Withholding tax

According to the above-mentioned amendments to the Romanian Fiscal Code, the tax on dividends paid to non-residents becomes 8% applied to the gross dividend (instead of 5%), starting with dividends distributed after 1 January 2023. Nevertheless, the exemption / reductions based on European directives or double tax treaties can be applied (if the required conditions are fulfilled).

Corporate income tax 

The CIT-related changes of the Romanian Fiscal Code affect from one hand the exemption of reinvested profits. Starting from 1 January 2023, other assets are eligible for the exemption from corporate income tax regarding the reinvested profit. Investments in assets used in the production and processing activity, the assets representing refurbishment will be exempted from corporate income tax (these assets will be established by order of the Minister of Finance).

Another CIT-related change of the Romanian Fiscal Code affects the dividend tax which is computed by applying an 8% tax rate on the gross dividend paid to a Romanian legal entity (instead of the current 5%).

Both of these provisions apply to dividends distributed after 1 January 2023.

Micro-enterprise tax

The amendments to the Romanian Fiscal Code significantly modify the regime of the income tax of micro-enterprises as well.

The conditions that must be met cumulatively by a company in order to be a taxpayer on the tax of micro-enterprises (these must be met on 31 December of the previous fiscal year) are amended as follows:

• revenues must not exceed the RON equivalent of EUR 500,000 (instead of the current EUR 1,000,000);
• its share capital is held by persons other than the state and the administrative-territorial units (condition currently in force);
• it is not in dissolution, followed by liquidation, registered in the trade register or in the courts, according to the law (condition currently in force);
• the company generates revenues, other than those from consulting and / or management, in proportion of over 80% of the total revenues (new condition);
• the company has at least one employee (new condition – respectively, the differentiated tax rate is no longer applied in relation to the existence or not of the employee);
• the company has associates / shareholders who hold over 25% of the value / number of participation titles or voting rights to at most three Romanian legal entities that apply to apply the income tax regime of micro-enterprises, including the analyzed company (if they are more than three Romanian companies, the three legal entities paying the micro-enterprise tax will be established, and the rest of the legal entities will become corporate income tax payers) – new condition.

Given the above conditions, from 2023 the tax rate becomes 1% in all cases. The tax regime becomes optional upon the registration of the company. The option can be exercised after registration if certain conditions are observed.

Micro-enterprises cannot opt ​​for the payment of the corporate income tax during the fiscal year, the option being able to be exercised starting with the following fiscal year, with certain exceptions.

Special rules for leaving the income tax system of micro-enterprises during the year were also established.

Example: If during a fiscal year a micro-enterprise generates revenues higher than EUR 500,000 or the share of revenues from consulting and / or management in total revenues is over 20% inclusive, it owes corporate income tax starting with the quarter in which any of these limits are exceeded, without the possibility to opt to apply the micro-enterprise tax afterwards.

VAT

According to the amendments to the Romanian Fiscal Code, amongst the goods subject to 9% VAT rate, the list of food products / other similar goods, as well as of the products used in agriculture was modified.

The VAT rate increases to 9% (from 5%) for hotel accommodation, restaurant and catering services (with certain exceptions).

The delivery of homes with a VAT rate of 5% to individuals applies to homes with a usable area of up to 120 square metres, excluding household annexes, whose value, including the land on which they are built, does not exceed the amount of RON 600,000, excluding VAT. Any natural person can purchase, starting with 1 January 2023, individually or jointly with another natural person / other natural persons, a single home whose value does not exceed the amount of RON 600,000, excluding VAT, with a reduced rate of 5% (there are transitional measures for 2022).

If you would like to know more about the latest amendments to the Romanian Fiscal Code or if you have any tax related question in Romania, please visit the homepage of Ensight, the exclusive representative of WTS Global in the country.

The post Amendments to the Romanian Fiscal Code from 2023 appeared first on WTS Klient | adótanácsadás | könyvelés | bérszámfejtés | HR szolgáltatások | digitális megoldások | állami támogatások.

No interest and penalties / non-enforcement of unpaid taxes

One of the main reliefs of the recent additional fiscal measures in Romania is the non-computation of interest and penalties for late payment. More precisely, interest and penalties on taxes due from 21 March 2020 and not paid until 25 December 2020 will not be computed (the previous deadline was 25 October 2020).

The above due and unpaid taxes will not be considered outstanding and their enforcement will be suspended / will not start until 25 December 2020 (with certain exceptions, such as in criminal cases).

No interest and penalties will be computed for the late payment of instalments from the rescheduling of taxes until 25 December 2020, the validity of this rescheduling is also maintained until 25 December 2020.

The prescription terms of the Romanian tax authorities to compute additional taxes and prescribe enforcement are suspended until 25 December 2020.

Extension of VAT refunds without a VAT audit

Another important element of the additional fiscal measures in Romania is that VAT can be refunded until 25 January 2021, with VAT inspections carried out afterwards (with certain exceptions, such as the submission of the first VAT refund request after registering for VAT purposes, or the reimbursable VAT is older than one year). Subsequent fiscal inspections are ordered based on a risk analysis by the fiscal authorities.

Payment rescheduling of taxes

A payment rescheduling of taxes may be approved for a maximum period of 12 months for the main and ancillary fiscal obligations whose maturity / payment term expired after the declaration date for the state of emergency (16 March 2020) and they are not paid before the issue date of the fiscal attestation certificate.

Payment rescheduling is not permitted for fiscal obligations totalling less than RON 500 (roughly EUR 100) for individuals and RON 5,000 (roughly EUR 1,000) for legal entities. To benefit from the payment rescheduling, the debtor must cumulatively meet the following conditions:

• submit an application to the tax authorities by 15 December 2020;
• not be subject to bankruptcy / dissolution proceedings;
• not have outstanding fiscal obligations on the date the state of emergency was declared, which are not paid before the issue date of the fiscal attestation certificate;
• not be liable according to the legislation regarding insolvency and / or joint liability;
• has submitted all tax returns, according to fiscal evidence, by the issue date of the fiscal attestation certificate.

After receiving the request, the fiscal body issues the fiscal attestation certificate ex officio, and communicates it to the debtor. Apart from this, there are several conditions for maintaining the validity of the payment rescheduling.

During the payment rescheduling period, from 26 December 2020 interest is due and calculated (0.01% for each day of delay) for the tax obligations scheduled for payment, namely, for each rate of the payment schedule, computed between the issue date of the payment rescheduling decision, and payment date of the instalment. The delay penalty of 0.01% will also be due for each day of delay.

Additionally, a penalty of 5% will be due for any late payment rescheduling rate until the next payment term in the rescheduling schedule, as well as for the differences of any unpaid fiscal obligations after settling VAT returns with a reimbursement option. The penalty of 5% is calculated based on:

• the amount remaining unpaid from the rescheduling rate, representing the main fiscal obligations and / or ancillary fiscal obligations rescheduled for payment;
• the differences of fiscal obligations remaining unpaid after the settlement of the returns with the negative amount of VAT with a reimbursement option.

Reduction of specific tax for HoReCa

According to the additional fiscal measures in Romania, HoReCa entities (hotels, restaurants, cafés) liable for the specific tax due for HoReCA activities in 2020, do not owe specific tax for the period between 26 October 2020 (the date these provisions enter into force) and 31 December 2020.

Thus, the specific tax established for 2020 will be recalculated accordingly.

Reduction of local taxes

Local authorities may reduce building tax for 2020 until 2 December 2020, the main measure being the reduction of the annual building tax by 50% for non-residential buildings, if, during the period for which the state of emergency / alert was established, the owners or users of the buildings were obliged, by law, to completely suspend their economic activity, or they hold a certificate for emergency situations issued by the Romanian Ministry of Economy certifying the partial interruption of the economic activity.

If such measures are adopted, the owners of the buildings are obliged to submit to the local fiscal authority a request for granting the reduction until 21 December 2020, together with a declaration on their own responsibility, which must contain specific information.

Extended restructuring of unpaid taxes

The additional fiscal measures in Romania also extend the possibility to restructure taxes (GO 6/2019). The obligation to notify the fiscal authorities of this restructuring intention can be submitted between 1 November 2020 and 31 March 2021. The restructuring request can be submitted until 30 June 2021.

No tax on employees for COVID-19 tests supported by the employer

No salary tax and social contributions are computed for the value of medical tests to diagnose COVID-19 infection, as supported by employers on their own initiative, for their employees, during the state of emergency or alert.

If you would like to know more about the additional fiscal measures in Romania in force from 26 October 2020, please visit the homepage of Ensight, the exclusive representative of WTS Global in Romania.

The post Additional fiscal measures in Romania in response to ongoing pandemic appeared first on WTS Klient | adótanácsadás | könyvelés | bérszámfejtés | HR szolgáltatások | digitális megoldások | állami támogatások.

Government Emergency Ordinance no. 69/2020, which includes the new financial measures, was published in the Official Gazette of Romania no. 393 as of 14 May 2020. One of the adopted measures is the cancellation of interest and penalties related to taxes overdue as of 31 March 2020 (due by companies, associations or individuals).  We outline the details below.

Interest and penalties related to overdue taxes as of 31 March

Interest or penalties related to overdue taxes as of 31 March 2020 are cancelled if the following conditions are fulfilled cumulatively:

a) all taxes overdue as of 31 March 2020, handled by the central fiscal body, shall be paid (e.g. by direct payment, compensation of taxes) until the submission date of the request for cancellation of interest or penalties;

b) all taxes due between 1 April 2020 and the submission date of the cancellation request are paid until the date the cancellation request is submitted;

c) all tax returns are submitted until the submission of the cancellation request;

d) the cancellation request is submitted after the conditions a)-c) above are fulfilled, but no later than 15 December 2020.

Interest and penalties related to additional taxes

Interest and penalties related to additional taxes declared through rectifying tax returns and taxes with a due date before 31 March 2020 are cancelled if the following conditions are fulfilled cumulatively:

a) the rectifying tax return is submitted starting from 1 April 2020 until the submission date of the cancellation request;

b) all these taxes are paid (e.g. by direct payment / compensation) until the submission date of the cancellation request;

c) conditions b)-d) from the first paragraph above are met (payment of current taxes, submission of tax returns, submission of cancellation request).

Other interest and penalties

Interest or penalties related to taxes due before 31 March 2020 (paid with a delay until this date), are cancelled if the conditions b)-d) of the first paragraph above are met cumulatively (payment of current taxes, submission of tax returns, submission of cancellation request).

Interest or penalties related to taxes handled by the central fiscal body with a due date prior to 31 March 2020 and instituted by tax decisions issued through a tax audit in force as of 14 May 2020 (the entry into force of the emergency ordinance) are cancelled if the following conditions are cumulatively met:

a) all additional taxes instituted by the tax decision are paid (e.g. by direct payment / compensation) by the deadline provided in the tax decision;

b) the cancellation request is submitted within 90 days of the communication of the tax decision.

Good to know

Entities can notify their intention to benefit from the cancellation of interest and penalties no later than 15 December 2020, the latest day when the cancellation request must be submitted, and certain procedural aspects must be fulfilled (e.g. postponement of payment of interest / penalties, suspension of enforced collection of taxes).

Entities benefiting from the rescheduled payment of taxes as well as those obtaining such measures between 14 May and 15 December 2020 may benefit from the cancellation of interest and penalties in compliance with certain conditions.

For taxes due to local authorities overdue as of 31 March 2020, similar facilities as above may be granted by the local authorities.

Procedures for applying the above provisions will be issued.

If you would like to know more about the new fiscal measures or other tax issues in Romania, please visit the homepage of Ensight, the exclusive representative of WTS Global in Romania.

The post Fiscal amnesty for interest and penalties in Romania appeared first on WTS Klient | adótanácsadás | könyvelés | bérszámfejtés | HR szolgáltatások | digitális megoldások | állami támogatások.