The Romania is abolishing its VAT split payment mechanism from 1 February 2020. The cancellation was following the warning from the EU commission that the regime infringes the EU VAT rules and the freedom to provide services (Article 56 TEFU). Romania requested for a derogation from the pertaining Directive but was rejected by the commission.
The VAT split payment regime was optional for the businesses until 1 January 2018 which became mandatory from then. The mechanism takes away the “VAT collection” role of the business and the VAT portion of the invoice will have to be paid directly to the tax authorities by the customers.
The mechanism already exists in Poland and Italy. Although the split payment scheme is canceled, Romania is proceeding with the introduction of a new SAF-T file that has to be submitted by all taxpayers.
