November 26, 2012 VAT on collection represents a new challenge for the Romanian taxpayer. That is why we want to welcome you, with the answer to some questions regarding the VAT collection system. Who applies the VAT collection system? Taxable persons who are registered for VAT purposes and who have their registered office in Romania Who does not apply the VAT collection system? Taxable persons established in Romania who are part of a tax group; taxable persons not established in Romania who are registered for VAT purposes, directly or through a tax representative; taxable persons who have their registered office outside the Romanian economic activity, but are established in Romania through a permanent establishment What does it mean to collect an invoice within the VAT collection system? By collecting the equivalent value of the delivery of goods / provision of services is meant any way in which the supplier / provider obtains the consideration for these operations from the beneficiary or from a third party, such as: payment in cash (excluding cash); payment in kind; compensation; assignment of receivables; use of payment instruments. What happens when you receive a cash invoice? The supplier / provider who applies the VAT collection system, excludes invoices collected in cash from beneficiaries legal entities, natural persons registered for VAT purposes, authorized natural persons, freelancers and associations without legal personality. If, after issuing the invoice, a part or its full value is collected in cash, for the tax related to these amounts the exigibility of VAT being moved, within 90 days, on the date of collection of the value of the issued invoice. What happens to deposits directly in the supplier’s bank account? Cash receipts / payments are not considered cash amounts deposited by the beneficiary directly in the bank account of the supplier / provider. What happens if the entry of the mention on the invoice “VAT on collection” is omitted? If the supplier / provider is registered in the Register of taxable persons who apply the VAT collection system on the date of issuing an invoice, but fails to enter the mention “VAT collection”, although the operation is not excluded from the application of the VAT collection system, the beneficiary has the obligation to exercise the right of deduction on the date of payment of the invoice. Each taxpayer will have to permanently consult the Register of taxable persons, which will be displayed on the website of the National Agency for Fiscal Administration. What about sales and purchase journals? The application of the VAT collection system will bring important changes to the sales and purchase journals by including additional information, such as: number and date of the collection / payment document, the value of the delivery / purchase of goods / services, including VAT ; the taxable base and the related value added tax; the amount collected / paid, including VAT and correspondingly the taxable base and the due VAT; the difference representing the taxable base and the non-exigible VAT. What is the impact of applying the VAT collection system in the taxpayer’s pocket? The application of the VAT collection system involves additional costs for adapting the accounting programs to the new provisions, for the consultants’ fees but also for the staff training.