2016 brings fiscal benefits concerning the taxation of the dividends distributed to the shareholders, the dividends related to the profit obtained in previous years. Starting with 2016, according to the new Tax Code, the tax on dividends was reduced from 16% to 5%.
In the previous years, the tax on dividends amounted to 16%, plus the contribution to the mandatory health insurance (CASS) of 5.5%, only if the natural person did not pay this contribution as a result of obtaining other categories of income (e.g. salaries). If a natural person had this contribution retained as a result of also obtaining other types of income, he/she had the obligation to pay only the aforementioned tax for the income obtained from dividends.
Starting with 2016, according to the provisions of the new Tax Code, the tax rate for dividends was reduced to 5%. Regarding the contribution to the mandatory health insurance (CASS), the provisions valid during the previous period shall also be applied during 2016.
It is important to mention that the fiscal provisions valid in 2016 are applicable to the dividends related to the profit obtained in the previous years (2015, 2014, etc.) and undistributed. Thus, the persons that have to distribute dividends from previous years and that will do so in 2016, shall pay an income tax of 5% and a CASS rate of 5.5%, unless they also obtain other revenues for which the contribution to health insurance is owed. 2016, the year of the “transit” of tax changes is the most advantageous one for distributing dividends.
Starting with 2017, regardless of whether the natural persons that have the capacity of shareholders also obtain other types of income for which they pay CASS, the tax on dividends shall be of 5%, plus the CASS rate of 5.5%, leading to a total of 10.5%.
The CASS corresponding to the income from dividends shall be owed starting with the dividends distributed after 01.01.2017, this exception being strictly applied for 2016. However, for the income from dividends, the monthly computation basis for CASS shall not exceed 5 times the gross average earnings in force during the year for which the contribution is computed.
In the previous years, the tax on dividends amounted to 16%, plus the contribution to the mandatory health insurance (CASS) of 5.5%, only if the natural person did not pay this contribution as a result of obtaining other categories of income (e.g. salaries). If a natural person had this contribution retained as a result of also obtaining other types of income, he/she had the obligation to pay only the aforementioned tax for the income obtained from dividends.
Starting with 2016, according to the provisions of the new Tax Code, the tax rate for dividends was reduced to 5%. Regarding the contribution to the mandatory health insurance (CASS), the provisions valid during the previous period shall also be applied during 2016.
It is important to mention that the fiscal provisions valid in 2016 are applicable to the dividends related to the profit obtained in the previous years (2015, 2014, etc.) and undistributed. Thus, the persons that have to distribute dividends from previous years and that will do so in 2016, shall pay an income tax of 5% and a CASS rate of 5.5%, unless they also obtain other revenues for which the contribution to health insurance is owed. 2016, the year of the “transit” of tax changes is the most advantageous one for distributing dividends.
Starting with 2017, regardless of whether the natural persons that have the capacity of shareholders also obtain other types of income for which they pay CASS, the tax on dividends shall be of 5%, plus the CASS rate of 5.5%, leading to a total of 10.5%.
The CASS corresponding to the income from dividends shall be owed starting with the dividends distributed after 01.01.2017, this exception being strictly applied for 2016. However, for the income from dividends, the monthly computation basis for CASS shall not exceed 5 times the gross average earnings in force during the year for which the contribution is computed.
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