Modifications to the Fiscal Code and of the minimum gross salary starting 1st of January 2014
Citeste varianta in limba romana

InfoTax no. 39, November 2013

Government Decision no. 871/14.11.2013, published in the Official Gazette no. 703/15.11.2013, reveals the increase of the national minimum gross salary in 2 consecutive steps, as follows: starting 1st of January 2014, from RON 800 to RON 850 and starting 1st of July 2014, from RON 850 to RON 900.

Government Emergency Ordinance no. 102/14.11.2013, published in the Official Gazette no. 703/15.11.2013, brings a series of modifications to the Fiscal Code which will be enforced starting 1st of January 2014, out of which we hereby reveal the most important.

I. Profits tax

- insertion of the possibility to opt for a fiscal year different from the calendar year, in accordance with the option made under the accounting regulations;

- the tax exemption of the dividend income received from a Romanian legal person, provided that the beneficiary Romanian legal person holds, for a continuous period of at least 1 year, minimum 10% of the share capital of the Romanian legal person distributing the dividends;

- insertion in the category of non-taxable income of the dividends received by a Romanian legal person from a foreign legal person, established in a third country with which Romania has concluded a convention for avoiding the double taxation. Conditions: (1) the foreign legal person pays profits tax or a similar tax, (2) the Romanian legal person receiving the dividends holds, at the date of their booking, for an uninterrupted period of at least 1 year, minimum 10% of the share capital of the foreign legal person distributing the dividends;

- insertion in the category of non-taxable income of the capital gain obtained in relation to shareholding titles held in a Romanian legal person or a foreign legal person established in a third country with which Romania has concluded a convention for avoiding the double taxation. Conditions: at the date of sale, the first legal person holds, for a continuous period of at least 1 year, minimum 10% of the share capital of the other legal person;

- insertion in the category of non-taxable income of the income gained from the liquidation of a Romanian legal person or of a foreign legal person established in a third country with which Romania has concluded a convention for avoiding the double taxation. Conditions: at the date of commencement of the liquidation, the receiver of the income holds, for a continuous period of at least 1 year, minimum 10% of the share capital of the legal person subject to liquidation;

- the decrease, from 2 years to 1 year, of the minimum holding period of minimum 10% of the share capital, with a view to benefit from tax exemption in case of dividends received by a Romanian legal person, mother-company, from its subsidiary established in a Member State, as well as of the dividends received by Romanian permanent establishments belonging to foreign legal entities established in other Member States, mother-companies, which are distributed by its subsidiaries established in Member States;

- possibility to carry forward for 7 consecutive years the amounts from sponsorship and/or patronage agreements and private scholarships, that cannot be deducted from the current year’s profits tax;

- possibility to transfer the right to carry forward the interest expenses and the foreign exchange net loss (where the debt-to-equity ratio is higher than 3), from the tax payers who cease to exist following a merger or spin off to the newly incorporated tax payers, respectively to those who take over the patrimony of the acquired or divided company, as case may be, proportionate to the assets and liabilities transferred to the beneficiary legal persons, according to the merger/spin off project;

- granting tax credit, under certain conditions, to Romanian permanent establishments belonging to a legal person established in EU or SEE;

- exclusion from the scope of dividend tax of the dividends paid by a Romanian legal person to another Romanian legal person, provided that the beneficiary of the dividends holds, at the date of payment of the dividends, minimum 10% of the share capital of the other legal person, for a continuous period of at least 1 year fulfilled at the date of payment.

II. Tax on income from independent activities

- granting a deductibility limited to 400 euro/fiscal year/person for expenses related to contributions at voluntary pension schemes qualified as such in accordance with the legislation on voluntary pensions by the Financial Surveillance Authority, carried out towards authorized entities established in EU or SEE.

III. Salary income tax

- the explicit recognition of the deduction, from the gross income, of the mandatory social insurance contributions, in compliance with the EU regulations or with the conventions/agreements on the coordination of social security systems in which Romania is a party (important for foreigners posted in Romania who continue to be insured in another state).

IV. Tax on income of microenterprises

- amendment of one condition for inclusion of companies in the category of microenterprises, namely that they must realize revenue, other than consultancy and management, in over 80% of total revenue;

- elimination from the taxable base of any subsidies, not just those for operating activities as per the current provisions;

- insertion in the category of non-taxable income, of trade discounts granted after invoicing, of foreign exchange gains and of financial income booked as a result of the settlement of claims and liabilities in RON currency depending on an exchange rate different from that to which they were originally recorded;

- widening the taxable base, by including the value of trade discounts received after invoicing and, in the IVth quarter, of the positive difference between foreign exchange gains/financial income booked as a result of the settlement of claims and liabilities in RON currency depending on an exchange rate different from that to which they were originally recorded and foreign exchange losses/financial expenses, accrued from the beginning of the year.

V. Withholding tax

- exclusion from the scope of exempt income, of dividends paid by a Romanian legal person / legal entity with headquarters in Romania, to a legal person established in one of the European Free Trade Association states, namely Iceland, Liechtenstein, Norway;

- the decrease, from 2 years to 1 year, of the minimum holding period of minimum 10% of the share capital, with a view to obtain the exemption of dividends paid by a Romanian legal person / legal entity with headquarters in Romania, to a legal person established in another Member State or to a permanent establishment belonging to a legal entity established in another Member State;

VI. VAT

- exclusion from the VAT taxable base of the amounts paid by a person in the name and on behalf of another person and which are subsequently reimbursed by the former, including the case where the lessor insures himself the leased asset and recharges the exact cost of the insurance, as the European Court of Justice ruled in Case C-224/11 BGŻ Leasing sp. z o.o.;

- it is allowed to adjust the VAT taxable base in case of total or partial dissolution of the agreement for the supply of goods or provision of services prior to their delivery/provision, but for which invoices have been issued in advance;

- in case of VAT reimbursements to taxable persons not registered for VAT purposes in Romania and of VAT reimbursements from other Member States to taxable persons established in Romania, it is eliminated the obligation to prove the payment of the VAT with a view to benefit of the VAT refund (obligation that was contrary to the VAT Directive);

VII. Excise duties

- amendment of the procedure for determining the exchange rate used for conversion in RON currency of the excise duties and the tax on petroleum oil from domestic production. As such, the exchange rate valid for 2014 is 4.738 RON/EUR and it is based on the exchange rate set on the first working day of October of 2012 (4.5223 RON/EUR), inflated with the annual average index consumer prices calculated in September 2013, namely 104.77%.

VIII. Tax on buildings

- for buildings belonging to legal entities applying International Financial Reporting Standards who opt for the cost model as evaluation method, their taxable value is the value resulting from the evaluation report issued by an authorized evaluator, submitted to the specialized department of the local public administration.

IX. Construction tax

The GEO introduces a new tax, on constructions, which is calculated by applying a rate of 1.5% on the value of constructions, other than those subject to the tax on buildings, existing in the taxpayers’ patrimony as of December 31st of the previous year, as evidenced in the debtor accounts corresponding to constructions revealed under Group 1 of the Catalogue on the classification and normal operating durations of the assets, GD no. 2139/2004, as amended.

In case of financial leasing operations, the taxpayer is the lessee, whilst in case of operational leasing operations, the taxpayer is the lessor (similar to tax on buildings).

The computation and declaration of the construction tax shall be made by 25th of May of the year for which the tax is due, whilst the payment is made in two equal instalments, until 25th of May and 25th of September inclusive.