The Romanian Government plans on introducing the split VAT payment system.

 On the Ministry of Finance website, a draft Ordinance has been published for the implementation of the split VAT payment system. According to this project, the standard VAT system in which a client pays the supplier's invoice for the whole amount (including VAT) and then the supplier pays the VAT to the State, will be replaced by a new system in which the client pays only the net amount to the supplier's acount and the VAT will pe paid in a special VAT account. As a result, the taxable entities and the public institutions registered as VAT taxpayers in accordance with art. 316 of the Tax Code, have the obligation to open new special accounts for receiving and paying the VAT. The split payment system will apply for all the taxable operations in Romania (with a few exceptions).

The proposed system is complex and has specific rules, out of which we mention the most important:

• The individuals that are not VAT taxpayers are exempt from applying the split payment system
• The amount in the special VAT accounts can be used or withdrawn only in certain conditions and with the approval of the tax authorities (more details will be set through an order of the president of the National Tax Agency)
• If a taxpayer ceases to exist, the amounts in the VAT account will be received by the State 
• The mounts received in cash or by debit/credit card and those received from individuals should be transferred by the supplier to its VAT account in maximum 3 working days 

The penalties set forth by the draft Ordinance are as follows: 

• The payment of the VAT in another account that the special VAT account one received from the supplier or using the money for other purposes than those provided by the law, will be fined with 50% of the VAT that was not correctly trasferred.
• Not trasferring the VAT to one's special VAT in 3 working days will be fined by an amount equal to 10% of the VAT not trasfered.
• Not oppenging a special VAT account will be fined with an amount between RON 2.000 and RON 4.000.

The provisions of the Ordinance will be applied optionaly starting 1 September 2017 and mandatory starting 1 October 2017.

Note: From the information available to Elite Compliance SRL, no other EU country applies this system on a general level. The system is applied in a few countries only for the relation between public institutions and their suppliers.