EU commission take action against split payment regime in Romania

7 December 2018

The European Commission (EC) recently sent a letter of formal notice to Romania requesting that they withdraw the new value added tax (VAT) split payment regime introduced in January 2018.

Currently, the split payment procedure requires Romanian VAT registered businesses with an overdue VAT debt to open special, secure bank accounts which are specifically used for receiving and making VAT payments. The vendor’s customers then pay the VAT amounts charged by the vendor directly into this special secure bank account.  At the same time, they will have to make a separate payment of the net amount to the vendor’s regular bank account. The Romanian tax authorities can then monitor the special VAT bank account and reconcile this with the vendors’ VAT reporting.

The EC described the split payments regime in Romania as a burden to honest businesses who may be in debt for honest reasons and also stated that the regime itself was against both EU VAT rules and the freedom to provide services.

Romania now has two months to act before the EC send a reasoned opinion. If no action is taken following this, a referral to the European Court of Justice may be made.

LATEST NEWS

Lithuania considers a standard VAT rate increase

Lithuania is currently considering whether to increase its standard VAT rate by 1% from 21% to 22%. This is being proposed to help meet additional military...

SEE MORE
VAT news
LATEST NEWS

Brazil to introduce indirect taxes on digital service...

From 2026, Brazil will introduce two new indirect taxes that will replace its old tax system. These two new taxes will work in a similar way to VAT and are...

SEE MORE
VAT news
LATEST NEWS

Ireland increases the VAT rate applied on...

The Irish government has confirmed that from 1 January 2026, the VAT rate will increase from 9% to the standard rate of 21% for: Accommodation...

SEE MORE
VAT news

Gated Content

The following email providers are not accepted: gmail, hotmail, yahoo. Please use proper company email.