In the Official Gazette no. 1036/28.12.2017 it was published the Law no. 275 for approving the GO 23/2017 regarding the VAT split payment system. We present below the main provisions of this law and the most important changes brought to the initial form established through GO 23/1017 (which was previously detailed in our Newsletter no. 9/2017).
Persons required to apply the VAT split payment system
As opposed to the initial form, the list of entities that have to apply the Split VAT system was significantly reduced to the following:
How it works
The taxable persons that are in one of the situations above will have to open at least one VAT bank account that must be used only in certain conditions (detailed below). These persons must receive/make 2 payments for each invoice: the value of the invoice will be received in/made from the company’s current bank account and the VAT in/from the VAT bank account.
Attention! The system impacts also the entities which do not have to apply the Split VAT system, because any taxable person must make split payments to the suppliers who apply the system. As an exception, the entities that are not registered for VAT purposes are no longer required to split the payments made to a supplier that applies the system (a change over the initial form in GO 23/2017).
The split VAT payment applies to all the taxable supplies of goods/services for which the place of supply is considered to be in Romania from a VAT perspective. The system applies to invoices issued after the supplier is registered in the system and thus the beneficiaries must make split payments only for these invoices.
The transactions for which the beneficiary is liable to pay the tax (reverse charge), the transactions subject to special regimes, which by default do not have VAT on the invoice, as well as the invoices paid in kind, by offsetting, paid in cash or using a debit/credit card, are exempted.
Payments received in the VAT account
The VAT account will be credited mainly with:
Payments performed from the VAT account
The VAT account will be charged mainly with:
ANAF’s approval is no longer required for charging the VAT account, but the penalties for incorrect use of the amounts are significant.
Facilities for optional application
The taxpayers who will opt for applying the VAT Split payment system will benefit from a 5% decrease in the corporate income tax/microenterprise income tax due in the period in which they applied the system.
The main penalties are:
The information in this newsletter is intended to give you an overview of legislative news; the newsletter does not contain a complete analysis of each topic. For more information about the subjects presented, please contact us. We do not accept any responsibility for decisions or omissions followed by the use of the content of this newsletter. All Boscolo&Partners newsletters are available at the following rel="noopener noreferrer" address: http://www.crowehorwath.ro.
Boscolo & Partners