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Monday, January 10, 2005

VAT for real estate transactions eliminated

Companies involved in land, building, scrap metal and wood transactions will not pay the Value Added Tax (VAT) for these operations as of January 1, according to a release from the Ministry of Finance.

This measure was included in the government ordinance 83/2004, approved at the end of last year.
In order to benefit from this VAT exemption, both the seller and buyer must be registered as VAT payers.
Thus, the two parties involved in these transactions will write down the VAT both in their sales and purchase registers. The tax will appear both as collected and deductible VAT, without any effective payments between the two.

The "reversed tax" system will be used until a company not registered as a VAT payer is involved in a transaction.

In the case of the amounts collected after January 1, 2005, the invoices issued by the sellers are drafted like usual, also containing the mention "reversed taxation."

However, buyers cannot deduct VAT in case the goods they purchased will be used in operations which do not allow the VAT deduction. In the case of goods paid by installments after January 1, the fiscal invoice will contain the corresponding VAT.

Posted by Iulia Rasoiu : 1/10/2005 10:15:00 am