. It's crucial for businesses to understand the penalties they may face for non-compliance and take proactive measures to ensure adherence to the new regulations.

Additionally, certain exemptions have been introduced to simplify the e-invoicing process. Simplified invoices for goods and services, as well as invoices for exports, non-resident counterparties, and B2C transactions, are exempted from the e-invoicing requirements. These exemptions aim to streamline the e-invoicing process and minimize the burden on businesses.

User Guidance Manual

To assist businesses in understanding and implementing the new e-invoicing regime, the Romanian Ministry of Finance has issued a user guidance manual. This manual covers various topics, including registration, access to the e-invoicing system, using the free invoicing app, generating XML invoices, downloading invoices, converting to PDF format, archiving, frequently asked questions, and additional relevant information. Businesses should consult this manual to ensure a smooth transition to the new e-invoicing system.

Legislative Approvals and EU Permission

The legislation required to launch the B2B e-invoicing regime in Romania has been approved by both the Parliament and the President. Furthermore, the Council of the European Union has granted permission for Romania to mandate domestic VAT electronic invoicing from January 1, 2024. This permission was necessary as it allowed Romania to deviate from certain articles of the EU VAT Directive, which restrict the use of government-mandated e-invoicing. Romania initially applied for this permission in 2022, with the original launch planned for July of the same year.

Moreover, the European Union itself is proposing to remove the requirement for member states to seek approval for deviations from the EU VAT Directive on e-invoicing from January 2023. These proposals are part of the VAT in the Digital Age reforms aimed at creating a fairer and more efficient EU tax regime.

Romania's B2B E-invoicing Journey

Prior to the implementation of the B2B e-invoicing regime, Romania has taken steps to combat fraud in certain sectors. In July 2022, the Romanian tax authority, ANAF (Agenției Naționale de Administrare Fiscală), enforced mandatory B2B e-invoicing in fraud-sensitive sectors such as vegetables, fruits, roots, edible tubers, other edible plants, alcoholic beverages, mineral products, new construction, clothing, and footwear. This initial implementation aimed to tackle tax evasion and ensure greater transparency in these sectors.

In addition to e-invoicing, Romania has also introduced an electronic movement of goods register, similar to Hungary and India's e-Way Bill. This register, known as e-transport, requires businesses to register their high-risk goods movements via an XML document submitted to ANAF. The implementation of e-transport started on July 1, 2022.

The Future of E-invoicing in Romania and the EU

Romania's B2B e-invoicing regime represents a significant step towards modernizing tax systems and combating tax evasion. By implementing pre-clearance electronic invoice submissions and introducing penalties for non-compliance, Romania aims to streamline tax processes and ensure greater tax transparency.

Furthermore, the European Union is actively working on harmonizing digital reporting requirements and continuous transaction controls among member states. These reforms, scheduled to be fully implemented by 2028, will create a more efficient and uniform tax regime across the EU.

In conclusion, businesses operating in Romania should familiarize themselves with the new B2B e-invoicing regime and start preparing for its implementation. By understanding the phases, requirements, penalties, and exemptions, businesses can ensure a smooth transition to the new system. Consulting the user guidance manual issued by the Ministry of Finance will provide invaluable assistance during this period of change. Ultimately, Romania's commitment to e-invoicing reflects its determination to enhance tax compliance and create a more transparent business environment.

Need help see also www.investromania.be