Who is subject to the VAT split payment system?
Relevant changes to the law on insurance against accidents at work and occupational diseases – Part Two
March 7, 2018
The procedure for the VAT split payment
March 14, 2018
Law no. 275/2017 modifies the VAT split payment system, approved by GO no. 23/2017. The normative act entered into force on 1 January 2018.
There will be required to apply the VAT split payment system to taxable persons registered for VAT purposes if they have outstanding VAT payments on 31 December 2017 and have not paid their debt to the budget by 31 January 2018.
Through overdue VAT debts we understand amounts higher than 15,000 for large taxpayers, more than 10,000 for medium taxpayers and 5,000 for small taxpayers.
They will also apply the VAT split payment system on January 1, 2018 to the VAT registered persons who were in the scope of insolvency law on 31 December 2017. In the event of non-payment of outstanding VAT on 31 December 2017, the entry into the split VAT payment system will take place on 1 March 2018.
Thus, we can identify the following situations:
- If, on 31 December 2017, a company has arrears of VAT in excess of the above amounts and the debt has been paid by 31 January 2018, then that company is not required to apply the mechanism of the disbursed VAT payment.
- If, on 31 December 2017, a company has arrears of VAT in excess of the above amounts and the debt has not been paid by 31 January 2018, then that company is required to apply this mechanism from 1 March 2018.
- If, as of 1 January 2018, a company accounts for arrears of VAT higher than the amounts mentioned above and the debt is unpaid within 60 days of maturity, then it will apply the VAT split payment mechanism as of the date 1 of the second month following the 60-day deadline.
A company registered for VAT purposes which is not in any of the situations mentioned above and is practically not required to apply this mechanism has the obligation to pay the VAT deducted to its supplier of goods and / or services that apply the VAT split payment mechanism. Thus, a beneficiary will pay to a supplier applying the VAT split payment mechanism the value of the VAT related to the purchases of goods / services in the VAT account communicated by the supplier.
There are exempt from this rule:
- payments made in cash
- payments made using credit / debit cards or cash substitutes
- payments not made directly by the beneficiary to the supplier
- payments made in kind
- payments made through compensation.
