Proposal: New Measures to Fight VAT Fraud

A proposal was submitted by the government to introduce new tax measures aiming to reduce VAT fraud, and notably the following proposals were included:

• Implementation of the EU reporting obligation for payment services on cross-border payments
• Introduction of reverse charge of VAT on telecommunications services
• Introduction of a new annual reporting obligation applicable to all VAT-registered businesses to provide information regarding activities that allow for partial VAT deduction

Such measures are proposed to come into force as from 30 June 2023 and will only become effective if approved and after being published in the official government gazette.

Proposal: Changes to the Standard VAT Rate and to the VAT Rate Applicable to Accommodation Services

Among other tax measures, the government has proposed the increase of the standard VAT rate from 20% to 22% starting from 1 January 2024.

In addition, it was proposed to increase the VAT rate applicable to accommodation services, from the reduced (9%) to the standard VAT rate, starting from 1 January 2025.

These measures will only become effective if approved and after being published in the official government gazette.

Zero VAT Rate on Supply and Installation of Solar Panels

The government announced that, as from 1 May 2023, the supply and installation of solar panels for private dwellings will be subject to a zero VAT rate.

Directive on VAT Data Reporting Obligation for Payment Service Providers Adopted

The Council Directive (EU) 2020/284 of 18 February 2020, amending Directive 2006/112/EC, which introduced certain reporting requirements for payment service providers, has been implemented by Luxembourg.

Therefore, as from 1 January 2024, the payment service provider must report certain payment data in the case of providing payment services corresponding to more than 25 cross-border payments to the same payee in a quarter.

2023 Budget Measures Implementation Act Enacted

The Minister of Finance has enacted the 2023 Budget Measures Implementation Act, which became effective on 3 April 2023. Concerning indirect taxes, the following measures are included:

• Introduction of new interest rates
• Increase of the penalties applicable in case of failure to comply with reporting obligations
• Introduction of a new obligation to provide information for VAT purposes upon request, with the objective of combating VAT fraud

New VAT Exemptions for Certain Goods and Services

Amendments to the Romanian Fiscal Code were published in the official government gazette. The respective changes, which will enter into force on 11 June 2023, include the introduction of VAT exemptions for certain supplies of goods and services provided to hospitals and to not-for-profit organisations, as well as to the supply of orthopaedic products and prostheses and their accessories (except dental prostheses).