We resume with this newsletter the information referring to the TVA Split in force as of January 1, 2018. The mechanism for those affected (obligated, by option or in any case who have to make a payment to a person listed in the ANAF registry) is particularly complex and the operation has already been the subject of a previous newsletter.
For the sake of clarity, we provide a concise diagram illustrating for each type (for VAT purposes) of customer and supplier entities what is the behavior to follow when paying an invoice:
| Supplier | Customer | How do you make payment to the supplier? |
| applies TVA Split | Does not apply Split but is registered for VAT purposes | Taxable is to be paid to the supplier’s ordinary current account while VAT is to be paid to the supplier’s VAT-only escrow account ( SPLIT PAYMENT) |
| applies TVA Split | does not apply Split and is not registered for VAT purposes | payment has no special problems and is made directly from the customer’s bank account to the supplier’s ordinary account (ORDINARY PAYMENT) |
| apply Split TVA | applies TVA Split | The taxable amount is to be paid to the supplier’s ordinary checking account while the VAT will be paid from the customer’s escrow account to the supplier’s VAT-only escrow account (SPLIT PAYMENT ) |
| does not apply Split TVA | applies TVA Split | The taxable amount is to be paid from the customer’s ordinary bank account to the supplier’s ordinary bank account while the VAT will be paid from the customer’s escrow account to the supplier’s ordinary bank account ( SPLIT PAYMENT) |
| does not apply TVA Split | Does not apply Split but is registered for VAT purposes | Payment is made as before January 1, 2018 i.e., between the customer’s ordinary current accounts to the supplier (ORDINARY PAYMENT) |
Exceptions
The Conversion Law provides the following exclusions from the application of the mechanism:
– Payment made not directly by the customer to the supplier (e.g., payment in the name and on behalf);
– Payment in kind and by compensation;
– credit card payment;
– Amounts made available to the supplier as collateral.
