Law no. 275/2017 approving Government Ordinance no. 23/2017 regarding the VAT split payment system was published in the Official Journal no. 1036 on 28th December 2017. Please find more information regarding the initial form of Government Ordinance no. 23/2017 in our Newsletter of 6th September 2017. We present, as follows, the main changes that shall apply as of 1st January 2018.
Please note that the effects of the VAT split payment system will be extended to all VAT payers, even if they do not apply the VAT split payment system. Thus, any person registered for VAT purposes who does not apply the system will have to pay attention to payments towards suppliers, given that, if the latter are listed in the Register of persons applying the VAT split payment mechanism, the payment of the VAT on the invoice should be made into the supplier’s special VAT account.
1. Overdue VAT debt ceilings have been introduced, above which a taxpayer registered for VAT purposes will mandatorily be included in the split payment system, as follows:
4. In addition to taxpayers with outstanding VAT debts, those who are under insolvency legislation will also mandatorily be included in the VAT split payment system, as described above.
5. Taxpayers who mandatorily applied the system can exit it after 6 months during which the conditions for mandatory application are no longer fulfilled. Instead, taxpayers who have voluntarily applied it can exit the system at the end of the fiscal year, but no sooner than one year after the date of the option.
6. Only taxpayers registered for VAT purposes under Art. 316 of the Tax Code, irrespective of whether or not they apply the VAT split payment system, have the obligation to make the payment into the VAT special account of a supplier who applies the system. Therefore, the following are excluded from the obligation to split VAT payment: VAT non-payers and public institutions.
7. The following clarifications have been made:
9. The VAT-payer client, although not obliged thereto, may pay the VAT for invoices issued before the supplier’s entry into the system which are paid after that date into the special VAT account of the supplier who applies the system.
10. The obligation to obtain the agreement of the National Agency for Tax Administration (ANAF) for certain operations through the VAT accounts is repealed. However, the deeds remain subject to contraventions.
11. The period for transferring the VAT collected in cash or through other receipts from the current accounts to the special VAT accounts has been increased from 7 to 30 days. This is valid in case of payments for which the client is not obliged by law to split the payment.
12. The 50% fine applicable at the level of the client who erroneously did not pay the invoice into the VAT special account of a supplier who applies the system has been repealed. Only a penalty of 0.06%/day was maintained until the correction date.
13. The 5% reduction of the income tax/revenue tax for the period when the mechanism is applied will be granted to persons who opt for the VAT split system in 2018, as well as to those who opted for it in 2017 (who are bound to remain in the VAT split payment system for at least one year).
We are at your disposal for any clarifications or additional questions regarding the application of the VAT split payment system.
Please note that the effects of the VAT split payment system will be extended to all VAT payers, even if they do not apply the VAT split payment system. Thus, any person registered for VAT purposes who does not apply the system will have to pay attention to payments towards suppliers, given that, if the latter are listed in the Register of persons applying the VAT split payment mechanism, the payment of the VAT on the invoice should be made into the supplier’s special VAT account.
1. Overdue VAT debt ceilings have been introduced, above which a taxpayer registered for VAT purposes will mandatorily be included in the split payment system, as follows:
- large taxpayers – lei 15,000;
- medium taxpayers – lei 10,000;
- remaining taxpayers – lei 5,000.
- taxpayers who have outstanding VAT debts on 31st December 2017 will apply the VAT split payment system as of 1st March 2018 if they do not settle their outstanding VAT debts by 31st January 2018;
- taxpayers who have outstanding VAT debts after 1st January 2018 will have a 60 calendar days payment period. If they do not settle the VAT debt during the said period, they will apply the system as of the first day of the second month following the one when the 60-day deadline was reached;
- taxpayers who are subject to insolvency procedure on 31st December 2017 will apply the system as of 1st March 2018, and those who enter the insolvency procedure after 1st January 2018 will apply the system as of the first day of the month following the one when they entered insolvency.
4. In addition to taxpayers with outstanding VAT debts, those who are under insolvency legislation will also mandatorily be included in the VAT split payment system, as described above.
5. Taxpayers who mandatorily applied the system can exit it after 6 months during which the conditions for mandatory application are no longer fulfilled. Instead, taxpayers who have voluntarily applied it can exit the system at the end of the fiscal year, but no sooner than one year after the date of the option.
6. Only taxpayers registered for VAT purposes under Art. 316 of the Tax Code, irrespective of whether or not they apply the VAT split payment system, have the obligation to make the payment into the VAT special account of a supplier who applies the system. Therefore, the following are excluded from the obligation to split VAT payment: VAT non-payers and public institutions.
7. The following clarifications have been made:
- any payments/receipts on behalf of another person are not made through VAT accounts;
- in case of factoring, discounts, other financing arrangements involving the assignment of receivables, credit institutions and Non-Banking Financial Institutions (IFNs) the value of the VAT will not be transferred into the VAT account of the supplier who applies the system;
- payments in kind, compensations, are excluded from the VAT split payment system.
9. The VAT-payer client, although not obliged thereto, may pay the VAT for invoices issued before the supplier’s entry into the system which are paid after that date into the special VAT account of the supplier who applies the system.
10. The obligation to obtain the agreement of the National Agency for Tax Administration (ANAF) for certain operations through the VAT accounts is repealed. However, the deeds remain subject to contraventions.
11. The period for transferring the VAT collected in cash or through other receipts from the current accounts to the special VAT accounts has been increased from 7 to 30 days. This is valid in case of payments for which the client is not obliged by law to split the payment.
12. The 50% fine applicable at the level of the client who erroneously did not pay the invoice into the VAT special account of a supplier who applies the system has been repealed. Only a penalty of 0.06%/day was maintained until the correction date.
13. The 5% reduction of the income tax/revenue tax for the period when the mechanism is applied will be granted to persons who opt for the VAT split system in 2018, as well as to those who opted for it in 2017 (who are bound to remain in the VAT split payment system for at least one year).
We are at your disposal for any clarifications or additional questions regarding the application of the VAT split payment system.
Any presented information is general and is not meant to address the specific conditions of a particular individual or legal person. Although we try to provide accurate and up-to-date information, there is no warranty that such information is accurate at the time of its receipt or that it continues to be accurate. No action should be taken based on this information without relevant professional assistance following a careful examination of the circumstances that are typical of a particular state of affairs.
