The new provisions bring a number of changes to the Fiscal Code and the Fiscal Procedure Code among which:
Corporate tax
Cultural gift vouchers regulated by law No. 165/2018 on granting stored-value money cards to employees are rated under the category of social expenditure subject to limited deductibility for the purpose of calculating the corporate tax (i.e., 5% of the salary expenditure).
There are amendments with respect to the limits applicable to the calculation of deductibility of the excess costs of borrowing.
Concretely, with effect from 1 January 2019, borrowing excess costs will be deductible up to a maximum of the RON equivalent of EUR 1 million (as compared to EUR 200,000 until 31 December 2018), and excess costs in beyond this ceiling will be deductible up to 30% (as compared to 10% in 2018) from the adjusted EBITDA indicator. New provisions relating to how to carry over the excess costs of borrowing in the case of merger/dissolution are introduced.
Income tax
Revenue from virtual currency transfers are included in the category of income from other sources.
Income tax is calculated by applying the 10% rate on the earning determined as the positive difference between the selling price and the purchase price, including direct transaction-related costs. Earnings below RON 200 per transaction are not taxable provided that the total earnings in a tax year do not exceed the level of RON 600.
Taxpayers who obtain revenue from virtual currency transfers are required to file the unique tax return and statement of social contributions due by individuals.
Changes with respect to the applicability of tax credit/redirecting of a percentage of the corporate tax in the context of sponsorship
Starting 1 April 2019, the corporate tax payers, as well as micro-companies will be able to apply the tax credit facility only to the extent that, at the time of conclusion of the sponsorship agreement, the beneficiaries of the measures (i.e., not-for-profit organisations and religious establishments) are entered in a Register NAFA official website.
Entry in the Register shall be made at the request of the not-for-profit organisations and religious establishments if the following cumulative conditions are met:
a) the activity is carried out in the field for which it was established, on the basis of the sworn statement;
b) the entity is in good standing;
c) the entity has no outstanding tax obligations in the consolidated general budget, older than 90 days;
d) the entity has filed the annual financial statements;
e) the entity has not been declared inactive.
It should be noted that, in the case of micro-companies, an additional condition for the lessening of the corporate tax by 20% is that the sponsorship beneficiaries should be accredited social service providers with at least one social service licenced.
Similar provisions were introduced also with regard to redirecting 3.5% of the income tax owed by taxpayers who are natural persons.
The redirect will only take place to the extent that the beneficiaries of the amounts are entered in the Register established by NAFA at the date when such amounts are paid by NAFA or by the employer (where the option of redirecting by employer is applied). It should be noted that redirecting 3.5% of the income tax is only possible as far as the sponsorship beneficiaries are accredited social service providers with at least one social service licenced, as in the case of micro-companies.
VAT
Amendments to the scope of VAT target:
(i) Adjusting the VAT base in the event of client bankruptcy
(ii) The removal of certain restrictions on the application of the reduced rate of 5% in the real estate sector
Significant changes made to the Fiscal Procedure Code
According to these changes, taxpayers will be rated into 3 major categories of tax risk: (i) low risk, (ii) medium risk and (iii) high risk.
The general criteria based on which the rating will be made are:
a) the criteria regarding the registration for tax purposes;
b) criteria relating to the filing of the tax returns;
c) criteria relating to the level of the returns;
d) criteria relating to the meeting of the payment liabilities towards the consolidated general budget and towards other creditors.
The risk analysis shall be carried out regularly by NAFA and the taxpayer's risk class will be published on its website.
The procedure for electronic communication of the administrative fiscal documents is regulated. For the purpose of communication of the administrative fiscal documents, the taxpayers may be automatically registered in the communication system by electronic means of remote transmittal.
Corporate tax
Cultural gift vouchers regulated by law No. 165/2018 on granting stored-value money cards to employees are rated under the category of social expenditure subject to limited deductibility for the purpose of calculating the corporate tax (i.e., 5% of the salary expenditure).
There are amendments with respect to the limits applicable to the calculation of deductibility of the excess costs of borrowing.
Concretely, with effect from 1 January 2019, borrowing excess costs will be deductible up to a maximum of the RON equivalent of EUR 1 million (as compared to EUR 200,000 until 31 December 2018), and excess costs in beyond this ceiling will be deductible up to 30% (as compared to 10% in 2018) from the adjusted EBITDA indicator. New provisions relating to how to carry over the excess costs of borrowing in the case of merger/dissolution are introduced.
Income tax
Revenue from virtual currency transfers are included in the category of income from other sources.
Income tax is calculated by applying the 10% rate on the earning determined as the positive difference between the selling price and the purchase price, including direct transaction-related costs. Earnings below RON 200 per transaction are not taxable provided that the total earnings in a tax year do not exceed the level of RON 600.
Taxpayers who obtain revenue from virtual currency transfers are required to file the unique tax return and statement of social contributions due by individuals.
Changes with respect to the applicability of tax credit/redirecting of a percentage of the corporate tax in the context of sponsorship
Starting 1 April 2019, the corporate tax payers, as well as micro-companies will be able to apply the tax credit facility only to the extent that, at the time of conclusion of the sponsorship agreement, the beneficiaries of the measures (i.e., not-for-profit organisations and religious establishments) are entered in a Register NAFA official website.
Entry in the Register shall be made at the request of the not-for-profit organisations and religious establishments if the following cumulative conditions are met:
a) the activity is carried out in the field for which it was established, on the basis of the sworn statement;
b) the entity is in good standing;
c) the entity has no outstanding tax obligations in the consolidated general budget, older than 90 days;
d) the entity has filed the annual financial statements;
e) the entity has not been declared inactive.
It should be noted that, in the case of micro-companies, an additional condition for the lessening of the corporate tax by 20% is that the sponsorship beneficiaries should be accredited social service providers with at least one social service licenced.
Similar provisions were introduced also with regard to redirecting 3.5% of the income tax owed by taxpayers who are natural persons.
The redirect will only take place to the extent that the beneficiaries of the amounts are entered in the Register established by NAFA at the date when such amounts are paid by NAFA or by the employer (where the option of redirecting by employer is applied). It should be noted that redirecting 3.5% of the income tax is only possible as far as the sponsorship beneficiaries are accredited social service providers with at least one social service licenced, as in the case of micro-companies.
VAT
Amendments to the scope of VAT target:
(i) Adjusting the VAT base in the event of client bankruptcy
- There are amendments relating to the adjustment of the tax base in the event of client bankruptcy.
- With effect from 1 January 2019, the adjustment shall be allowed from the date of the sentence or of the decision whereby bankruptcy was decided, according to the insolvency legislation. Previously, the adjustment was allowed as of with the passing of the judgment to close the bankruptcy proceedings.
- Strictly for the year 2019, it is provided that, if the client went bankrupt prior to the year 2019 and, by the end of 2018, the closing of the bankruptcy proceedings was not pronounced, the adjustment shall be made within 5 years calculated from 1 January 2019.
(ii) The removal of certain restrictions on the application of the reduced rate of 5% in the real estate sector
- the condition whereby any person who is single or any family may acquire a single housing with reduced rate of 5% is removed and
- the restriction whereby the reduced rate applies only if the land on which the house is built does not exceed the surface area 250 m² is removed.
Significant changes made to the Fiscal Procedure Code
According to these changes, taxpayers will be rated into 3 major categories of tax risk: (i) low risk, (ii) medium risk and (iii) high risk.
The general criteria based on which the rating will be made are:
a) the criteria regarding the registration for tax purposes;
b) criteria relating to the filing of the tax returns;
c) criteria relating to the level of the returns;
d) criteria relating to the meeting of the payment liabilities towards the consolidated general budget and towards other creditors.
The risk analysis shall be carried out regularly by NAFA and the taxpayer's risk class will be published on its website.
The procedure for electronic communication of the administrative fiscal documents is regulated. For the purpose of communication of the administrative fiscal documents, the taxpayers may be automatically registered in the communication system by electronic means of remote transmittal.
Any presented information is general and is not meant to address the specific conditions of a particular individual or legal person. Although we try to provide accurate and up-to-date information, there is no warranty that such information is accurate at the time of its receipt or that it continues to be accurate. No action should be taken based on this information without relevant professional assistance following a careful examination of the circumstances that are typical of a particular state of affairs.
