VATLive > Blog > Romania > Romania withdraws VAT split payment Feb 2020

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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Researching Romanian VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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