Recently, the EU Commission (EC) has decided that Romania’s VAT split payment mechanism (the system) is contrary to both EU’s VAT law and the principle of the freedom to provide services within the Union.
The main reasons of the EC decision: the taxpayer eligibility criteria for the mandatory use of this system and the sanctions imposed on beneficiaries acquiring goods/services from suppliers using the system.
The EC rejected Romania’s request to apply the system in its current form and sent a letter of formal notice (as part of the EU infringement procedure for failure to comply with Community law). If Romania fails to take remedial action within the next two months, the EC may send a reasoned opinion (a formal request that the country comply with EU law).
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