SAF-T in Romania in two phases

From 1 January 2022 SAF-T is also rolled out in Romania. First, only large taxpayers had to declare SAF-T in Romania through mandatory monthly filings, but from 1 January 2023 also medium sized taxpayers have to submit SAF-T on monthly basis. The rest of taxpayers, including small taxpayers and non-resident companies registered only for VAT purposes in Romania, will submit SAF-T from 1 January 2025. The obligation applies to all Romanian and foreign companies with a presence in the country registered for tax purposes in Romania.

Content of SAF-T reports 

Generally, among others, data reports submitted to the National Tax Administration Agency (ANAF) within the system of SAF-T in Romania must contain the following:

1. The master files section contains subsections for more information, such as:

• accounting accounts / journal register
• customers (identification data, analytical account, initial and final balance debtor / creditor)
• suppliers (identification data, analytical account, initial and final balance debtor / creditor)
• tax table (specific tax information)
• table of units of measurement
• table of types of analysis (information on the structure of the taxpayer’s cost centers)
• table of types of movements
• products
• stocks
• owners (details regarding stock owners)
• assets

2. Accounting records / Journal Register: information on accounting records, at transaction level, including analytical accounting accounts.

3. Source documents: information about source documents such as:

• sales invoices
• purchase invoices
• payments
• movements of goods
• asset transactions

Reporting periods for SAF-T in Romania

The submission terms for SAF-T in Romania are monthly or quarterly, depending on the VAT fiscal period. Companies submitting SAF-T on monthly basis have a grace period of six months for the first return, five months for the second return, etc.

Information regarding section “Assets” will be submitted annually, at the date when the financial statements are submitted, whilst information of section “Stocks” are submitted upon the request of the tax authorities.

If you would like to know more about the SAF-T in Romania or if you have any tax related question in the country, please visit the homepage of Ensight, the exclusive representative of WTS Global in Romania.

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Legal background

Based on Sections 2 (2) and 3 (1) 2 of Act C of 2000 on Accounting (Hungarian Act on Accounting), the Hungarian branch of a foreign-registered company, as a business entity, is subject to the Act on Accounting; at the same time, it is bound by the rules of Act CXXXII of 1997 on the Hungarian Branches and Commercial Representative Offices of Foreign-Registered Companies (Branch Office Act).

Initial registered capital based on the Hungarian Branch Office Act 

In legal terms, i.e. by definition, the registered capital of branch offices differs from the registered capital of other business entities, i.e. from share capital. While a limited liability company may be founded with share capital of HUF 3 million, and a private company limited by shares with HUF 5 million, the Branch Office Act defines no minimum amount for the initial capital in relation to founding a branch office. However, it does prescribe that a foreign company must continuously provide the assets required to operate the branch office and settle debts.

Registered capital of branch offices based on Hungarian Accounting Act 

Section 35 (6) of the Act on Accounting stipulates that in respect of Hungarian branch offices of foreign-registered companies, the capital provided and made permanently available by the foreign-registered company (including the endowment capital prescribed by law) for the operation of the Hungarian branch office, and for the settlement of its debts, must be recognised as registered capital.

So this is the registered capital of branch offices, which is not designed to cover the daily operating expenses of business activities, but to ensure operational conditions on a prolonged basis and be a source of assets required for operation.

As a result, it must be set forth in an agreement what the foreign-registered company allocates to its Hungarian branch office, and at what value. For non-cash contributions, the cost of the asset is the value defined in the agreement or contract in accordance with Section 50 (7) of the Act on Accounting. 

Registered capital at the Court of Registration

The allocated amount mentioned above, as set out in an agreement, must be registered at the Court of Registration once a year. Although the foreign-registered company may transfer permanent resources to the branch even several times a year to ensure continuous operations, without the obligation to register this at the Court of Registration, the cumulated amount of capital provided to the branch office must still be registered at the Court of Registration once a year.

If your foreign-registered company is considering opening a branch office in Hungary, or planning to make changes to registered capital (capital increase or decrease) at an existing branch office, we recommend you contact our expert advisers to get answers to any questions arising in relation to their accounting, or any other accounting issues related to the registered capital of branch offices. The accounting specialists at WTS Klient Hungary are here to help.

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The Czech tax package 2019 brought significant changes also to the Czech VAT Act and to the Tax Code, but in our present article we only highlight some of the main changes to the Income Tax Act. About other amendments you can either read our earlier summary or the updated, latest newsletter of WTS Alfery, the exclusive representative of WTS Global for the Czech Republic.

In particular, the Czech tax package 2019 shall implement EU Directive 2016/1165 (ATAD) laying down the following five rules against tax avoidance practices:

Limitation on the deductibility of excessive borrowing costs

 Borrowing costs exceeding the associated income of a tax period shall be tax deductible only up to CZK 80 million (roughly EUR 3 million) or up to an amount corresponding to 30% of earnings before interest, taxes, depreciation and amortization (EBITDA), whichever is the greater. Borrowing costs exceeding the above thresholds shall be considered tax non-deductible; however, they may be deducted in the following years.

Unlike thin capitalisation rules, the new rules will also cover loans from unrelated parties. Moreover, the definition of borrowing costs shall be much broader than under the thin capitalisation rules. For example, capitalized interest or exchange differences related to funding shall also be subject to these rules. The thin capitalisation rules shall continue to apply, which means that ATAD introduces yet another rule applying to borrowing costs.

Exit tax in the Czech tax package 2019

With effect from 2020, transfers of assets without changing ownership shall be subject to tax as if they were sales of assets. This applies, for example, to situations in which a Czech company transfers its assets to its permanent establishment abroad or changes its tax residency.

The difference between the market value and the tax value of assets shall serve as the corporate tax base. In certain cases, payments of this tax may be split into several instalments over the following five years.

CFC rules in the Czech tax package 2019

 Starting from this year, a Czech company is obliged to include the revenues of a foreign company in its tax base if the foreign company is considered to be a controlled entity.

A controlled entity shall mean an entity in the capital of which a Czech company has – whether directly or indirectly – a holding exceeding 50% where, at the same time, the foreign entity does not carry out any significant economic activity, its tax liability abroad being less than half the tax liability this company would have had were it taxed under Czech tax law.

A Czech parent company will be allowed to set off any tax the controlled subsidiary has paid on its income abroad against the parent company’s own tax liability.

 Click here if you want to read the full article about further changes of the Czech tax package 2019 on the homepage of WTS Alfery, the exclusive representative for the Czech Republic of WTS Global.

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