The B2B e-invoicing regime in Romania will be implemented in two phases in 2024, with new regulations and penalties being introduced through government emergency ordinance 115/2023. These changes include exemptions for simplified invoices, exports, non-resident counterparties, and B2C transactions. Furthermore, the grace period for fines has been extended until July 2024. This article will provide an in-depth look into Romania's e-invoicing regime, covering the launch phases, requirements, penalties, and the user guidance manual issued by the Ministry of Finance.

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

The initial stage of the B2B e-invoicing system in Romania is scheduled to begin in January 2024 and will prioritize the timely reporting of domestic supplies. Within this timeframe, companies must submit their invoices in the XML format within five business days of issuance, in addition to the traditional paper invoice. The reporting process will occur on the RO e-invoice system's Virtual Private Space (SPV). It is crucial to mention that this obligation solely pertains to domestic supplies, and exports and intra-community supplies are excluded from this requirement.

In order to promote a seamless implementation, the Romanian authorities have made the decision to refrain from imposing penalties for failure to comply until March 31, 2024. This period of leniency gives businesses the opportunity to adapt to the revised reporting system and ensure adherence without the risk of immediate repercussions. Nevertheless, it is imperative for businesses to acquaint themselves with the updated regulations and begin implementing the required adjustments at the earliest possible time.

Phase 2: Submission of Electronic Invoices for Pre-Clearance (July 2024) for B2B E-invoicing in Romania

The complete implementation of the second stage of Romania's B2B e-invoicing system is set for July 2024. In this stage, companies will need to submit pre-approved electronic invoices through the eFactură platform. Paper invoices will not be deemed valid for tax compliance purposes. In order to comply with regulations, invoices must be transmitted in the CIUS_RO format, which follows the UBL 2.1 or CIN format, to the government's portal for clearance. The submitted invoices will undergo standard validation tests to ensure the correctness and proper format of the e-invoice.

It is important to note that the need for government pre-clearance checks could potentially be eliminated by January 2026 in order to align with the proposed ViDA (VAT Information Exchange System) requirement of completely removing such checks by 2028. This possible alteration is in line with the worldwide movement towards live-reporting or sending draft sales invoices to tax authorities for record-keeping and basic validation procedures.

Fines and Exceptions

In Romania, the implementation of the B2B e-invoicing system has led to the implementation of punishments for those who do not comply. However, in order to give companies enough time to adjust, the deadline for imposing fines has been extended until July 2024. It is essential for businesses to comprehend the potential penalties for non-compliance and to proactively take measures to comply with the updated guidelines.

Moreover, there are now certain exemptions in place to make the e-invoicing procedure more straightforward. Simplified invoices for goods and services, exports, transactions with non-resident parties, and B2C transactions are all exempt from the e-invoicing obligations. These exemptions are implemented to streamline the e-invoicing process and reduce the workload for businesses.

Manual for User Guidance

The Romanian Ministry of Finance has released a user guide manual to help businesses comprehend and adopt the new e-invoicing system. This comprehensive manual contains detailed instructions on topics such as registration, accessing the e-invoicing platform, utilizing the free invoicing application, creating XML invoices, downloading and converting invoices to PDF, archiving, frequently asked questions, and other pertinent information. It is recommended that businesses refer to this manual for a seamless transition to the new e-invoicing system.

Authorization from Legislatures and Approval from the European Union

The approval of legislation by the Parliament and the President has paved the way for the implementation of the B2B e-invoicing system in Romania. Additionally, the European Union Council has given Romania the green light to enforce electronic invoicing for domestic VAT starting January 1, 2024. This approval was crucial as it allowed Romania to deviate from specific provisions of the EU VAT Directive, which limit the use of government-mandated e-invoicing. Romania had initially requested this permission in 2022, with the original launch date set for July of the same year.

In addition, the European Union has suggested eliminating the need for member states to obtain authorization for variances from the EU VAT Directive on e-invoicing starting from January 2023. These propositions are a part of the VAT in the Digital Age initiatives that aim to establish a more equitable and effective tax system within the EU.

The Evolution of E-invoicing in Romania's B2B Sector

Before implementing the B2B e-invoicing regime, Romania had already made efforts to combat fraud in specific industries. By July 2022, the country's tax authority, ANAF (Agenției Naționale de Administrare Fiscală), made B2B e-invoicing mandatory in sectors prone to fraud, including vegetables, fruits, roots, edible tubers, other edible plants, alcoholic beverages, mineral products, new construction, clothing, and footwear. This initial step was taken to address tax evasion and promote transparency within these sectors.

Romania has recently implemented an electronic register for the movement of goods, similar to the e-Way Bill systems in Hungary and India, in addition to their e-invoicing system. This register, called e-transport, mandates businesses to submit an XML document to ANAF for any high-risk goods movements. The implementation of this system began on July 1, 2022.

The Prospects of Electronic Invoicing in Romania and the European Union

The implementation of Romania's B2B e-invoicing system is a crucial move towards updating tax systems and addressing tax fraud. Through the incorporation of pre-clearance electronic invoice submissions and the enforcement of penalties for non-compliance, Romania's goal is to simplify tax procedures and enhance tax accountability.

In addition, the European Union is currently engaged in efforts to synchronize digital reporting standards and ongoing transaction monitoring across its member countries. This process, set to be completed by 2028, will establish a more streamlined and consistent taxation system throughout the EU.

To sum up, companies in Romania must acquaint themselves with the updated B2B e-invoicing policies and begin to get ready for its execution. By comprehending the stages, criteria, consequences, and exemptions, businesses can guarantee a seamless shift to the new framework. Utilizing the user guidance manual released by the Ministry of Finance will offer invaluable aid during this time of transformation. Ultimately, Romania's dedication to e-invoicing showcases its resolve to improve tax adherence and establish a more open business landscape.

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