Romania withdraws VAT split payment Feb 2020
- Jan 7, 2020 | Richard Asquith
Romania is scrapping its anti-VAT fraud split payment regime from 1 February 2020. This is following a November 2018 EU Commission warning that it was not compatible with the EU VAT Directive and the freedom of services on the basis of it being a disproportionate measure for honest businesses.
The measure requires customers to pay the VAT element of suppliers’ invoices into a special, restricted account of the supplier. It was mandated from 1 March 2018 for all insolvent or VAT indebted suppliers. It was also run on a voluntary basis for other businesses, with the incentive of a 5% discount off corporate income taxes.
The anti-fraud measure will remain on a voluntary basis. 18,700 businesses are currently using the mandatory regime.
Romania has one of the EU’s largest VAT GAP’s, an estimate of missing VAT collections, at over 37% of VAT due.
Poland's split payment regime was introduced recently for sectors suseptiple to VAT fraud, including computer chips, laptops and other high-value goods.
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