Amendments to the Fiscal Code Norms
View this page in:
26 March 2013
Government Decision no. 84/2013 amending the Fiscal Code Norms entered into force on 14 March 2013.
The most important changes and clarifications are as follows:
I. Profit tax
- Clarifications have been introduced regarding the tax treatment of revenues and expenses resulting from the revaluation or impairment of bonds. These are included in the categories of taxable revenues and non-deductible expenses, respectively.
- Clarifications have been set out in terms of what additional information should be included in the tax registry for profit tax calculation purposes. This information refers both to the taxable revenues and the expenses incurred with a view to generating these revenues, as well as any other information included in the profit tax return.
- For taxpayers applying IFRS accounting regulations, amendments have been made regarding the tax treatment of the amounts resulting from applying the inflation rate to depreciable fixed assets and to land, when switching from the revaluation method to the cost method. These amounts are treated as reserves and taxed according to the Fiscal Code provisions.
- Protocol expenses now also include VAT collected on the value of gifts granted by a taxpayer which are equal to or exceed RON 100.
- Clarifications have been brought to the concept of “transfer of going concern” in the course of a reorganisation as well as to the method of recovering the fiscal loss if the assets are not transferred as a going concern.
- The legislative act specifies the categories of taxpayers, either beneficiaries or transferors in the course of a reorganisation, which apply the advance tax payment system in order to determine profit tax.
- Correlations have been made in respect of the obligations to declare and pay the annual profit tax in the case of non-resident companies who have obtained during the year revenues from real estate located in Romania or from selling / assigning participation titles held in a Romanian company.
II. Revenue tax for micro-enterprises
- Clarifications were introduced regarding the transition from the optional revenue tax system for micro-enterprises to the mandatory one. Thus, until 2014, the revenue tax system is not mandatory for:
- companies established in January 2013;
- companies which obtained revenues of between EUR 65,000 to EUR 100,000 as at 31 December 2012 and which had requested to leave the revenue tax system for micro-enterprises by 31 January 2013.
- The method of recovering the fiscal loss recorded by taxpayers applying the revenue tax system for micro-enterprises as of 1 February 2013 has been clarified.
III. Withholding tax
- Additions were brought to the types of services rendered abroad that are subject to a 16% tax rate, namely: management services, consulting services, marketing services, technical assistance services, research and design services, advertising and publicity services, and services rendered by lawyers, engineers, architects, notaries, accountants and auditors.
- The legislative act brings some clarifications regarding the types of income falling under the scope of an increased tax rate of 50% paid in a state with which Romania does not have any signed legal instrument for exchanging information. This rate applies regardless of whether the beneficiary of the income is resident of a state with which Romania has concluded a double tax treaty or not.
- Clarifications have been introduced concerning the fiscal residency certificate of non-residents who are beneficiaries of income derived from Romania. Thereby, this document qualifies as authentic also when issued in an electronic format or online by the competent authority in the foreign state.
- A clarification is made in respect of the filling in of the "Informative declaration regarding the income tax withheld and paid on income subject to source withholding / exempted income for non-resident beneficiaries." Thus, in Chapter B of this declaration, the payer of income fills in either the non-resident’s fiscal identification code assigned by the Romanian authority, when such a code has been assigned, or the identification data of the non-resident income beneficiary, when such a code has not been assigned.
IV. Personal income tax
- Further clarifications have been introduced regarding the non-taxable income derived from the transfer of ownership of movable and immovable property from personal patrimony, specifically regarding wood exploitation.
- The remuneration paid to a coordinating attorney appointed or elected for the coordination activity within a professional civil law firm or a professional limited liability company is considered income treated as salary, with the corresponding income tax implications.
- Clarifications have been brought regarding the taxation of the secondment allowance received by employees during delegation and secondment to another location within the country and abroad, for business purposes, for the part that exceeds the level of 2.5 times the legal amount established for public servants, starting with the rights corresponding to the month of February 2013.
- The amounts paid directly by employees as union fees are deductible for salary income tax purposes, within the limits established by Law, against the monthly income when the payment was made, based on supporting documents issued by the union organisation.
- Clarifications have been introduced in respect of cases where the withholding of income tax on salary income paid by or on behalf of a Romanian resident employer for dependent activities undertaken in a foreign country can be stopped.
- Salary income payers are required to fill in returns regarding the calculation and withholding of income tax for each beneficiary of income, including in respect of salary income paid to employees for their employment activities abroad, regardless of whether the income tax on such income was calculated, withheld and paid.
- The reconciliation method used by the tax authorities for assessing the salary income tax due in Romania by Romanian tax residents in respect of activity rendered abroad is provided.
- Clarifications have been introduced in respect of the income tax withholding method for land lease income paid in kind, method which is established upon agreement of the parties.
- In order to determine gain / loss for the transfer of securities obtained in accordance with art.27 and art.27¹ of the Fiscal Code in non-taxable transfer operations, the purchase price is set based on the nominal value or purchase price of the securities transferred before the operation. If the transferred securities were obtained for free, the nominal value or purchase price is considered nil.
- For shares in limited liability companies obtained by inheritance, the nominal value / purchase price used for determining the gain from the shares alienation is considered nil.
- Clarifications have been brought regarding the taxation of income from agriculture, forestry and fishery.
- The income obtained by an assignor from an assignment of receivables and by an assignee from such receivables, including those resulting from salary receivables obtained under a final and irrevocable court judgment, is deemed income from other sources.
V. Social security contributions
- Similar to the rule applicable in the case of personal income tax, the part of the secondment allowance received during delegation or secondment to another location within the country or abroad, exceeding the level of 2.5 times the amount established for public servants, is considered income treated as salary and is included in the calculation base for social security contributions.
VI. Value added tax
VAT taxable base at market value
Further clarifications have been introduced as regards the taxable base and related VAT for supplies of goods or services performed between related parties that have limited deduction right, as well as regards the taxable base for fixed assets, as follows:
VAT adjustments for demolitions
- The market value for supplies of goods and services performed between related parties is determined based on the same methods used to determine the market value for transfer pricing, when a comparable transaction can be identified;
- In the case of immovable goods transfer from the company assets to the shareholders or associates, or in the case of transactions consisting in granting goods for consideration or these goods are used for activities without deduction right, the VAT taxable base is the value registered in the accounting records minus the accounting depreciation.
The decision of the European Court of Justice in case of C-257/11 Grand Via Moinesti regarding the right to deduct VAT related to the acquisition of land and buildings constructed on that land which were subsequently demolished was transposed into the Romanian legislation. Romanian real estate developers purchasing buildings subject to demolition are no longer required, therefore, to adjust the input VAT related to these buildings. This new provision substantially increases the chances of winning in court for companies which have litigation cases pending in this respect.
VAT amendments for leased goods not repossessed following the early termination of financial leasing contracts
Further amendments have been introduced regarding the VAT treatment for leased goods which were been repossessed following the early termination of financial leasing contracts. As a consequence, leasing companies are no longer required to adjust the VAT related to not repossessed goods following the early termination of leasing agreements, as long as the company can prove that it initiated the recovery procedures for these goods, regardless of whether or not the goods are recovered further to the finalisation of the recovery procedures.
Other VAT amendments
- Companies registered for VAT purposes have the right to deduct the VAT related to the acquisitions of goods and services with a value of less than EUR 100, based on a fiscal receipt, as long as that receipt also specifies the VAT registration number of the beneficiary.
- Companies which have had their VAT registration number cancelled and which have issued invoices / received advance payments for supplies of goods or services before the cancellation of the VAT registration have to apply the VAT exemption for the entire amount related to the supply of goods or services, provided that the actual supply takes place after the VAT deregistration. The value added tax resulting from the VAT regularisation after the VAT registration number is cancelled, can be recovered based on a statement submitted to the tax authorities following the VAT deregistration.
- The provisions regarding payments in cash received by the supplier applying the cash accounting VAT scheme have been supplemented. As a consequence, suppliers which have already issued invoices under the cash accounting VAT scheme are required to apply this scheme also for the cash payments received following the invoicing moment.
- Further clarifications have been introduced as regards the VAT treatment applicable to goods granted for consideration under protocol actions. In this respect, companies are required to collect VAT for the amounts exceeding RON 100 per present, regardless of whether the related VAT was totally or partially deducted.
- The VAT exemption for medical services will not be applicable if these services have as unique scope maintenance and embellishment.
VII. Excise duties
Companies that purchase energy products classified under the tariff codes 3811 11 10, 3811 11 90 and 3811 90 00 which are not offered for sale or used as motor fuel or heating fuel, are required to notify the customs authorities in this respect.
- Companies which are not authorised as warehouse keeper or as registered consignee and which perform intra-community acquisition of beer / mixture of beer with non-alcoholic beverages, and which meet a range of conditions are required to comply with the legal procedure applicable for the intra-community movement of goods with excise duties paid. Similar conditions were also introduced for fermented beverages, except beer and wines, which have a defined set of characteristics.
- For beer and fermented beverages, except beer and wines, which have a defined set of characteristics, the level of the guarantee is determined by summing up the harmonised excise duties and the non-harmonised excise duties.
- Companies releasing for consumption beer and fermented beverages, except beer and wines, which do not meet the characteristics under the excise duties legislation, are required to hold declarations / quality certificates issued by the producers mentioning that the proportion of Plato degrees resulting from malt, malted grains and / or non-malted, in the total number of Plato degrees of the finished good, is higher than 30%, so the absolute alcohol (100%) proportion resulted exclusively from the fermentation of fruits, fruit juice and concentrated juice is higher than 50%.
- The excise duties paid by a Romanian company for the food flavours, extracts and concentrates of alcohol purchased from a supplier from another Member State will be refunded as long as the company follows the legal procedure applicable for the intra-community movement of goods with excise duties paid.
- Excise duties paid for coffee assortments withdrawn from the market in order to be destroyed, provided that their condition and age make them unsuitable for consumption or they no longer meet the commercial conditions, can be refunded based on a request submitted by the company which paid the excise duties.
[Source: Official Gazette of Romania no. 136 /14 March 2013]
For more information, please contact Peter de Ruiter, Mihaela Mitroi, Ionut Simion and Daniel Anghel.