Solidarity contribution to address the problem of high energy prices: GEO no. 186/2022

The takeaway 

Emergency Ordinance no. 186/2022 (EOG no. 186/2022), as adopted the Government of Romania, entered into force on 29 December 2022 for the implementation of Council Regulation (EU) 2022/1854, dated 6 October 2022, which imposes on member states the obligation to introduce a temporary solidarity contribution based on the surplus profits generated by companies in the member states and by permanent establishments carrying out activities in the sectors of crude oil, natural gas, coal and refineries.

In detail

According to GEO no. 186/2022, the companies obliged to pay the solidarity contribution are:

• companies paying corporate income tax, and
• companies paying microenterprise income tax

which:

• carry out activities in the sectors of crude oil, natural gas, coal and refineries with CAEN codes: 0610 − “Crude extraction”, 0620 − “Natural gas extraction”, 0510 − “Coal extraction”, 1910 − “Manufacture of coking products” and 1920 − “Manufacture of products obtained by oil refining”, and
• generate 75% or more of their turnover from those activities.

Companies paying profit tax and those paying microenterprise tax affiliated to the above-mentioned companies are also obliged to pay the solidarity contribution if at least 50% of their turnover for the year 2022 came from related-party relationships. For these purposes, an affiliated party is one which is defined in art. 7 point 26 of the Fiscal Code, regardless of the object of activity, and which does not carry out the activities provided for in the CAEN codes above.

Payers of profit or microenterprise tax that are part of a profit tax group calculate, owe and pay the solidarity contribution individually.

The solidarity contribution provided for by GEO no. 186/2022 is 60% (compared to the minimum threshold of 33% of the solidarity contribution provided for by Regulation (EU) 2022/1854) of the surplus profits.

Companies paying profit tax calculate the solidarity contribution based on the taxable profits for the year which exceed by more than 20% the average taxable profits related to the financial years from 2018−2021.

Calculation formula

Solidarity contribution = [2022/2023 taxable profit - (1.2 x average of 2018−2021 taxable profits)] x 60/100.

Companies paying microenterprise tax calculate the solidarity contribution based on the financial year accounting profits, including the microenterprise tax expenses, exceeding by more than 20% the average accounting profits related to the financial years in the period 2018−2021.

Calculation formula

Solidarity contribution = [accounting profit of the year 2022/2023 - (1.2 x average accounting profits for the period 2018-2021)] x 60/100.

For companies operating a modified tax year, with financial years different from the calendar year, the taxable profits / accounting losses included in the calculation of the average are those determined before the recovery of losses from previous years. Companies that did not exist during the period 2018−2021, in part or in full, consider only the taxable/accounting profits related to the years in which they did exist when calculating the average. 

The solidarity contribution is calculated, declared and paid annually by 25 June of the following year or by the twenty-fifth day of the sixth month of the closing of the modified tax year.

The model and content of the declaration regarding the solidarity contribution will be approved by order of the president of the National Fiscal Administration Agency within a maximum of 30 days as of the date of entry into force of GEO no. 186/2022.

The amounts collected from the solidarity contribution are paid into a separate account available in lei opened at the State Treasury units, coded with the taxpayer’s tax identification code, and are to be used in any of the following purposes:

• Support measures for final energy consumers, especially vulnerable households.
• Support measures to help reduce energy consumption (auctions, promoting investments in renewable resources and energy efficiency).
• Financial support measures to support enterprises in large energy-consuming industries.
• Financial support measures for the development of energy autonomy.
• Measures for the joint financing of measures aimed at reducing the negative effects of the energy crisis, including support for protecting employment, reskilling and upskilling the workforce or promoting investments in energy efficiency and renewable energy.

Source: [Government Emergency Ordinance no. 186/2022 regarding some measures to implement Council Regulation (EU) 2022/1854 of 6 October 2022 regarding an emergency intervention to address the problem of high energy prices, published in the Official Gazette no. 1270 dated 29 December 2022]