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Romania – Split VAT

By January 23, 2018July 10th, 2021No Comments

Split VAT system in Romania starting with January 2018

Split VAT system in Romania starting with January 2018

The law was amended at the end of last year and we now can confirm that this system is mandatory only for certain categories of taxable persons, as follows:

  1. Taxable persons with VAT outstanding amounts due to the state (VAT liabilities outstanding for more than 60 days and in a cumulated amount higher than RON 5,000);
  2. Taxable persons under insolvency procedure.

However, please keep in mind that the split VAT system may also be applied by option and many Romanian companies will opt for this as the state grants certain incentives (in the form of a small reduction of corporate income tax and clearing of some late payment penalties). If non-resident companies registered for VAT in Romania carry out purchases from such Romanian companies in the future, they will need to pay close attention when making the payment, if the invoice includes Romanian VAT. This is because, in case of suppliers applying split VAT (either mandatory or by option), the beneficiary has the obligation to split the payment thus:

  • the net value of goods/services must be paid in the current bank account of the supplier;
  • the VAT amount must be wired to the VAT account of the supplier. If this split payment requirement is not followed then the beneficiary risks a penalty of 0.06% per day of the amount wired incorrectly to the supplier applying the split VAT system. 

The above information was kindly provided by DC Tax, Romania. If you need any further information you can contact Marina Alexandru, email to: marina.alexandru@dctax.ro.