From 1st February 2020 the split payment mechanism for VAT has been abolished.
This mechanism obliged certain businesses receiving an invoice to settle the invoice they received by means of two separate transfers, one for the amount of the transaction and the other for the amount of VAT charged. The businesses concerned were those in financial difficulty (e.g. a business in receivership) or in arrears with their VAT payments (late payment threshold set at LEI 5,000). However, companies that were not in difficulty could obtain a 5% rebate on profit tax or microenterprise tax by applying this mechanism voluntarily.
Following a warning from the European Commission that the measure was incompatible with the EU VAT Directive due to disproportionality with its objectives, the mechanism was withdrawn by the Romanian government.
