Following the letter of formal notice sent by the European Commission (EC) to Romania during November 2018, the country has now dropped the requirement for mandatory VAT split payments. Please click here to view our previous article in regards to this.
The split payment procedure introduced in Romania required VAT registered businesses with an overdue VAT debt to open special, secure bank accounts that 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 had to make a separate payment of the net amount to the vendor’s regular bank account. The Romanian tax authorities could then monitor the special VAT bank account and reconcile this with the vendors’ VAT reporting.
The Romanian tax authorities have however confirmed that they will still offer this measure to VAT registered businesses on a voluntary basis; therefore, the 19,000 businesses that currently use this mechanism will not have to change.