(P) Tax flash: Amendments to the Fiscal Code in Romania
(Ordinance no. 8/2013 published in the Official Gazette no. 54 / 23 January 2013) The Ordinance brings a series of amendments to the Fiscal Code with regard to the corporate income tax, personal income tax, microenterprises income tax,…
(Ordinance no. 8/2013 published in the Official Gazette no. 54 / 23 January 2013) The Ordinance brings a series of amendments to the Fiscal Code with regard to the corporate income tax, personal income tax, microenterprises income tax, withholding tax, VAT, excise duties and social contributions, as well as to the Fiscal Procedure Code. The changes will enter into force starting with 1 February 2013, except for the provisions regarding the level of the excise duty for cigarettes, which will enter into force starting with 1 April 2013. Among the most important amendments, we present the following: Artificial transactions It is specified that the transactions classified as artificial (as defined by the Fiscal Code) will not benefit from the provisions of the double tax treaties. Corporate income taxTax ledger The tax ledger will have to reflect all taxable income and related expenses, for the fiscal year in question. Research and development expenses The additional deduction allowed for research and development expenses has been increased from 20% to 50% of the expenses eligible for these activities. Retained earnings from updating with the inflation rate as per IAS 29 for taxpayers who apply IFRS Amendments are brought regarding the fiscal treatment of the retained earnings resulted from the update with the inflation rate of the value of the depreciable fixed assets and land. Expenses related to acts of corruption Expenses booked and subsequently proven to be associated with acts of corruption are non-deductible. Non-deductible interest for contracts with deferred payment Interest expenses established in compliance with IFRS for fixed assets/intangible assets/inventory acquired based on deferred payment agreements are non-deductible. Biological assets A number of provisions regarding biological assets have been introduced, as regards their fiscal value, revaluation, tax depreciation, etc. Tax amortization of intangible assets Intangible assets with an indefinite operational life will not be amortized for tax purposes. Limited deductibility for depreciation of vehicles Deductible expenses related to the fiscal depreciation of vehicles having no more than 9 seats are limited to RON 1,500 /month. Tax due by foreign legal entities In case a foreign legal entity derives income from real estate and from the sale or alienation of participation titles held in a Romanian legal entity, where the buyer is a Romanian legal entity or a permanent establishment of a foreign legal entity registered for tax purposes, even though the obligation to compute, withhold, declare and pay the corporate income tax stays with the buyer, the foreign entity will have the obligation to register for tax purposes in Romania, submit the annual corporate income tax return and pay the tax as per art. 35 of the Fiscal Code.
Starting with 1 February 2013 the system for taxation of micro-enterprises is no longer optional, but mandatory for the taxpayers that meet the conditions provided by the law. The level of annual income up to which a Romanian legal entity is considered a micro-enterprise was reduced from EUR 100,000 to EUR 65,000. One of the conditions for a Romanian legal entity to be considered a micro-enterprise was removed, namely the one requiring a number of employees between 1 and 9. The corporate income tax payers that meet, as of 31 December 2012, the conditions required in order to apply the system for taxation of micro-enterprises, will mandatorily apply it starting with 1 February 2013 and will notify the tax authorities by 25 March 2013. The corporate income tax return for January 2013 will be also submitted by this date. The taxpayers that opted for this system based on the legal provisions valid until 1 February 2013 will apply this tax regime in 2013, except for the case when, during 2013, the cap of EUR 65,000 is exceeded.
Withholding tax
Taxation of income from services rendered
Besides the income earned by non-residents from services rendered in Romania, the income derived from services rendered abroad become taxable in Romania, regardless of their nature (with the exception of international transport services and the ancillary services). Tax rate applicable in cases where there is no legal instrument for the exchange of information The tax rate applicable to certain types of income (i.e. dividends, interest, royalties, commissions, income from services and independent professions) is 50% of the gross income if the income is paid to a state which has not concluded a legal instrument for the exchange of information with Romania.
VAT
The taxable base for supplies of goods/services between related parties For supplies of goods/services between related parties, the taxable basis is the market value when: the consideration obtained is less than the market value and the recipient does not have a full deduction right; the consideration obtained is less than the market value and the supplier does not have full deduction right and the supply is VAT exempted without deduction right; the consideration obtained is higher than the market value and the supplier does not have full deduction right.
Transactions exempt without deduction right
The granting of rights in rem over an immovable property, e.g. beneficial interest right and superficies right, becomes transaction exempt without deduction right.
Stolen goods
For stolen goods (including capital goods), the taxable person will adjust the VAT initially deducted, however they will have the right to cancel the adjustment when the theft is legally proven through a final court ruling. Erroneous registration/deregistration in/from the Register of taxable persons that apply the VAT cash-in system In case of erroneous registration by the tax authorities, the taxable person in question applies the normal tax system between the date of registration and the date of error correction, in terms of both the collection and deduction of VAT. However, the taxable person will not be sanctioned in case it applies the VAT cash-in system over the above-mentioned period. In case of erroneous de-registration by the tax authorities, the taxable person in question applies the VAT cash-in system between the date of de-registration and the date of error correction, in terms of both the collection and deduction of VAT. However, the taxable person will not be sanctioned in case it applies the normal system over the above-mentioned period. In the above-mentioned situations, the beneficiary that does not apply the VAT cash-in system will exercise its deduction right according to the normal tax system.
Excise duties
Non-harmonised excise duties
Beer, beer base from a mix with non-alcoholic beverages and also fermented beverages, other than beer and wine, which fulfil the specific requirements of the Fiscal Code were introduced in the list of products which are subject to non-harmonised excise duties. The amendments to the Fiscal Code include specific provisions regarding the taxation regime of these products, including the level of excise duty, the obligations of excise duty payers, the chargeability and payment of the excise duty. The value of the excise duties are of EUR 10/hl for beer, respectively EUR 25/hl for fermented beverages other than beer and wine.
Harmonised excise
The value of the excise duty for beer was increased from EUR 0.748/hl/1 Plato degree to EUR 0.8228/hl/1 Plato degree. The progressive increase of the excise duty for cigarettes, planned for the 2013-2018 period, will be made annually starting with 1 April of the respective year.
Income tax
Salary income
Salary assimilated income subject to taxation will also include the following:
amounts that exceed 2.5 times the level set for the public institutions personnel, for the allowance received by the employees during delegation and secondment in another locality, within the country and abroad, for business purposes, as well as any other amounts of the same nature. The amounts granted within this limit, as well as those received for travel and accommodation expenses shall not be subject to taxation;
interests granted in connection with wages and salary differences, as well as their updates with the inflation rate, determined on the basis of final and irrevocable court rulings. The income tax due on this income shall be calculated and withheld at the payment date and wired to the state budget by the 25th of the month following the payment.
