Who can opt for VAT on collection?

VAT-registered companies with turnover below the annually set legal threshold. The option is notified to the tax authority and takes effect from the 1st of the following month.

How does it affect input VAT deduction?

Symmetrically with sales: the right to deduct VAT on purchases arises on the payment date to the supplier, not on invoice receipt.

What happens on a partial collection?

VAT becomes chargeable pro-rata to the collected amount. Each partial collection generates a pro-rata share of chargeable VAT.

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Operations Glossary
VAT on collection (cash accounting)

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Category: Financiar

VAT on collection (cash accounting)

Quick answer: Optional Romanian scheme where VAT becomes chargeable when the invoice is collected, not when it is issued.

Key takeaways

Companies with turnover below the annual legal threshold
The option is exercised by notifying the tax authority, effective from the 1st of the following month

What VAT on collection is

VAT on collection (cash accounting for VAT) is an optional scheme where VAT chargeability (when you owe VAT to the state) arises on the collection date of the invoice, not the issue date. Symmetrically, the right to deduct input VAT arises on the payment date to the supplier.

Who can apply

Companies with turnover below the annual legal threshold

The option is exercised by notifying the tax authority, effective from the 1st of the following month

Pros and cons

Pro: you don't pay VAT on uncollected invoices — helps cash flow for companies with long payment terms (high DSO)

Con: more complex accounting — every document must be tracked to collection/payment; input deduction is deferred until payment

Operational impact

The scheme requires exact matching between invoices and collections/payments. Without a system that automatically links a bank payment to its invoice, you risk mis-declaring chargeable VAT in the VAT return.

Common mistakes

1. „I deducted VAT on invoice receipt” — Under cash accounting, deduction arises on payment to the supplier, not on invoice receipt.

2. „I didn't track partial collections” — Chargeable VAT is computed pro-rata to the collected amount.

3. „I forgot the threshold” — Exceeding the threshold forces exit from the scheme; failing to flag it correctly causes VAT return errors.

Frequently asked

Who can opt for VAT on collection?: VAT-registered companies with turnover below the annually set legal threshold. The option is notified to the tax authority and takes effect from the 1st of the following month.
How does it affect input VAT deduction?: Symmetrically with sales: the right to deduct VAT on purchases arises on the payment date to the supplier, not on invoice receipt.
What happens on a partial collection?: VAT becomes chargeable pro-rata to the collected amount. Each partial collection generates a pro-rata share of chargeable VAT.

Where Azuvio fits

Related terms

VAT return (D300, Romania) — Monthly/quarterly Romanian VAT return reporting output VAT, input VAT and the net payable or refundable amount to ANAF.
Sales journal (Romania) — Mandatory accounting register listing every issued invoice chronologically, with VAT base and output VAT — the primary source for D300 and D394.
Purchases journal (Romania) — Mandatory Romanian accounting register listing every supplier invoice received, with deductible VAT — the primary source for recoverable VAT through D300.
DSO (Days Sales Outstanding) — Average number of days from invoice issue to cash collection. Key cash-flow indicator.

Last updated: 2026-07-06