This paper demonstrates the splitting of the modular multilevel converter real-time simulation model into several independent parts through the use of the virtual capacitor concept. As a result, the number of state-space matrices the real-time solver needs to take into account gets significantly reduced, offering the possibility for substantial reduction of the simulation step size. Consequently, real-time simulation quality increases. The proposed concept was verified on a large-scale hardware-in-the-loop system comprising seven RT Boxes, where the model of the physical system is deployed, and ABB PEC800 industrial controller, where control algorithms of the real power hardware are deployed and executed.