A laptop bought with Phare funds before January 1 this year, when Romania joined the EU and a new Fiscal Code was introduced, used to cost about 1,000 euro. Now, beneficiaries must pay 19% more as procurements using EU funds are no longer VAT-exempt - not even in running projects. The Romanian Finance Ministry explained for HotNews.ro the VAT regime for such funds.

While Romania became a member of the EU on January 1, 2007, pre-accession funds are still available through ongoing projects launched before accession through programs such as Phare, ISPA and SAPARD. Until now, this money was VAT-exempt through certificates delivered especially in this purpose.

The principle was that EU funds come from EU contributors to reach citizens in poorer states, and a value-added tax would have moved them from the EU budget to the Romanian state budget.

In this regard, Romania concluded a framework agreement in 1991, which exempted such acquisitions from VAT.

But the new Fiscal Code introduced this year applies VAT to pre-accession funds, arguing such a move was allowed by a EU directive introduced last year on a common VAT system.

But representatives of fund beneficiaries disagree, saying that the Finance Ministry disregards the fact that the EEC Directive 112/2006 specifies only post-accession funds, so its application to pre-accession funds is abnormal.

The Finance Ministry explained for HotNews.ro that the exemption certificates delivered so far were still valid, but no new ones will be issued even if the same programs and type of funds are involved.