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Romania: about the VAT

Alessandro PasutTaxable persons that have been de-registered for VAT purposes for not submitting the VAT returns for a period of six months or two consecutive calendar quarters may re-register for VAT purposes at any time, provided that they present the returns not submitted within the legal deadlines with a statement in which they undertake to file their future returns within the legal deadlines. If the supplier’s VAT code is cancelled, the beneficiary cannot deduct the input VAT starting the day following that on which the cancellation is performed in the Register of taxable persons. Taxable persons whose VAT code was erroneously cancelled by default are still regarded as taxable persons for VAT purposes, with the right to deduct input VAT. Persons erroneously registered for VAT purposes by the tax authorities are not obliged to invoice with VAT. In such circumstances, however, those persons have the obligation to pay the tax and their beneficiaries have the right to deduct the input VAT.

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Lithuania: Vat purposes

Alessandro PasutObligation for travel agents to register for VAT purposes. The travel agents, who supply tourism services for end consumers, which are considered to be supplied in the territory of Lithuania and for which margin scheme is applied, are obliged to register for VAT purposes when the amount of consideration paid by end consumers exceeds the threshold of LTL 155,000. In cases, when a travel agent exceeds the threshold, but does not register for VAT purposes, the VAT amount payable is calculated on the margin of services supplied for which the threshold of obligatory registration was exceeded.

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Austria: the fight against tax fraud and other illegal activities

A proposal for a European directive dating July 2012 is aimed at harmonizing on a European level the fight against tax fraud and other illegal activities against the European Union’s financial interest. The term illegal activities is understood to mean particularly the underpayment of import taxes and the valued added tax.

The proposal of a Directive provides for the obligation of member countries to punish as criminal offence already the incitement, aiding and abetting and the attempt to commit an illegal activity. Furthermore the proposal provides for the liability of legal persons while natural persons are punished by the application of fines or imprisonment.Contrary to the previous practice, in the event of tax offences the Directive envisages expressly the application of the European arrest warrant. Consequently the underpayment of duties or VAT in another member state of the European Union may be punished as fraud through the European arrest warrant. This is a significant change compared to the previous practice when tax offences were not prosecuted on a European level.

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Romania: VAT

An Order of the President of the National Agency for Fiscal Administration has approved a new procedure introducing provisions regarding the VAT registration and deregistration by default of taxable persons required to register for VAT purposes, but which do not comply with this obligation.

The default VAT registration of taxable persons is valid starting from the first day of the month following the month when the taxable persons were notified about the default VAT registration. The default VAT deregistration of temporarily inactive taxpayers, according to the Trade Registry, is valid starting from the first day of the month following the month when the taxpayers were declared as temporarily inactive in the Trade Registry.

The default VAT deregistration of inactive taxpayers is valid starting from the first day of the month following the month when the Order of the National Agency for Fiscal Administration containing the list of inactive taxpayers was published.

Transfer pricing. At the beginning of May an amendment to the Romanian fiscal law was approved clarifying that transfer pricing legislation also applies to domestic intra group transactions, thus putting an end to the common interpretation that only cross-border transactions are subject to transfer pricing regulation. Consequently, it is likely that the Tax Authorities will conduct extensive transfer pricing audits of domestic intra-group transactions, which could result in fiscal adjustments.

In the past, the tax authorities have focused on intra group cross-border transactions, mainly due to inconsistencies in the Fiscal Code and its Application Norms. This latest development in legislation suggests that transfer pricing audits will increase. As a result, Romanian companies that trade domestically with group entities are also required to prepare transfer pricing documentation to prove that prices charged for intra group transactions reflect the market value. If they fail to demonstrate this, they may face fiscal adjustments.