Indirect tax - Moldova

Value Added Tax (VAT) is the main type of indirect taxation in Moldova. VAT in Moldova is levied pursuant to title III of the Moldovan Tax Code and other acts of the Moldovan authorities (Ministry of Finance and State Tax Service).

The Association Agreement between the Republic of Moldova and the European Union signed in 2014 and entered into force on 1 July 2016 includes a gradual harmonization of the indirect taxes applicable in Moldova (including value added tax, excise duties) with the current rules established within the European Union.

VAT is a state tax and a form of collection to the budget of a part of the value of supplied goods and services that are taxable in Moldova, as well as a part of the taxable goodsand services imported to Moldova. VAT is levied on top of the cost of a product or service and it applies to most goods and services that are bought and sold for use or consumption within Moldova.

A registered person for VAT purposes will charge VAT (output tax) on its sales and incur VAT (input tax) on its purchases. The difference between the output tax and the deductible input tax in each reporting period will be the amount of VAT payable by the taxable person to the state budget. In case the difference resulted is negative, a VAT refund can be claimed under certain conditions. The amount of VAT paid on goods and services which are to be used for the purpose of making supplies exempt from VAT is not subject to credit and shall be included into the cost of goods or expenditures.

A transaction is within the scope of Moldovan VAT if the following conditions are met:
• It is a supply of goods or services (except those exempted without deduction right) performed by a taxable person or it is an import of goods and services
• it takes place in Moldova
• it is made in the course of the business carried by the respective taxable person.

There are three VAT rates applicable to goods and services in Moldova: the standard rate (20%) and two reduced rates (8% and 12%). In addition, some goods and services are exempt from VAT such as land, dwellings, specific food for children, financial services, educational services, medical services, betting and gambling, etc. A particular exemption with deduction right is granted for the goods and services imported and/or supplied in Moldova for the purpose of technical assistance projects conducted on the territory of Moldova by international organizations and donor states or assistance for investment projects financed from grants awarded to the Government and from grants awarded to the institutions financed from budget, according with the limits prescribed by international treaties and agreements ratified by Moldova.

Imports of goods and services are also subject to VAT. VAT on imported goods must be paid as part of the customs clearance process. VAT on imported services for which the place of supply is within territory of Moldova must be paid no later than the date of 25th of the month following the reporting period in which the import of services or payment for those took place, depending on what happens first.. The tax for the goods imported by individuals is paid only if the value of goods exceeds the non-taxable amount of €300 for road transport, or €430 for air and maritime transport.

A company is required to register for VAT purposes in case the total value of taxable supplies of goods and services (except supplies which are exempt without deduction right or non- taxable or out-of-scope of VAT) within the last 12 consecutive months exceeds the threshold established by legislation, which is MDL 1,200,000. The company shall officially notify the State Tax Service by filling out the respective form and register not later than the last day of the month when this threshold was exceeded. The registration shall take effect on the first day of the month following the month when the threshold was exceeded.

A company may apply voluntary for VAT registration if it plans to carry out taxable supplies, irrespective of the turnover value.

The VAT registration procedure consists in submission of a VAT registration application to the State Tax Service together with additional documentation as requested by the authorities.

The registration as a VAT group is not permitted under the Moldovan legislation. In case two or more entities are closely connected, they must fill VAT returns separately.

A foreign entity which performs economic activities in Moldova can register for VAT purposes in Moldova only if it has a permanent establishment registered in Moldova. According to the Moldovan legislation, a permanent establishment is a fixed place of business through which a non-resident carries out, wholly or partially, business activity, either directly or via a dependent agent. A permanent establishment may include a branch, an office, a factory, a plant, a store, a construction site, the rendering of services or the pursuit of other activities during a period longer than three months except through representative offices, etc.

The VAT registration requirement for a permanent establishment of a non-resident entity as a VAT payer is the same as for residents. Therefore, the registration threshold for non- established businesses is the same, namely, MDL 1,200,000, with the possibility to apply for a voluntary VAT registration in Moldova.

The VAT registration is required for nonresidents, provided that they render electronic services through electronic networks to resident individuals, performing entrepreneurial activity without holding an organizational legal form in the Republic of Moldova.

Registration for VAT purposes is mandatory during the first fiscal period, when the obligation of VAT calculation and payment occurs up to the date by which VAT return is due, regardless of the nonresident’s turnover.
VAT compliance and payment of VAT is quarterly, by the 25th of the following month.

Not applicable. There is no concept of fiscal representative in Moldova.

All entities registered for VAT purposes are obliged to submit electronically VAT returns on a monthly basis. VAT liabilities must be declared and paid monthly no later than the 25th day of the month following the reporting period. Additionally, the VAT payer must complete the appendix to the VAT return representing the list of the invoices received from suppliers and invoices issued during the reporting period.

The not registered for VAT purposes entities which import services have the obligation to submit the VAT return no later than the 25th day of the month following the month in which the import of services or payment for those took place, depending on what happens first.

Whenever taxpayers discover an error in the tax return previously submitted, they have the right to submit a rectified tax return, provided that the related tax period was not covered by a tax control or is subject to an ongoing tax audit.

For the payment with delay of the VAT, penalties (i.e.,late payment interests) are due.

For not complying with the legal requirements, the taxpayers are subject to fines, as provided by the Moldovan Tax Code. In case the taxpayers discover an error in the tax return previously submitted and perform a correction by submission of a rectifying tax return and pay the additional tax liability resulted until a tax audit begins, the fines must not be applied.

The under-declaration is sanctioned with a fine of between 20% and 30% from the amount not declared. If this is performed with intention, the fine is between 80% and 100% from the amount not declared.

VAT taxpayers are obliged to prepare and submit to the Moldovan tax authorities the VAT return and the appendix regarding the list of all purchase invoices received and issued during the reporting period.

The Moldovan Tax Code contains provisions regarding fines applicable in case of various types of breaches of the tax law, such as:
• preventing the tax authorities to perform their duties
• not fulfilling the obligation to use electronic cash register machines
• not meeting the rules to keep the fiscal evidence
• not meeting the rules regarding the registration for fiscal purposes
• not meeting the rules regarding the tax returns and the fiscal invoices
• not meeting the rules regarding the payment of taxes.

Moldova does not refund VAT incurred by businesses that are not established or registered for VAT, unless a reciprocal/ bilateral agreement is ratified by Moldova (as state of refund
– similar to implementation of 13th Council Directive 86/560/ EEC of 17 November 1986 on the harmonization of the laws of the Member States relating to turnover tax arrangements for the refund of value-added tax to taxable persons not established in Community territory.

For VAT registered taxpayers, if the amount of input tax declared in a monthly period exceeds the amount of output tax payable in that period, the VAT payer may request a refund of VAT if the excess VAT results from a specific activities such as: production of bakery and dairy products; exempt supplies with deduction right (e.g., exports); financial and/or operational lease; certain types of capital investments etc.

For other activities, refundable VAT may be carried forward to the following months and can be used against future payable VAT.

The reimbursement of VAT is made based on the request submitted by the registered person to the Moldovan tax authorities. Once the request is submitted, the tax inspectors have to check if the VAT computation is correct and if the taxpayer has any debts to the state budget.

Fiscal invoice is a standard form of primary document with special regime, issued either in pre-printed (paper) or electronic format. VAT payers are obliged to issue fiscal invoices for taxable supplies of good and services performed in Moldova, as well as in other specific cases.

In the case of public acquisitions, the issuance of an electronic fiscal invoice is mandatory.

Taxpayers included in the list of companies required to use electronic fiscal invoices, approved by the State Tax Service, are required to issue only electronic fiscal invoices.

The invoices are issued by using the pre-printed (paper) forms released by the Moldovan tax authorities (State Tax Service) following written request submitted by the taxpayer. The taxpayers who are issuing electronic invoices or the ones who choose to print the invoices by their own means must issue the invoices by using the serial number as released and approved by the Moldovan tax authorities.

The invoices that are issued and stored in electronic format must contain the same information as the paper invoice.

The invoice must show the following mandatory information:
• the sequential number of the invoice
• the name, the address and the fiscal code of the supplier
• the date when the invoice is issued
• the date when the goods/services were supplied if the date differs from the date when the invoice was issued
• the name, the address and the fiscal code of the customer
• the type of supply

• for each type of delivery of goods:
– the quantity of goods
– the unit price of the goods without VAT
– the applicable VAT rate
– total value of goods, services without VAT
– total value of VAT
– total value of goods, services which needs to be paid.

An appendix to the invoice issued is mandatory if the layout of the invoice does not allow a full description of the goods or services.

There are certain cases stipulated by Moldovan law when the use of fiscal invoice is not mandatory (e.g., supplies of electric, thermal energy, water, gas and services to individuals. Electronic supplied services which are paid through international payment cards, retail sales and services rendered in special places).

There is no SAF-T requirement in Moldova.