Ordinance 23/2017 on the VAT split payment system was published on 31 August 2017. The Romanian Government has adopted the necessary legislation in order to establish a system for the VAT split payment which will be optional as of 1 October 2017 and mandatory as of 1 January 2018.
This system is mandatory from 1 January 2018 for invoices issued and advances as of 1 January 2018. Between 1 October and 31 December 2017, the mechanism is optional. For this purpose, the fiscal body is organising the "Register of persons applying the VAT split payment", which will include the list of taxpayers applying the scheme.
Taxable persons and public institutions registered in VAT purposes in Romania (i.e. companies, individuals, public institutions and non-resident companies registered directly or through fiscal representatives) are required to apply the VAT split system. Taxpayers applying the system will have the following obligations:
The companies and public institutions, whether VAT registered or not, will apply the VAT split payment system when performing payment of invoices with VAT issued by suppliers.
According to the Ordinance, during the period preceding the mandatory application of the measure, namely 1 October - 31 December 2017, taxable persons choosing for the optional application of the VAT split payment will benefit from the following facilities:
The amounts from this distinct VAT account are to be used for payments such as: payments of the VAT related to acquisitions performed by taxable persons registered for VAT purposes to their suppliers / providers, transfer to another holder's VAT account, VAT corrections, VAT settlements within the single tax group, as well as VAT payment to the state budget.
The possibility of transferring amounts from VAT accounts to another account by the owner is allowed only with the approval of ANAF, within a maximum of three working days as of the request. As per the current provisions, cash withdrawals of amounts from the VAT account are forbidden.
The normative framework provides for specific contraventions and sanctions for non-compliance with the obligations set out in its contents, as follows:
The introduction of the VAT split payment mechanism is mandatory from 1 January 2018.
Under the proposed system, providers will be required to communicate to their beneficiaries information on a dedicated VAT account, opened at State Treasury units or credit institutions, where the beneficiaries will pay the VAT equivalent for each acquisition of goods / services. These limitations are not applicable for individuals not registered for VAT purposes.
Amounts credited to the VAT account can be used by taxpayers only to pay in turn the VAT due to the suppliers, or the VAT to the state budget within the deadlines set by the law. As for cash, card or cash substitutes, taxpayers will be required to pay the corresponding tax amounts into their own VAT account within seven working days as of receipt. Amounts in the VAT account may be transferred by the holders to their current account only with ANAF’s prior approval.