Navigating Romania's E-Invoicing landscape: A practical guide for freelancers and small business owners
In March 2020, Romania took a bold step with the launch of "E-Factura," a mandatory electronic invoicing system introduced by the Ministry of Finance and the National Agency for Fiscal Administration (ANAF). This move wasn't just about embracing digital invoices; it was a strategic effort to revolutionize tax processes, elevate VAT collection, and tighten the noose on tax evasion. The goal? A seamless financial landscape, and this shift is propelling Romania into a modern and manageable era.
Inspired by the triumph of electronic invoicing in Italy's B2G and B2B relations, Romania meticulously planned the implementation stages. The objective was not merely to adopt technology but to understand its impact on the economic environment, ushering in modernization and efficiency in financial information management.
Implemented on January 1, 2024, the RO E-Factura system is more than an electronic invoicing mandate; it's a strategic move to enhance invoicing efficiency and combat tax evasion in B2B relationships in Romania.
Who Needs to Use the RO E-Factura System?
Starting July 1, 2022, entities, regardless of VAT registration, must report B2G (business to government) invoices in the RO E-Factura system. From January 1, 2024, reporting extends to all B2B transactions in Romania.
All companies based in Romania are now required to utilize the RO e-Factura system for business-to-business transactions starting January 1, 2024. This mandate applies to both Romanian and foreign businesses operating in Romania. Essentially, it means that if you're a business in Romania, you must create and send electronic invoices (e-factura) to your Romanian business clients using the RO e-Factura system.
This new regulation encompasses all business-to-business transactions, emphasizing that invoices from now on must be submitted through the RO e-Factura system. However, it's important to note that specific transactions, like those involving individual consumers, are exempt from this requirement.
Every invoice must be sent immediately after issuance, electronically in an XML file, breaking the traditional end-of-month practice. The issued invoice must be transmitted within 5 working days, with the communication date considered the date it's available for download.
Distinguishing e-Factura from "Electronic Format" Invoices
E-Factura is distinct from an "electronic format" invoice. It's a file with encoded information generated alongside the classic fiscal invoice, emphasizing the responsibility of the company's administrator or the designated person for invoice preparation.
The content of the invoice/elements related to the invoice has not undergone any changes following the implementation of this system; they remain the same.
It's crucial to recognize that the primary form of the electronic invoice is considered to be the XML file, coupled with the electronic seal of the Ministry of Finance. This represents a shift in how businesses in Romania handle their invoicing processes, aligning with the requirements of the RO e-Factura system.
Exceptions
Exceptions to reporting in the RO E-Factura system include exports, imports, intracommunity transactions, and transactions with individuals.
However, companies operating in the tourism industry in Romania must issue e-invoices to individuals who have paid for their tourism services using holiday vouchers.
Fines
Not meeting the deadline for submitting invoices in the national electronic invoicing system RO e-Invoice is considered an offense and is subject to fines. For large taxpayers, as defined by the law, the penalty ranges from 5,000 lei to 10,000 lei. For medium taxpayers, also defined by the law, the fine ranges from 2,500 lei to 5,000 lei. Other legal entities, as well as individuals, face fines from 1,000 lei to 2,500 lei.
However, as an exception, during the period from January 1 to March 31, 2024, there are no fines for not meeting the deadline for submitting invoices in the national electronic invoicing system RO e-Invoice.
Additionally, if a business in Romania sends an invoice to another business in Romania (B2B), and it's not done through the national electronic invoicing system (RO e-Invoice), the receiving business could face a penalty. This penalty is a fine equivalent to the VAT amount mentioned in the invoice.
Steps to Upload Invoices into the RO E-Factura System
- Obtaining a Digital Signature:
The use of digital signatures in Romania is governed by a comprehensive legal framework, including Law No. 455/2001 on electronic signatures, subsequent amendments, and additional regulations. This framework ensures the legal recognition of electronic signatures as a valid means of authentication and electronic signing in Romania. The regulations define various types of electronic signatures, establish requirements for certification service providers, and outline conditions for using electronic signatures in different contexts. These regulations also align with the European Union's eIDAS regulation, ensuring interoperability and acceptance of electronic signatures across the EU single market.
Acquiring a Digital Signature: In Romania, several providers offer digital signatures, such as CertSIGN, Alfa Trust Certification(Alfasign), DigiSign, Trans Sped, and Centrul de Calcul SA(Certdigital). Interested individuals need to follow these steps:
- Visit the provider's website.
- Choose the type and validity period of the certificate.
- Complete the registration form.
- Download the generated documents.
- Follow the email-based identification steps.
More information about digital signature you can find here.
- Registration in the Private Virtual Space (SPV):
Once the digital signature is obtained, the next step is enrolling in the Private Virtual Space (SPV). SPV is a free service accessible permanently via the internet on the ANAF website. Registration in the Private Virtual Space involves completing identification data in the web form on the ANAF page and uploading certain supporting documents. After enrollment/registration in SPV, you can send or receive fiscal administrative documents, access information regarding social contributions or fiscal obligations.
Link to explanation of SPV registration based on CUI
ANAF SPV Registration for Legal Entities
- Uploading Issued Invoices into the RO E-Factura System:
The RO E-Factura system is available within SPV. To upload issued invoices into this system, they need to be transmitted in an electronic XML format mandated by ANAF, a format adhering to strict rules and containing specific mandatory information.
ANAF checks if the sent invoice is correct, analyzes it, and if it is not compliant, sends back a response to the supplier with the erroneous details that need modification. If the invoice meets all requirements and passes necessary checks, it is accepted into the system, and a response is sent to the supplier stating that the invoice is valid.
Upon transmission of the electronic invoice, the RO E-Factura system associates the transmission with an identification number used as a reference in specific system processes and operations.
Through an invoicing or accounting application, the client can check in the E-Factura system if they received the invoice from the supplier for payment.
Physical invoices will no longer be issued, nor will those in Excel/Word or handwritten ones. However, you can continue to use your preferred invoicing program, provided it is integrated with the national system for electronic invoicing, RO E-Factura.
However, you can issue invoices and send them to RO e-factura system using the free tools provided by ANAF here, and their usage is explained in Romanian here.
It is mandatory for recipients of invoices received through the system to ensure the accuracy of the data on them, as the original copy of the invoice is considered to be the XML file accompanied by the electronic seal of the Ministry of Finance.
Conclusion: Embracing Efficiency
In conclusion, Romania's E-Factura system signifies more than a shift from physical to digital invoices. It's a commitment to efficiency, transparency, and modernization. As businesses adapt to this new era, integrating preferred invoicing programs with RO E-Factura ensures compliance and a smoother financial landscape. Any objections or discrepancies are communicated through the system, reinforcing the accuracy and validity of the digital record. For taxable entities, receiving and recording invoices outside the RO E-Factura system constitutes a contravention, emphasizing the system's central role in Romania's fiscal future.