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VAT rates to increase from 2023, with implications in food, real estate sectors (consultants)

Roberts Nathan
TVA VAT

A series of legislative novelties in the field of VAT will enter into force from January 1, 2023 as a result of the amendment of the Fiscal Code by Government Ordinance 16/2022, the biggest impact to be in the food, tourism and real estate sectors, is the conclusion of an analysis published on Tuesday by Izabela Stoicescu, Senior Manager PwC Romania and Cristina Florea, Senior Consultant PwC Romania.

"For some beverages (mineral and carbonated waters containing sugar or other sweeteners or with aromas, or other drinks such as soy-based drinks), the VAT rate will increase from 9% to 19% from 1 January 2023. The text of the law refers to certain tariff codes that will be the subject of this increase," the source says.

Thus, producers, distributors and retailers who sell non-alcoholic beverages must carry out a revision of the tariff classification of the products in the portfolio, in order to avoid further surprises regarding the VAT rate applied for sales on the territory of Romania (reduced rate versus standard quotation), the consultants say.

The analysis of the tariff classification of the sold drinks is of interest also in the context of the introduction of the RO e-invoice and RO e-transport systems, both systems also covering the products with CN (Combined Nomenclature) code 2202.

At the same time, large taxpayers who have the obligation to report SAF-T ((Standard Audit File for Taxation) will have to consider an update of the VAT mapping if they are concerned by the increase of the applied rates, in the sense of using another tax code for the SAF-T declaration starting with the first month of next year.

Regarding the accommodation, restaurant and catering services, starting with January 1, 2023, the VAT rate was increased from the current level of 5% to 9%.

According to the Substantiation Note of Government Ordinance 16/2022, by increasing the VAT rate, it would be aimed at facilitating the uniform / correlated application of the VAT rate, regardless of the nature of the operation: supply of services or supply of goods.

The ceiling for the delivery of dwellings to the population for which VAT is applied in a reduced rate of 5% will be reduced from 700,000 RON to 600,000 RON (the equivalent of 120,000 euros) for a dwelling of no more than 120 square meters.

As a transitional measure, for the deliveries of dwellings to the population for which pre-contracts are concluded by January 1, 2023, 5% VAT is applied according to the current rules (within the limit of 700,000 RON).

At the same time, if at present several buildings with a reduced VAT rate of 5% can be purchased within the limit of 450,000 RON (without VAT), starting with January 1, 2023, only one house whose value does not exceed 600,000 RON will be able to be purchased under the 5% VAT regime, individually or jointly.

"Contracts concluded prior to January 1, 2023 will be excluded from the previous number. Similar to the annual mechanism, a new Register of housing purchases with a reduced VAT rate of 5% will be organized, starting with January 1, 2023, in electronic format, based on the information provided by notaries public," the analysis reads.

The new fiscal measure is meant to attract a higher volume of VAT collected to the state budget, with the price of an anti stimulus on the real estate market, already confronted with the whole range of difficulties generated by the current crisis (rising prices for raw materials, increased interest rates, increased labour costs, etc.).AGERPRES

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