Romania abolishes VAT split payment plans
Plans for a split payment mechanism have been abolished in Romania after challenges received from the EU.
15 January, 2020
After several delays from the initial plan, Romania finally cancelled the proposed VAT split payment mechanism plans. Initially, Romania announced a voluntary VAT split payment scheme allowing businesses to adhere voluntarily to this regime during 2017. As from 2018, the new scheme would become mandatory.
Following the request for a derogation sent to the European Commission, the EU challenged the system proposed on the grounds on non-proportional administrative burden. In particular, the EU considered this initiative to be non-compatible with the EU VAT Directive and the freedom to provide services. This challenge ultimately lead to the Romanian government cancelling all plans and current optional regime on the VAT split payment mechanism.
The split payment scheme is already applicable in Poland and Italy . The scheme consists on splitting the payment of each invoice in two separate payments: a payment of the net amount to the supplier and a payment of the VAT amount to a control VAT bank account of each taxpayer.
Although Romania has cancelled plans on the split payment mechanism, the country is moving forward with its plans on a new SAF-T file to be submitted by all taxpayers periodically. Further details about this requirement will soon be published in our website.