Chamber of Deputies has passed the law to approve the Ordinance on the VAT split payment mechanism

Deputies passed the law to approve VAT split payment

The Chamber of Deputies has passed the law to approve Government Ordinance no. 23/2017 on the VAT split payment mechanism, which will now be submitted for promulgation to the President of Romania. Significant amendments have been made compared to the initial version of the Ordinance.

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Ramona Jurubiță

Country Managing Partner

KPMG in Romania

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Who must apply it?

  • The VAT split payment mechanism will be mandatory for VAT registered entities which have VAT outstanding liabilities owed to the state budget as at 31 December 2017 above various thresholds: RON 15,000 for large taxpayers; RON 10,000 for medium-sized taxpayers; and RON 5,000 for other taxpayers, if the liabilities remain outstanding as at 31 January 2018;
  • Taxpayers which have VAT outstanding liabilities as at 31 December 2017, will be required to apply the mechanism starting from 1 March 2018, if these liabilities remain outstanding as at 31 January 2018;
  • The VAT split payment mechanism will be mandatory for taxpayers which have VAT liabilities which are more than 60 working days overdue and which exceed the thresholds mentioned above, starting from 1 January 2018. If the VAT payments are not made by this deadline, the taxpayer will enter into the system starting from the first day of the second month following the month in which the 60 day period elapsed;
  • The outstanding VAT liabilities for which the enforcement is suspended under the prevision of art. 235 from the Fiscal Procedure Code regarding the suspension of the foreclosure procedure in the case of the deposit of a bank guarantee / insurance policy are not taken into account for the application of the VAT split payment mechanism;
  • Taxpayers under insolvency proceedings as at 31 December 2017 will apply the system starting from 1 March 2018. Also, those which enter into insolvency proceedings after 1 January 2018 will have to send a notification to the tax authorities regarding applying the VAT split payment until the first day of the following month when they entered into insolvency proceedings.
     

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