Tax Flash No. 1/2018

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Law no. 275/2017 for the approval of Government Ordinance no. 23/2017 concerning the VAT split payment was published in Official Gazette no. 1036/2017

The Law brings amendments to Ordinance no. 23/2017, out of which we mention the following:

  • the taxable persons and public institutions registered for VAT purposes that will be liable to open and utilize at least one VAT account for cashing and payment are the ones that:
    • at 31 December 2017, have outstanding VAT liabilities whose value exceeds:
      • LEI 15,000 for large taxpayers;
      • LEI 10,000 for medium taxpayers;
      • LEI 5,000 for small taxpayers;

and these amounts are not paid by 31 January 2018;

    • as of 1 January 2018, they have outstanding VAT liabilities exceeding the values mentioned above, which are not paid within 60 business days as of their due date;
    • are in insolvency or insolvency prevention procedures.
  • The taxable persons and public institutions registered for VAT purposes may opt for applying the VAT split payment mechanism by notifying the competent tax authority.
  • The taxable persons that have outstanding VAT liabilities exceeding the values mentioned above will be inscribed within the Registry by the competent tax authority as of:
    • 1 March 2018 for taxable persons having outstanding VAT liabilities at 31 December 2017;
    • 1st day of the second month following the one in which the term of 60 days provided for taxable persons having outstanding VAT liabilities which was not paid is fulfilled;
    • 1 March for the taxpayers that are subject to the insolvency legislation at 31 December 2017;
    • 1st day of the month following the one when it is found that the taxable person is subject to insolvency legislation and it did not submit the notification in this respect.
  • The term of inscribing in the Registry of persons opting to apply the VAT split payment is of maximum 3 business days from the date when the notification is submitted.
  • The mechanism of VAT split payment applies by the persons mentioned starting the day following the one of publication in the Registry of persons applying this mechanism either optionally, or mandatory.
  • The taxable persons apply the VAT split payments system as follows:
    • the ones who opted can give up applying the system at the end of the calendar year, but no earlier than one year from the date they were included in the Registry;
    • the ones having outstanding debts can give up applying the system after a period of minimum 6 months from the date they do not register any outstanding debts;
    • the ones being insolvent can exit the system from the date of exiting the insolvency.
  • The deregistration from the system is made based on a request that will be processed by the tax authorities in maximum 5 business days from the date when such notification is submitted.
  •  Certain operations are not subject to VAT split payment, such as:
    • operations for which the payment is not made directly by the beneficiary to the supplier of goods/services;
    • operations for which the payment is made in kind or by set off;
    • financing granted by credit institutions and non-banking financial institutions upon the takeover of receivables.
  • The mechanism of split payments no longer applies to VAT group members.
  • The obligation to obtain the approval of NAFA for debiting the VAT account was eliminated. Therefore, from a technical perspective, the amounts from the VAT account can be transferred to other accounts different than the VAT account, but the taxable persons should follow the debiting situations allowed by the law in this respect.
  • The taxable persons who are not registered for VAT purposes in Romania, as well as the public institutions do not perform the split VAT payment for acquisitions of goods and services from taxable persons applying such system.
  • The term within which the VAT cashed in the current account should be transferred to the VAT account, for the specific cases provided, was extended from 7 business days to 30 business days.
  • The supplier of goods/services who applies the split payment system and erroneously cashes the VAT in the current account has the option to transfer the VAT to the VAT account in maximum 30 business days from cashing.
  • In case of payments made by error in the current account of the supplier, the fine of 50% from the VAT amount was eliminated, only the sanction of 0.06%/day until the payment correction.
  • The taxable persons who will opt for the application of the VAT split mechanism after 1 January 2018 will benefit of a reduction of 5% of the corporate income tax/microenterprises tax for the entire duration of the application of the system, including the taxable persons who opted for the application of such mechanism in 2017.

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