Chain transactions with a EU client
Regarding the VAT treatment of the transactions in question, it is necessary to analyse them as separate transactions.
The first transaction, between X and Y, is subject to VAT in Romania, according to article 268 of the Romanian Tax Code.
For the second supply of goods between Y and the CEE customer, the client will or will not apply the reverse charge mechanism depending on who will be the customs exporter and the exporter for VAT purposes for the export supply to the Australian customer.
Customs exporter may be “(i) the person established in the customs territory of the Union who has the power to decide and has decided that the goods must leave the customs territory of the EU. Where this definition is not applicable, any person established in the customs territory of the EU who is a party to the contract under which the goods are to leave that customs territory shall take the status of exporter.”
On the basis of this definition it is inferred that both the Y and the CEE Customer can be, in the transaction we have analysed, customs exporters.
According to the Romanian Tax Code, the supplier described in letter d) is considered an exporter for VAT purposes, who delivers the goods mentioned in letter e), as well as any person who transports the goods outside the European Union, in the absence of a commercial transaction.
Under letter d) the supplier is defined as any taxable person making a delivery of goods, in accordance with art. 270 of the Romanian Tax Code, either the producer of the goods, the owner of the goods or the taxable person acting in his own name but on behalf of another taxable person, in accordance with art. 270 par. (2) of the Romanian Tax Code.
As a result, both the company Y and the CEE customer can be considered exporters for VAT purposes in Romania.
In accordance with Romanian Revenue Agency Memo 70491/2021, the transaction on which VAT exemption will apply depends on how the Customs Export Declaration (DVE) is filed.
Case 1: we consider that, in the context of the transaction, the CEE customer is both the customs exporter and the exporter for VAT purposes – art. 294, par. 1, letter b) of the Romanian Fiscal Code for deliveries of goods transported outside the EU by the non-Romanian resident purchaser or by another person on his behalf.
In this case, the CEE customer will appear in box 2 of the DVE (where the customs exporter is entered). If no other subject’s details appear in box 44 (where the VAT exporter is entered), the CEE customer will also be considered an exporter for VAT purposes.
Unfortunately, in this case, for the transaction of sale of goods under Ex – Works by Y to the CEE customer, the VAT exemption regime cannot be applied and the invoice issued by Y to the CEE customer will be with VAT.
In addition, in accordance with art. 316 par. (4) of the Romanian Tax Code, the CEE customer will have to obtain a VAT identification number in Romania in order to carry out VAT-free transactions. In this case the exemption will be on the transaction CEE Customer – Australian Customer (export of goods).
Case 2: we consider that, in the context of the transaction, the CEE customer is only the customs exporter and Y is the exporter for VAT purposes – art. 294, par. 1, letter b) of the Romanian Tax Code for deliveries of goods transported outside the EU by the non-Romanian resident buyer or by another person on his behalf.
In this case in the DVE the CEE customer will only appear in box 2 being the customs exporter and in box 44 of the DVE the details of Y as exporter for VAT purposes will be entered. For this transaction, the CEE customer can apply the reverse charge mechanism and the invoice issued by Y in favour of its CEE customer will be VAT exempt.
The delivery of the goods by the CEE customer to the Australian customer is subsequent to the export and does not fall within the applicability of VAT.
As a conclusion, we can state that the chain transaction of sale of goods between X – Y – CEE customer – Australian customer is possible and that exemption applies to transaction Y – CEE customer if and only if Y will be entered in box 44 of the DVE.
Attention should be paid to the sales price information from Y to the CEE customer. Box 44 shows Y as the exporter for VAT purposes and therefore the invoice for the sale of goods by Y to the CEE customer is one of the documents that is attached to the DVE. Practice teaches us that the customs commissioner sometimes forgets to send the goods to Australia with only the invoice issued by the CEE customer to the Australian customer. In this way, the Australian customer can also see the invoice between Y and the CEE customer and thus has access to information on the CEE customer’s buying and then selling prices.
The documents required to justify the VAT exemption and the subsequent request for its refund from the Romanian state are:
- The invoice containing the information as stipulated in art. 319, par. 20 of the Tax Code,
- Certification of the conclusion of the export transaction issued by the customs office or the export notification certified by the customs office for export, in the case of the DVE in electronic format or
- Copy 3 of the single administrative document used as export declaration in paper format, certified on the back by the customs office of exit of the goods.
 Commission Delegated Regulation (EU) 2018/1063, in force as of 31 July 2018
 Order of the Minister of Finance 2148/2020
 Order of the Minister of Finance 103/2016
 Order of the Minister of Public Finance (OMFP) 103/2016 amended by OMFP 2148/2020