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19 January 2018

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Romania VAT Split Payment System Codified and Obligation to Use Relaxed

Law No. 275 was published in Romania's Official Gazette on 28 December 2017, which codified the regulatory framework for the country's value added tax (VAT) split payment system, which was introduced by way of Government Ordinance No. 23/2017 (previous coverage). The system itself, which has been optional since 1 October 2017, is generally unchanged from the ordinance, but the conditions for mandatory use of the system have been relaxed. Taxpayers are now only obligated to use the split payment system if meeting one of the following conditions:

  • Outstanding VAT liabilities exceeded RON 15,000 as of 31 December 2017 in the case of large taxpayers, RON 10,000 in the case of medium-size taxpayers, and RON 5,000 for all other taxpayers;
  • Outstanding VAT liabilities older than 60 business days exceed the above amounts from 1 January 2018; or
  • The taxpayer has entered into procedures for insolvency or prevention of insolvency.

Where any one of the above conditions is met, the taxpayer will be entered into a registry for applying the split payment system, with the timing dependent on the condition met. Where taxpayers are required to use the system due to outstanding VAT liabilities, entry in the registry is effective 1 March 2018 if the first condition was met and is effective on the first day of the second month following the month in which the 60-day period of the second condition is met. For taxpayers that have entered into insolvency procedures, entry into the registry is effective 1 January 2018 if procedures began before that date or is effective the first day of the month following the month insolvency procedures begin. For other taxpayers, the split payment system remains optional.

Click the following link for Law No. 275 as published (Romanian language).

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