The introduction of the new VAT collection mechanism, known as VAT Split, was included in GO no. 23/2017, which states that as of 1 January 2018 companies registered for VAT purposes will have to open a new VAT account. Although several forms of Split VAT were circulated in its final form published in the Official Gazette, the document states that the VAT splitting mechanism is only mandatory for insolvent firms and those paying VAT, the other companies being able to opt for split VAT on a voluntary basis.
The obligation to use the Split VAT mechanism rests with companies that:
- at the end of 2017, they had VAT debts of over 15000 lei (big companies), 10000 lei (medium companies) or 5000 lei (small businesses and individuals) if they were not paid in January 2018
- starting January 1, 2018, have VAT payable more than 60 days from maturity higher than 15000, 10000 and 5000 lei respectively
- is in insolvency
The obligation to pay VAT on the purchase of goods and services in the special VAT account is exclusively for companies registered for VAT purposes. The VAT split mechanism does not address non-registered companies for VAT purposes, nor will they buy goods or services from companies that apply the mechanism.
How can companies forced to apply Split VAT withdraw from the mechanism?
Under certain conditions, firms required to apply Split VAT may withdraw from the VAT-deductible payment mechanism.
Companies that pay VAT and register debts at the end of 2017 and the beginning of the current year, the order sets the possibility of leaving the system at least 6 months from the date when the company no longer has VAT debts. As for firms in insolvency, they may waive the application of the VAT Split VAT system after falling out of legislation on insolvency and insolvency prevention procedures.
What is, in short, the Split VAT mechanism?
Companies that apply the Split VAT system will have 30 working days from receipt of the equivalent of supplies of goods or services, during which time they must pay VAT on the amounts collected in the VAT account, the account opened with the Treasury or the bank . Specifically, we are talking about:
- VAT on receipts using credit / debit cards
- VAT not paid into the VAT account by non-system users
- VAT on payment instruments issued before the date on which the supplier or the supplier applies the disbursed VAT payment and received after that date
SocrateERP is ready for Split VAT
As far as we are concerned, SocrateERP is already prepared to meet the new requirements in line with the legal changes by the Split VAT mechanism.