In carrying out their economic activity, more and more companies, especially those that are active in the segment of trading of goods need storage spaces or storage services, in Romania or abroad. In order to meet this requirement, these companies conclude contacts with internal or external suppliers. Thus, these companies may choose either to rent a space or deposit in order to store goods, either for storage services, each of these situations having a distinct VAT regime as regards the place of provision.

These matters concern not only the beneficiary companies, but also those companies that own storage spaces and that provide storage services or rent spaces.

Legal provisions

As regards the rental or storage services, in order to determine the VAT regime in terms of the place of provision and therefore where VAT for these services is due, art. 278, par. (4) let. a) of the Tax Code in force (Law 227/2015 regarding the Tax Code) must be analyzed.

According to this article, the place of the provision of services is considered to be the place where the immovable properties are located, for those services that are performed in relation to the immovable properties.

In addition, the enforcement guidelines state that are considered services in relation to immovable properties those services that have a sufficiently direct relation to the immovable property in question, relation that can be found in the following cases:

  • the services derive from an immovable property and that immovable property is a constituent of the service and is central and essential for the services provided;
  • bun the services are provided to the benefit of an immovable property and concern an immovable property and have as goal the modification of physical features or of the legal status of that good.

Thus, are considered services that are directly related to the immovable good the leasing or rental of immovable properties, including the storage of goods if in view of storage a specifc part of the space is assigned.

In conclusion, according to the exception showed:

1. while the rental or storage services with the assignment of a distinct space to the client, are services related to immovable properties and therefore the place of provision (and where VAT is due) is the place where that immovable property is located, while

2. the storage depozitare services (without the assignment of a distinct space to the client) are not services related to an immovable property and therefore the place of provision (and not the place where VAT is due) is considered to be, according to the general rule the place where the beneficiary established the office of its economic activity.

Practical matters

In practice, the way in which the contract is ratified, more precisely if we discuss about a rental contract, storage with distinct assignemtn of the space or storage services. In most cases the contracts of this kind are not very clearly drawn up and thus there can be differences of opinon as regards the establishment of the place to provide the services.

The importance of contractual provisions stems from the requirement to precisely establish the place of services provision and therefore the place where VAT is due and the differences are the following:

1. The contract is concluded between a provider from EU and a client from Romania.

In this situation, for the services of rental or storage with the assignment of a distinct space to the client, the place of services provision is outside Romania – where the immovable property is located. In this situation, the supplier will take into account the applicable VAT regime in the state of the immovable property location and in Romania is considered that the beneficiary makes a non-taxable acquisition in Romania and therefore VAT paid according to the rules in the state of the immovable property will not be a deductible tax in Romania.

In the case of storage services, the place of provision is the place where the beneficiary established the office of the economic activity, and in such a situation the supplier will issue an invoice without VAT while the client will carry out the applying the reverse-charge mechanism by recognizing the VAT value both as deductibletax and as collected tax.

2. The contract is conclued between a provider in Romania and client in EU.

Similarly to the situation above, the place for the provision of services of rental or storage with assignment of a distinct space to the client is to be the place in which is located the immovable property, therefore in this case Romania. In such a situation, the supplier will issue an invoice with VAT in Romania and at the beneficiary level the acquisition will not be taxable in its state.

In the case of storage services, the supplier in Romania will issue an invoice without VAT and the beneficiary will thereafter apply the reverse-charge mechanism in its state.

In conclusion, any contractual arrangement should provide the factual situation and the way in which the collaboration takes place, in order to eliminate the risk of applying a wrong VAT regime, that could lead (for example in the case of a provider in Romania) to the establishment of an additional VAT amount and ancillary obligations.

Article published firstly on Avocatnet.ro.