The VAT on collection system is an important fiscal mechanism designed to help small and medium-sized enterprises (SMEs) by allowing them to postpone the payment of VAT to the state until the actual collection of invoices.
💡 What the VAT on Collection System Means
This optional regime allows taxpayers to pay VAT only when the invoice is actually paid by the client, rather than at the time of issue.
It improves cash flow and reduces credit risk, especially in industries with delayed payment terms.
🏛️ Legal Background
The system was first introduced through Government Ordinance No. 15/2012, amending Law No. 571/2003 (the Fiscal Code).
Starting 1 January 2014, under Emergency Ordinance No. 111/2013, the system became optional for eligible taxpayers.
✅ Key Advantages
- VAT is paid only after the invoice is collected, not upon issuance.
- It enhances cash flow and helps avoid financial strain caused by unpaid invoices.
- It reduces fiscal pressure on SMEs.
🧾 Invoice Requirements
According to Article 319(20)(p) of the Fiscal Code, taxpayers applying the system must include the mention “VAT on collection” on their invoices, except for transactions subject to general VAT exigibility rules.
⚙️ Determining the Collection Date
Under Government Decision No. 1/2016, the moment of collection depends on the payment method:
🔸 Offsetting (Compensation)
- Between legal entities – the date of effective offsetting, according to Government Ordinance No. 77/1999.
- If one party is not a legal entity – the date of signing the offsetting protocol, which must include: names, VAT codes, invoice number and date, total amount, compensated amount, signatures, and date of signing.
🔸 Bank Transfers
For credit transfer payments, the collection date is the date stated on the bank statement.
🔸 Payment Instruments (cheques, bills of exchange, promissory notes)
- If the supplier does not endorse the instrument, the collection date is the date on the bank statement. If discounted, the full value is considered collected.
- If the supplier endorses the instrument, the collection date is the date of endorsement, and a copy of the endorsed instrument must be kept.
🔸 Card Payments
For payments made via debit or credit card, the collection date is the date shown on the bank statement.