| We inform you that in Official Journal no. 706 was published Ordinance 23/2017 issued by the Romanian Government regarding the split payment of VAT (hereinafter named the “Ordinance”).
According to this mechanism, payments and collections of VAT corresponding to transactions made by taxable persons shall be made in a dedicated VAT account, while payments and collections (only for VAT) will be made in a distinct account.
According to the provisions of the Ordinance, the mechanism regarding the split VAT payment is optional in the period
1 October 2017 – 31 December 2017, and starting from 1 January 2018 it will be compulsory.
Thus, taxable persons registered for VAT purposes that want to apply by choice the system for the period 1 October 2017 – 31 December 2017 must notify the competent tax body in this period and the application itself will start on the day following that in which were included by ANAF in the “Registry of persons that apply for the split payment of VAT” – the registration will be made by ANAF within maximum 3 days from the date of submission of the notification.
According to the Ordinance a company may open several VAT accounts, being no limitation in this regard. The VAT accounts can be opened at the Treasury or a credit institution that meets cumulatively the requirements provided by legislation.
We show, briefly, the mechanism of operation of the system regarding the split payment of VAT
For each invoice issued by the supplier, the purchasing company will make two payments:
- A payment in the current account, for the value of products/services. This payment shall be made in the current account of the beneficiary.
- Another payment in the VAT account, for the VAT value for the products/services in question. This payment shall be made in the VAT account of the beneficiary.
From the VAT account of a company, generally two types of operations can be made:
- The payment of VAT to the company suppliers;
- The payment of VAT to the state budget (the amounts due to the state as a difference between collected VAT and deductible VAT in the VAT return).
In case the company did not have enough funds in the VAT account for the VAT payments to suppliers or to the state budget and supplemented with own funds, then it can request to be repaid the amounts from the VAT account in the company’s current account, however only with the approval of ANAF granted following a request from the company.
We mention that no cash withdrawals from the VAT account can be made.
As a general rule, all invoices must pe paid to suppliers through the application of the system regarding the split payment of VAT in their VAT account, except for the following:
- Cash payments, from natural or legal persons;
- Payment by card with cash substitutes, from natural or legal persons.
In the situations above, the companies that collected money are obliged in maximum 7 working days to lodge the VAT corresponding to the amounts collected in their own VAT account.
For the persons who chose to apply the mechanism of the split payment of VAT in the period 1 October – 31 December 2017, the Ordinance provides the following facilities:
- cancellation of delayed payment penalty corresponding to main tax liabilities representing VAT, outstanding on 30 September 2017, under certain conditions;
- decreasing by 5% the corporate income tax/on the income of micro-enterprises corresponding to the IVth quarter of the tax year 2017
An important aspect to be set down is the fact that the non-observance of he Ordinance provisions is a contravention and their amount is significant depending on the non-observed legal provision..
r example, it is a contravention to pay VAT corresponding to the acquisition of goods and services to the beneficiaries in another account than the supplier’s VAT account, if the correction of the payment is not done within 7 days. If the payment is not corrected within the deadline provided, the contravention will be sanctioned with a fine established as a percentage of 0,06% per day of the wrongly paid sum, starting from the day of the wrong payment until the correction date, but after no more than 30 days from the date of the worng payment. If after 30 days from the dat of the wrong payment this is not corrected, a fine will be applied equal to 50% of the wrongly paid sum in another account than the VAT account of the supplier/provider.
In conclusion, the application of the system regarding the split VAT payment involves the implementation of a method to monitor the traceability of VAT payments/collections to result in securing the fact of all legal provisions being observed.
The Darian Tax is at your disposal with pleasure for any questions or discussions regarding this matter.
Sincerely,
The Darian DRS Tax team |
