Romania will abolish its split payment scheme with effect from 1 February 2020.
As a result, the split payment scheme in Romania is to remain in place on a voluntary basis. However it will no longer be mandatory for businesses.
Split Payment Mechanism
Previously under the split payment mechanism (which was in effect since 1st January 2018) there was a requirement for certain businesses to open a dedicated VAT bank account, into which their customers paid the VAT amount applicable to the bought goods and services. The money in this VAT account paid VAT to the Treasury and to suppliers.
However, it was found by the European Commission to not be compatible with the EU VAT Directive and the freedom of services. The Commission holds the view that the system overburdens the customer with weighty administrative obligations. Therefore in November 2018, the European Commission initiated infringement proceedings against Romania.
If you have any queries, please contact our VAT experts.