Law no. 296/2023 on fiscal-budgetary measures to ensure Romania’s long-term financial sustainability

The takeaway 

Law no. 296/2023 introduced important changes to the Fiscal Code, including measures relating to electronic devices, strengthening financial and fiscal discipline and increasing voluntary compliance with the rules for road transport of goods.

We present below the most important changes and additions to the Fiscal Code and Government Emergency Ordinance no. 120/2021 regarding the administration, operation and implementation of the national RO e-Invoice system and the new measures regarding the introduction of the RO e-Seal system for tracking shipments.

In detail

The Fiscal Code has been modified and completed

Title II – Corporate income tax

• The minimum turnover tax has been introduced for taxpayers (other than credit institutions and legal entities conducting activities in the oil and natural gas sectors, for which special rules have been introduced – see below) which registered in the previous year turnover over EUR 50 million and which have profit tax lower than the minimum turnover tax. They will be obliged to pay profit tax at the level of the minimum turnover tax.

The previous year’s turnover is the difference between VT and Vs, as defined below.

Economic operators that exclusively conduct activities of distribution/supply/transport of electricity and natural gas that are regulated/licensed by the National Energy Regulatory Authority are exempt from the application of the minimum turnover tax.

The formula for calculating the minimum turnover tax (which also applies if the cumulative tax result, before loss recovery, is a tax loss) is:

 1% * (VT - Vs - I - A), where:

VT = total revenues, determined cumulatively from the beginning of the fiscal year / modified fiscal year to the end of the quarter / calculation year, as appropriate.

Vs = revenues that are subtracted from total revenues, namely:

• non-taxable revenues provided by the Fiscal Code; 

• revenues related to product inventory costs;

• revenues related to the costs of services in progress; 

• revenues from the production of tangible and intangible assets not included in indicator I below;

• revenues from subsidies; 

• the income obtained from compensations from insurance/reinsurance companies for damages caused to goods of the nature of stocks or own tangible assets; 

• revenues representing excise taxes that were simultaneously reflected in the expense accounts.

I = the value of fixed assets in progress caused by the acquisition/production of assets, recorded in the accounting records starting from 1 January 2024 / the first day of the modified fiscal year starting in 2024. 

A = accounting depreciation at historical cost related to assets purchased/produced starting 1 January 2024 / the first day of the amended fiscal year beginning in 2024 (excluding accounting depreciation of assets included in indicator I above).

The assets taken into account when calculating indicators I and A will be established by a separate order to be issued by the Minister of Finance within 60 days as of the entry into force of Law no. 296/2023. The selection of eligible asset categories will be based on criteria related to the nature of the activity conducted.

Taxpayers can deduct from the minimum tax due the amounts related to sponsorship / patronage conducted according to the law, at the minimum value of the following:

•  0.75% of the turnover; 

• 20% of the profit tax.

The amounts representing the exempted, reduced profit tax and other amounts that are deducted from the profit tax, according to special laws, are not deducted from the minimum turnover tax / profit tax according to Emergency Ordinance no. 153/2020.

In the case of a tax group, each member of the tax group calculates the minimum turnover tax according to the formula and communicates it to the group’s responsible legal entity. The responsible legal entity compares the profit tax determined at the group level with the aggregated value of the minimum turnover taxes submitted by the members of the tax group and applies the applicable provisions. If the group’s tax result is a tax loss, the group tax is due at the level of the sum of the minimum turnover taxes submitted by the group members.

• An additional tax has been introduced for credit institutions, applicable to Romanian legal entities and Romanian branches of credit institutions – foreign legal entities.

In addition to the profit tax, credit institutions are liable for turnover tax calculated by applying the following tax rates to the turnover:

• 2% for 1 January 2024 – 31 December 2025; 

• 1% as of 1 January 2026.

 For calculating the additional tax, the turnover includes: 

• interest income; 

• dividend income;

• revenues from taxes and commissions; 

• gains (losses) from the derecognition of financial assets and liabilities that are not measured at fair value through profit or loss, net;

• gains or losses related to financial assets and liabilities held for trading, net; 

• gains or losses related to financial assets not intended for trading, necessarily valued at fair value through profit or loss, net; 

• gains or losses related to financial assets and liabilities designated as being valued at fair value through profit or loss, net; 

• hedge accounting gains or losses, net; 

• exchange rate differences (gain or loss), net; 

• gains or losses from the derecognition of non-financial assets, net; 

• other operating revenues.

To determine the fiscal result, the turnover tax is a non-deductible expense. 

The turnover tax is calculated, declared and paid quarterly, up to and including the 25th day of the month following the quarter for which the payment is made, for quarters I–III, and up to and including 25 March of the following year, for quarter IV.

In the case of a tax group, the turnover tax is applied by the members depending on their individual situations.

The model and content of the additional tax declaration are established by order of the president of the National Tax Administration Agency (ANAF) within 60 days as of the entry into force of Law no. 296/2023.

• A specific turnover tax has been introduced in addition to the profit tax for legal entities that conduct activities in the oil and natural gas sectors and that registered turnover over EUR 50 million in the previous year.

The previous year's turnover is the difference between VT and Vs, defined above. 

The formula for calculating the specific tax on turnover is: 0.5% x (VT - Vs - I - A). 

The indicators are as defined above.

The specific turnover tax is calculated, declared and paid quarterly, up to and including the 25th day of the month following the quarter for which the payment is made (for quarters I–III), and for quarter IV, up to the date of submission of the annual tax return on profit. 

The specific turnover tax is a non-deductible expense.

Taxpayers which conduct activities in the oil and natural gas sectors and electricity and natural gas distribution/supply/transport activities and which are regulated/licensed by the National Energy Regulatory Authority, for the determination of the specific tax, do not include the elements related to the activities of distribution/supply/transport of electricity and natural gas in the VT, Vs, I and A indicators in the calculation formula. Economic operators which exclusively conduct activities of distribution/supply/transport of electricity and natural gas and which are regulated/licensed by the National Energy Regulatory Authority are exempt from the application of the specific turnover tax.

For microenterprises, the tax rates change as of 1 January 2024 as follows: 

• 1% for microenterprises that achieve revenues that do not exceed EUR 60,000 and do not perform the activities listed under point 2 below. 

• 3% for microenterprises that: 

1. have revenues over EUR 60,000 or 

2. conduct activities corresponding to the CAEN codes: 5821 – Computer games publishing activities, 5829 – Other software product publishing activities, 6201 – Custom software creation activities (customer oriented software), 6209 – Other activities of information technology services, 5510 – Hotels and other similar accommodation facilities, 5520 – Holiday and short-term accommodation facilities, 5530 – Caravan parks, campsites and camps, 5590 – Other accommodation services, 5610 – Restaurants, 5621 – Food activities (catering) for events, 5629 – Other food services n.e.c., 5630 – Bars and other beverage service activities, 6910 – Legal activities – only for companies with legal personality that are not fiscally transparent entities, constituted by attorneys at law, 8621 – General health care activities, 8622 – Specialized health care activities, 8623 – Dental care activities, 8690 – Other human health activities.

If, during a fiscal year, a microenterprise has revenues in excess of EUR 60,000 euros or starts to conduct the activities listed at point 2 above, the 3% rate is applicable as of the quarter in which such situations are recorded.

TITLE IV – Income tax 

TITLE V – Mandatory social contributions

Law no. 296/2023 limits the applicability of the tax exemption on income from salaries and income treated as salaries as a result of conducting the activity of creating computer programs until 31 December 2028 inclusive. 

The exemption applies to the place where an employee’s basic function is located, for monthly gross incomes up to and including RON 10,000. Similar to the regime for employees who obtain salary income exempt from income tax for activities conducted in the construction sector, the food industry and in agriculture, for individuals who benefit from a tax exemption on income from wages and salaries as a result of conducting the activity of creating computer programs, the social insurance contribution rate is reduced, until 31 December 2028, by the percentage points corresponding to the contribution rate to privately administered pension funds. However, employees can opt to pay the contributions to these funds. The provisions are applicable starting with the income related to the month following the entry into force of Law no. 296/2023.

Regarding the tax facilities applicable to employees who conduct activities in the construction sector, in the food industry and in agriculture, starting with the income related to the month following the entry into force of Law no. 296/2023, the exemption from the payment of the social health insurance contribution, the social insurance contribution for special and special working conditions, as well as the payment of the reduced share of the insurance contribution for work, has been eliminated. In this case, the tax facilities will be applied to the place where an employee’s basic function is located.

Regarding the fiscal regime applicable to salary advantages, Law no. 296/2023 introduces the value of meal vouchers and holiday vouchers into the basis for calculating the social health insurance contribution, starting with the income related to January 2024. 

For individuals who obtain income from independent activities, starting with the income related to the year 2024, the annual basis for calculating the social health insurance contribution is equal to the net annual realized / gross income or the annual income norm, but not more than the level of 60 gross national monthly minimum wage in force at the time of filing the tax return on the estimated income / income rate to be achieved in Romania and the social contributions owed.

Income from unidentified sources

• As of 1 July 2024, income ascertained by the tax authorities, under the terms of the Fiscal Procedure Code, for which the source has not been identified will be subject to income tax at a rate of 70% (under the previous regulation, the rate was 16%) applied to the adjusted taxable base.

TITLE VII – Value added tax (VAT)

As of 1 January 2024: 

The definition of “dwelling which at the time of delivery can be lived in as such” has been amended. In the new definition, an inhabitable home must have: free individual access to the living space, without disturbing the possession and exclusive use of the space owned by another person or family; access to electricity and potable water, controlled disposal of waste water and household waste; at least a space for rest, a space for preparing food and a bathroom; exterior finishes and interior finishes; sanitary installations and sanitary objects; electrical installations. 

The VAT rate increases from 9% to 19% for: 

• delivery of non-alcoholic beer;

• foods with added sugar (over 10 g per 100 g product), with the exception of cookies and biscuits.

The VAT rate increases from 5% to 9% for: 

• the delivery of high-quality food, i.e. mountain, eco and traditional products; 

• the delivery of housing as part of the social policy (useful surface of a maximum of 120 sqm, exclusive of household annexes, the value of which, including the land on which they are built, does not exceed the amount of RON 600,000 excluding VAT). The reduced rate applies only to homes that, at the time of delivery, can be lived in as such;

• supply and installation of photovoltaic panels, solar thermal panels, heat pumps and other high-efficiency, low-emission heating systems, including installation kits, as well as all necessary components purchased separately for central or local public housing / buildings except for commercial companies;

• the delivery and installation of components for the repair and/or expansion of systems as a component part of construction deliveries or as extra options when delivering a construction; 

• access to malls, amusement parks and recreational parks the activities of which fall under CAEN codes 9321 and 9329, fairs, exhibitions, cinemas and cultural events, other than tax-exempt ones;

• access to sporting events.

The VAT rate increases from 5% to 19% for: 

• the right to use sports facilities whose activities are classified under CAEN codes 9311 and 9313, other than the exempt ones; 

• the transport of people by trains or historic steam-powered vehicles on narrow gauge lines for tourist or leisure purposes;

• the transport of people using cable transport facilities – cable car, cable car, chair lift and ski lift – for tourist or leisure purposes; 

• transporting people with animal-drawn vehicles, used for tourist or leisure purposes; transporting people with boats used for tourist or leisure purposes.

The VAT exemption with deduction right has been eliminated for operations conducted for state hospital units involving: 

• construction, rehabilitation and modernization services for hospital units in the state public network; 

• delivery of medical equipment, apparatus, devices and the like; 

• adaptation, repair, rental and leasing of such goods. 

The VAT exemption is maintained only when these operations are conducted for non-profit entities registered in ANAF’s Public Registry and intended for hospital units owned and operated by the non-profit entity or those in the state public network.

Transitional measures are established for housing deliveries for which contracts were concluded by 31 December 2023 and which will be delivered between 1 January and 31 December 2024 to apply the reduced VAT rate of 5% or 9%.

TITLE VIII – Excise duties and other special taxes 

Law no. 296/2023 introduces a series of changes in the field of excise duties, such as: 

• Unharmonised excise duties have been introduced for: 
  • products containing tobacco, intended for inhalation without burning, with tariff classification NC 2404 11 00, including those contained in supplies delivered together with electronic cigarettes and other similar personal electric vaporizing devices under CN code 8543 40 00;
  • liquids with or without nicotine, intended for inhalation without burning, under tariff classification CN 2404 12 00, 2404 19 90, including those contained in supplies delivered together with electronic cigarettes and other similar personal electric vaporizing devices under CN code 8543 40 00; 
  • products for non-combustion inhalation containing tobacco substitutes, with or without nicotine under CN code 2404 12 00, 2404 19 10, including those contained in refills supplied with electronic cigarettes and other similar personal electric vaporizing devices under CN code 8543 40 00; 
  • non-alcoholic drinks with added sugar for which the total sugar level is between 5 g to 8 g/100ml; 
  • non-alcoholic drinks with added sugar for which the total sugar level is more than 8 g/100 ml. 

• The production, intra-Community purchase or import of non-harmonised excisable products is subject to prior notification (in the case of non-alcoholic beverages with added sugar) or authorisation (in the case of other products) to the competent customs authority.

• The excise duty level for alcohol, alcoholic beverages and processed tobacco increases from 1 January 2024.

• In the period 1 January 2024 to 31 December 2024 inclusive, for alcohol and alcoholic beverages, the excise duty level is not updated in line with the increase in consumer prices. 

• In the period 1 January 2024 to 31 March 2024 inclusive, the specific excise tax for cigarettes is RON 540.938 /1,000 cigarettes. 

• New contraventions are introduced in the field of excisable products (both harmonised and non-harmonised), and the amounts of contravention fines for non-compliance with the legislation in the field have been increased.

Title X¹ Special tax on immovable and movable assets of high value has been introduced

As of 1 January 2024: 

• individuals who on 31 December of the previous fiscal year owned / jointly owned residential buildings located in Romania will pay a tax of 0.3% on the difference between the taxable value of the building communicated by the local fiscal body through the taxation decision and the limit of RON 2.5 million if the taxable value of the building exceeds RON 2.5 million;

• Individuals and legal persons who own cars registered in Romania the individual purchase value exceeds RON 375,000 will pay a tax of 0.3% on the difference between the purchase value and the limit of RON 375,000. The tax is due over a period of five years.

The obligations of issuers transmitting invoices in the national system for electronic invoicing (RO e-Invoice) have been extended

As of 1 January 2024, economic operators – taxable persons established in Romania, regardless of whether they are registered for VAT purposes or not, and taxable persons not established in Romania but registered for VAT purposes – have the obligation to submit invoices issued for the supply of goods and the provision of taxable services in Romania, conducted in B2B relationships, in the RO e-Invoice system, regardless of whether or not the recipients are registered in the RO e-Invoice Register.

It is not mandatory to submit invoices issued for VAT-exempt operations within the meaning established in art. 294 para. (1) lit. a) and b) and para. (2) of the Fiscal Code.

Invoices issued for taxable operations in Romania to a public institution, as defined in the Administrative Code, must be sent through the RO e-Invoice system.

It is mandatory to send the invoices specified above to the beneficiaries, in the sense of art. 319 of the Fiscal Code, except in cases where both the supplier and the beneficiary are registered in the RO e-Invoice Register.

Invoices must be sent to the RO e-Invoice system within five working days as of the date of issuance or the deadline provided in the Fiscal Code for issuing the invoice.

For non-compliance with this provision, contravention fines will be applied depending on the taxpayer category of the issuer, as follows: 

• from RON 5,000 to RON 10,000 for large taxpayers; 

• from RON 2,500 RON to RON 5,000 for medium taxpayers; 

• from RON 1,000 RON to RON 2,500 for other legal entities and individuals.

In the period 1 January 2024 to 31 March 2024, no sanctions will be applied for non-compliance with the obligations to submit invoices in the RO e-Invoice system.

As of 1 July 2024, under amendments to the Fiscal Code, only invoices sent through the RO e-Invoice system will be considered invoices for the supply of goods and the provision of taxable services in Romania, conducted in B2B relationships between taxable persons established in Romania,. The use of electronic invoices is subject to acceptance by the beneficiary, with the exception of invoices sent through the RO e-Invoice system. 

The receipt and registration of invoices by the recipients – taxable persons established in Romania – other than through the RO e-Invoice system for B2B transactions is sanctioned with a fine equal to the amount of VAT entered in the respective invoice.

RO e-Seal 

Law no. 296/2023 also introduces a new national system, RO e-Seal, based on the use of electronic devices and an IT application that allows the competent authorities (such as the National Fiscal Administration Agency and the Romanian Customs Authority) to determine the potential points of diversion for the road transport of goods regardless of whether they are in transit or have as their final destination an economic operator on the national territory. 

Source: [Law no. 296/2023 regarding some fiscal-budgetary measures to ensure the financial sustainability of Romania in the long term, published in the Official Gazette no. 977 dated 27 October 2023]