The VAT cash accounting system is an optional fiscal mechanism under which VAT becomes chargeable when the consideration for the supply of goods or services is collected. According to the Fiscal Code, the system may be applied by taxable persons registered for VAT under Art. 316, established in Romania, whose turnover in the previous calendar year did not exceed 4,500,000 lei.
A taxable person that did not apply the system in the previous year but whose turnover is below the threshold may opt to apply the VAT cash accounting system. The option becomes effective from the first day of the tax period following the submission of the option, provided that the threshold has not been exceeded at that date. The turnover used for determining the limit includes all taxable and/or exempt supplies of goods and services, as well as operations deemed to take place abroad according to Arts. 275 and 278.
Persons registering for VAT during the year may opt either from the date of registration or later in the same year. If exercised at the time of registration, the system applies from that date; if exercised later, it applies from the first day of the next tax period, provided the threshold of 4,500,000 lei is not exceeded.
According to Art. 282(5) of the Fiscal Code, persons opting for the system must apply it at least until the end of the year in which the option was made, unless the threshold is exceeded during the same year. In such cases, the system remains applicable until the end of the tax period following that in which the threshold was exceeded. If the threshold is not exceeded during the first year, the system may continue to apply until the end of the tax period following the year in which the limit is eventually exceeded.