22
Mar
387

The issue we are referring to is the tax treatment of the transfer of a totality of goods from one company to another according to the Romanian fiscal legislation. For example, company A wishes to acquire the assets of company B. Is this operation considered a "supply of goods” (thus generating for the buyer the obligation of paying VAT) or, on the contrary, it is excluded from the range of application of the VAT?

The European legal basis of this issue is art. 19 of Directive 2006/112/CE regarding the common system of value added tax. This article stipulates that: “in the event of a transfer, whether for consideration or not or as a contribution to a company, of a totality of assets or part thereof, Member States may consider that no supply of goods has taken place and that the person to whom the goods are transferred is to be treated as the successor to the transferor…”

Taking into consideration that the European Union has given Member States a margin of appreciation in considering whether the transfer of assets from one person to another is excluded or not from the range of application of the VAT, the Romanian legislator has adopted the opinion that such an operation is not a "supply of goods" and therefore is excluded from the obligation of payment of the value added tax.

This issue was stipulated in art. 270 par. 1 of the Romanian New Fiscal Code that entered into force on January 1st, 2016 (the equivalent of art 128 par. 7 of the previous Fiscal Code), which states the following: “The transfer of all assets or of a part of the assets which is carried out with the transfer of assets or, as the case may, of the liabilities as well, as a result of other operations than a split or a merger, such as alienation or contribution in kind to the share capital of a company is not a supply of goods if the person to whom the assets are transferred is a resident of Romania and a taxpayer in compliance with art. 266 par. 2, according to the implementing regulation. The transfer of a totality of assets or of a part of them which is carried out following a split or a merger is not a supply of goods if the person to whom the assets are transferred is a resident of Romania and a taxpayer according to art. 266, par. 2. In case of a transfer of all assets or of a part of them which is carried out with the transfer of assets or, as the case may be, of the liabilities as well, as a result of other operations than a split or a merger, as well as in the case of a transfer of assets or of a part of them carried out following a split or a merger, the person to whom the goods are transferred is to be treated as the successor of the transferor concerning the adjustment of deduction provided by the law”.

Moreover, item 7 of art. 8 of the implementing regulation concerning art. 270 par. 7 of the New Fiscal Code brings some additions and clarifications:

“(8) The transfer of assets provided by art. 270 par. (7) of the Fiscal Code is a universal transfer of goods and/or services, which are no longer considered individually, but as a whole in relation to the transferor who is a taxpayer, regardless whether it is a total or a partial transfer of assets. According to art. 270 (7) a partial transfer of assets is the transfer of all assets or of a part of the assets that were invested in a branch of the activity of the company, if these assets form a technically independent structure which is capable of carrying out independent economic activities. Also, a partial transfer takes place when the premises where the transferred assets are located are not alienated, but reassigned to other branches of the transferor’s activity. The simple transfer of some assets cannot guarantee the possibility of pursuing an economic activity in any situation. In order for an operation to be considered a transfer of assets, as provided by art. 270 (7) of the Fiscal Code, the person to whom the assets are transferred must prove his intention of carrying out the economic activity or the branch of the economic activity that has been transferred to him and not settle immediately that activity and sell the possible stocks. The person to whom the assets are transferred has the obligation to send a statutory declaration to the transferor indicating that he will fulfill this obligation. In order for an activity to be qualified as a transfer of assets it is not relevant whether the receiver of the assets is authorised to carry out the activity that has been transferred to him or whether that activity is included in his object of activity. For this purpose, the European Court of Justice has delivered a decision in the Zita Modes case (C-497/01). The requirements provided by this paragraph do not apply in case of a merger and of a split which are always considered to be transfers of assets according to art. 270 (7) of the Fiscal Code.

(9) The taxpayer who is the beneficiary of the transfer mentioned at par. (7) is to be treated as the successor of the transferor, regardless whether that person is registered as a taxpayer or not. The beneficiary will take over all the rights and obligations of the transferor, including those to supply himself provided by art 270 par. (4) of the Fiscal Code and those regarding the adjustment of the tax deduction, as provided by art. 304 and 305 of the same Code. If the beneficiary of the transfer is a taxpayer that is not registered for VAT purposes according to art. 316 of the Fiscal Code and will not register for VAT purposes following the transfer, he will have to pay to the state budget the sum resulted from the adjustments carried out according to art. 270 (4), art. 304, 305, 306 or 332 of the Fiscal Code and to file the declaration stipulated by art. 324 par. (8) of the Fiscal Code. In order to determine the date from which the tax adjustment starts, in the case of capital goods, the date when the goods were acquired by the transferor will be taken into consideration and not the date of the transfer, according to art. 305 or 332 of the Fiscal Code, as the case may be. The transferor will have to send a copy of the register of the capital goods to the beneficiary of the goods, if the goods were acquired after the date of the adherence. Applying a tax treatment for the transfer of assets by taxpayers does not imply the canceling of the right of tax deduction for the beneficiary, if the operations in question can be taxed according to the law or by option, except for the situation when it is found that the transaction was taxed for fiscal purposes." 

Dehelean Marius - Attorney-at-law

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