A new company, born as the result of the Splitting of Process is the subject of VAT legislation as same as any other new company.
The case we are studying here is about a New Co which will need to continue the activity in normal parameters, meaning that the transactions carrying forward should be subject of VAT stipulations. Also, the New Co will have intra-community operations (in UE) which also require VAT code.
VAT Code – implications
The New Co. will not have the VAT Code from the very first day of activity. This will have the following implications:
- The sales transactions will be without VAT
- The purchases transactions will be also without VAT.
- The VAT for the assets transferred will suffer an adjustment.
All the sales transaction will be without VAT. The New Co will act as a VAT non payable company and will have to issue the invoices accordingly.
As the Fiscal Code stipulates, until the VAT Code it is obtained, the company is not allowed to deduct VAT for all the transactions of purchases.
When the VAT code it is obtained, the company will adjust the VAT for all the invoices received. This amendment is applicable from the date when the company was born. The invoices should refer to stock and assets. For services rendered till the date when the company is a VAT payable the adjustment cannot be done. With other words, for all the production costs (raw materials and other stocks) the VAT will be deductible, except the services.
- Assets received after the division process
An important aspect of our subject is the VAT regime for the assets received after the division process. As the New Co will not have a valid VAT code, for all the assets received after the splitting of process, adjustments have to be made.
The reference date for calculate the adjustments is not the date of the transfer but the date when the Old Co. bought the assets.
The adjustments will trigger further fiscal obligations, meaning the declaration and the payment of a certain VAT. These operations will be due in the following month.
Nevertheless, as soon as the New Co will get the VAT code, the adjustments will be made again, but this time in the New Co s benefit.
To avoid any unnecessary payments to the Budget it is important that the VAT code to be obtain in the same month.
The request for VAT code has to be submitted in the same day with the resolution from Trade Registry. This will requires 2 fiscal declarations:
- 098 File – Request for registration as VAT payer;
- 088 File – A declaration to evaluate the intention and the capacity of the new company to involve in economic activities with VAT.
If the request is approved, the New Co should receive its VAT Code in 3 days. We have to emphasize the imperative requirement that the file for 088 to be complete. Otherwise, the risk is that Fiscal Authorities to delay us for 30 days or even worst, to refuse giving us the VAT code.
For 088 File there will be needed a lot of documents and information. Most of them will have to be translated and legalised. In the following we are presenting some of them:
- Contracts for the Headquarters and for working points
- Information about shareholders and administrators (physical persons):
- Regarding their participations in other companies (the last 5 years) and fiscal debts of those companies;
- Regarding fiscal and criminal records
- Gross incomes for the last 12 months
- Information about shareholders and administrators (juridical persons):
- Financial information (from balance sheet). For non-residents an information about turnover should be enough
- Other questions to answer at.
For all of these, relevant documents must be provided.
The New Co will have to register in the Registry of Intra-community Operators in order for it to develop transactions in UE. For this purpose, a documentation has to be submitted also to Fiscal Authorities, together with the 095 File.
The documentation consists also in Criminal Files of the shareholders and from the administrators of the company. If the persons are non-residents, these documents should be Apostille. There is an exception for a joint stock company where the Criminal file will be necessary only for the administrators.
The request is approved in 10 days and it will produce effects starting the date of approval.