Through the Fiscal Bulletin sent on September 4, 2017, we announced the introduction of the VAT split payment mechanism by Government Ordinance No. 23/2017. After the Ordinance passed the Parliament approval through a law and the Approval Law was published in the Official Gazette, the VAT split payment mechanism has undergone major changes – in a positive way for most taxpayers.

1. 11 January 2018
Summary:
1. Law No. 275/27.12.2018 for approving the Government Ordinance No.
23/2017 regarding the VAT split payment mechanism (“Approval Law”)
The New VAT Split Payment Mechanism
Through the Fiscal Bulletin sent on September 4, 2017, we announced the introduction of
the VAT split payment mechanism by Government Ordinance No. 23/2017. After the
Ordinance passed the Parliament approval through a law and the Approval Law was
published in the Official Gazette, the VAT split payment mechanism has undergone major
changes – in a positive way for most taxpayers, as will be shown below.
How will the VAT split payment mechanism work?
The main coordinates of the VAT split payment mechanism (as opposed to the initial form)
are as follows:
• Mandatory implementation as of March 1, 2018 by taxpayers with outstanding fiscal
obligations representing unpaid VAT on 31 December 2017 and not paid until
January 31, 2018 (RON 15,000 – large taxpayers, RON 10,000 – medium taxpayers,
RON 5,000 – other taxpayers – except the debts whose forced execution is suspended
under the Code of Fiscal Procedure) and by taxpayers in insolvency;
• Mandatory implementation starting with the 1st day of the second month following
the 60-day maturity date for taxpayers with outstanding tax liabilities representing
VAT during the year (please refer to the thresholds mentioned above) and,
respectively, starting on the 1st of the following month for taxpayers who have been
subject to insolvency law;
• Optional implementation at the taxpayer’s request – the benefit being, starting
with January 1, 2018, a 5% reduction in corporate tax/income tax. In this case, exit
from the system could be approved only at the end of the tax year, but no earlier
than one year after the date on which the taxpayers began applying VAT split
payment mechanism;

2. Fiscal Bulletin – 11 January 2018
2
• Taxpayers who are not registered for VAT purposes will not have to make split
payments to suppliers. For taxpayers registered for VAT purposes who do not pay
separately the VAT amount to suppliers enrolled in the system, the penalty is 0.06%
/ day of the amount not transferred to the special VAT account until the situation
is remedied. The verification whether the supplier is applying the VAT split payment
system shall be performed by interrogating the Registry published on the ANAF
website;
• The VAT accounts will be debited without ANAF’s approval, this being one of the
greatest surprises of the Approval Law. From the list of transactions for debiting
and crediting the VAT account, the settlement operations between the members of
the single tax group were excluded;
• Transfer in the own VAT account of the amounts collected by card, cash and cash
equivalents must be made within 30 days (instead of 7 days);
• Penalties for errors/non-compliance with certain provisions (e.g. non-payment
into/from the VAT account) were generally reduced and the fine of 50% of the
wrongly paid VAT was eliminated (this fine currently applies only in one situation,
when debiting of the VAT accounts under other conditions than allowed and if the
error is not remedied within 30 days). Currently, the penalties are mainly 0.06%/day
and, in some situations, if the error is not remedied within 30 days, it is applicable
a fine of 10% of VAT paid;
• Other good news: partial payments may follow the allocations stipulated in the
contract/payment order, if applicable, and payments through an agent, payments
in kind, compensations, cash payments, card, cash substitutes, collateral or escrow
accounts and credit institution/IFN financing operations by taking over receivables
were excluded from the application of the scheme.

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3
Editors
Ţuca Zbârcea & Asociaţii Tax S.R.L. is the specialised tax consultancy entity of Ţuca
Zbârcea & Asociaţii, offering a full range of advisory and compliance services. Ţuca
Zbârcea & Asociaţii Tax S.R.L. covers transaction planning, operational tax advice,
efficiency structures (tax optimization schemes), tax reviews and due diligence, tax
authorities’ audits and dispute resolution (including mitigating the risks and the
potential impact of time-consuming disputes with local fiscal authorities), tax
compliance and representation, as well as transfer pricing. Our team comprises seven
tax consultants previously working in management positions with Big Four companies
and the Ministry of Finance. The group cooperates closely with the firm’s lawyers
specialising in administrative law, as well as contentious-administrative disputes.
Ţuca Zbârcea & Asociaţii Tax S.R.L. is a proud member of A.R.S.I.T. - Asociaţia pentru
Reformarea Sistemului de Impozite şi Taxe - a nonprofit organisation created in an
effort to represent the voice of the Romanian taxpayer in relation to state authorities.
Alexandru Cristea
Tax Partner
+4 037 413 61 15
alexandru.cristea@tuca.ro
Şos. Nicolae Titulescu nr. 4-8
America House, Aripa de Vest, et. 8
Sector 1, 011141, Bucureşti, România
T + 4 021 204 88 90
F + 4 021 204 88 99
E office@tuca.ro
www.tuca.ro/tax
This material is for reference only. It does not seek to provide final fiscal advice, which may be requested according to each specific issue. For
details and clarifications on any of the topics dealt in this Fiscal Bulletin, please do not hesitate to contact the tax consultants indicated
hereinabove.