Reflection of the reduced VAT rate to 6% in the Sales and Purchases Books

Dear taxpayers, 

Pursuant to the Law No. 71/2017, dated 27/04/2017 “On an addition to the Law No. 92/2014 “On Value Added Tax”, as amended, Article 49, paragraph 3, as of June 2017, now the taxpayers that own accommodation structures shall declare VAT at a rate of 6%, only the provision of accommodation (bed) service and, if available, also breakfast, within the room price.

All other services or goods provided by the accommodation structures, except for the provision of accommodation, shall be taxable at a 20% tax rate, and shall be identified separately in the invoice.

An accommodation unit that also provides other supplies, like bar-restaurant, pool, sauna, sunbeds, conference rooms, shall invoice these services at the standard tax rate of 20%.

Pursuant to the Law 92/2014 “On VAT”, as amended, Article 74 “Limitations to the right of deduction” paragraph ç, accommodation in hotels is a service exempted from the right to VAT deduction, therefore, it has been only reflected in the book of sales and in the VAT declaration, by adding the respective items for sales at a 6% tax rate and such a change has not been reflected in the books of purchases regarding the legal change of VAT rate for the service of accommodation in the accommodation structures.

Under these conditions, given that this service is exempted from the right to deduction in purchases, the purchase supplies in hotel accommodation shall be reflected in the “Exempted purchases” section.

For illustration purposes, we are showing two transactions between two entities and the manner how they will be reflected in the sales book and in the purchases book by both parties involved.

Thank you!