What is the “VAT on Collection” system
The “VAT on Collection” regime is an optional system allowing companies to defer the payment of value-added tax until the moment they actually receive payment for the issued invoices. It mainly supports small and medium-sized enterprises, helping them avoid financing the state between the issuance of an invoice and its actual collection.
This system offers substantial benefits, including improved cash flow and reduced credit risk, as companies do not have to pay VAT to the state before receiving payment from their clients.
Legal background
The system was first introduced by Government Ordinance no. 15/2012, which amended the Fiscal Code (Law no. 571/2003). Starting January 1, 2014, under Emergency Ordinance no. 111/2013, it became optional for eligible taxpayers.
Advantages
- Better cash flow management;
- Reduced financial pressure in case of delayed payments;
- Payment of VAT aligned with actual cash receipts.
According to Article 319 (20)(p) of the Fiscal Code, invoices issued by taxpayers applying this regime must include the mandatory note: “VAT on collection”.
Moment of collection
According to Government Decision no. 1/2016, collection may occur through compensation, bank transfer, card payment, cheque, or bill of exchange. The relevant collection date is the one stated in the bank statement or in the document confirming payment settlement.
Eligibility criteria
Under Article 282 (3) of the Fiscal Code, the system may be applied by:
- Taxable persons registered for VAT purposes in Romania with an annual turnover below 4,500,000 lei;
- Newly registered VAT payers who opt to apply the system from the date of registration or later in the same year.
Not eligible are:
- Companies belonging to a single fiscal group;
- Persons not established in Romania;
- Those exceeding the 4,500,000 lei threshold in the current or previous year.
Exiting the system
Exit is possible:
- When the turnover threshold of 4,500,000 lei is exceeded;
- By voluntary withdrawal, through submission of Form D700 to the tax authorities.
Deregistration from the Register of Taxpayers Applying the VAT on Collection System is performed by the tax authority starting from the first day of the following fiscal period.
Verification of companies applying this regime can be made online on the ANAF website:
👉 https://www.anaf.ro/IncasareTva/