The VAT split payment system was introduced in Romania in August 2017 through Governmental Ordinance 23 and the text was applicable to all taxpayers registered for VAT in Romania as of January 2018/optional as of 1 October 2017, with few exceptions.
The VAT split payment mechanism requires companies applying this system to pay or cash-in invoice amounts split in two parts: the taxable base – in/from the normal bank account, the VAT amount – in/from a newly created VAT bank account, dedicated exclusively to VAT payments.
The Law approving Governmental Ordinance 23 was published on 28.12.2017 and brought significant changes to the initial form of the norms.
Thus, the category of entities that have to apply the VAT split mechanism was significantly reduced, the taxpayers required to apply the VAT split payment system now being the following:
The VAT split payment system applies to all taxable supplies of goods/services for which the place of supply is considered to be in Romania from a VAT perspective. Transactions subject to special regimes, or transactions for which the beneficiary is liable to pay the tax (reverse charge), are exempted.
The facilities for the optional application of the VAT split system are maintained, i.e. 5% decrease in corporate income tax/microenterprise income tax.
We set out below important aspects that should be considered by taxpayers in terms of the VAT split system:
Considering that a taxpayer may opt voluntarily at any time to apply the VAT split payment system, for each payment to be made, a special ledger on the website of the tax authority ANAF (https://www.anaf.ro/RegPlataDefalcataTVA/) should be checked. This electronic ledger discloses the companies applying the VAT split payment mechanism.
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