Law 275 of Dec. 27, 2017, converted Decree 23/2017 and permanently amended the regulations regarding split payment (separate payment of VAT from taxable income) as of Jan. 1, 2018.

The good news is that the “mandatory” cases of application of the mechanism have been limited to only debtors to the Romanian Treasury or companies in insolvency, the bad news is that in any case the onerous application of the Split could affect many entities given the modest limits related to state debts exceeded which one is automatically subject to the mechanism.

Obligated Persons (option, if any).

As anticipated, the range of obligated parties has been reduced to only:

– Taxpayers with overdue VAT-related tax debts (differentiated into categories: large taxpayers with debts over 15,000 lei, medium taxpayers with debts over 10,000 lei, small taxpayers with debts over 5,000 lei);

– Taxpayers in insolvency.

The Split TVA regime can also be adopted by option with the benefit of reducing the direct (micro business or ordinary) tax by 5 percent. The option takes effect and lasts for a full calendar year.

Entry into the system:

The application of the mechanism is from the date of registration in the special electronic register established by the ANAF and available at:

https://www.anaf.ro/RegPlataDefalcataTva

Automatic entry into the registry occurs after the following time periods have elapsed:

– for taxpayers who had exceeded the VAT debt limits as of 12/31/2017, with a date of 3/1/2018, if we have not regularized our debt by that deadline;

-for taxpayers who after 1.8.2017 exceed the above-mentioned limits, 60 days after the VAT debt is due, if it is not regularized.

Exit the system

More complicated is the exit from the system as it is provided for (disbarment) only in case at least 6 months have elapsed since full payment of VAT debts. Consequently, in the 6 months of “vigilance” the taxpayer will have to pay the tax regularly if he intends to exit the system.