(P) Tax Alert: Methodological norms for the application of the Fiscal Code in Romania

(Government Decision No. 84 / 2013, published in the Official Gazette No. 136 / 14 March 2013) Certain amendments and clarifications have been introduced concerning corporate income tax, personal income tax, microenterprises income tax, withholding tax, VAT, excise duties and social contributions. The provisions of the Government Decision become effective on publication in the Romanian Official Gazette. Among the most important changes, we mention the following: Corporate income tax Fiscal register Certain clarifications have been introduced with respect to the filling-in of the fiscal register, which should specifically mention the taxable income (from any source, derived in the course of the tax year) and expenses incurred for the purpose of deriving such income, as well as any information included in the tax return, gathered from processing accounting records. Tax rules for taxpayers applying IFRS Clarifications have been provided as regards the tax treatment of retained earnings originating from the inflation rate adjustment of depreciable fixed assets and land through the gross method. Protocol expenses Protocol expenses subject to limited deduction for corporate income tax purposes should include also expenses related to output VAT for gifts offered by the taxpayer with a value equal to or higher than RON 100. Recovery of tax losses The concept of “transfer of a going concern” within carve-out operations has been referred to in the context of tax loss recovery at the level of the transferor. Moreover, provisions have been introduced regarding the recovery of tax losses by taxpayers applying the system for taxation of microenterprises starting with 1 February 2013. Income from immovable property and participation titles Methodological norms have been amended so as to include the provisions as regards the cumulation for reporting and payment purposes of the fiscal result for transactions involving participation titles and immovable property carried out by foreign legal entities. Corporate income tax with advance payments Clarifications are provided regarding the application of the advance payments system by certain categories of taxpayers within re-organization operations. Microenterprise tax Clarifications have been provided in terms of applying the system of taxation of microenterprises by:

• Romanian legal entities whose period of temporary inactivity / non-performance of operations ceases in the course of the year;
• Romanian legal entities newly established in the period 1 January – 31 January 2013;