Fiscal Code Amendments

04/04/18

In brief

Law 72/2018 amending the Fiscal Code, regarding corporate income tax, personal income tax, social contributions and value added tax, has been published.

 

In detail

Corporate income tax

Net losses arising from assignment of receivables, calculated as the difference between the assignment price and value of the assigned receivables, are deductible up to 30%. This limit previously applied to expenses arising from assignment of receivables.

For a subsequent assignment by the assignee, the net losses are calculated by reference to the acquisition cost of the receivables, the cost of which is deducted from the new assignment price.

For receivables assigned by banks, partially or fully covered by provisions, or reflected in off-balance sheet accounts, the difference between the value of the assigned receivable and the assignment price is taxed as an item similar to revenues, up to a limit of 70%.

Personal income tax and social contributions

1.        Independent activities

In addition to voluntary health insurance premiums, medical services in the form of subscriptions, paid for the benefit of the taxpayer, up to a limit of EUR 400 / year for each person, are deductible expenses when calculating income tax on independent activities. The phrase “according to Law no. 95/2006 on Health Reform, republished” has been removed from article 68, point 5, letter h), which refers to the deductibility of voluntary health insurance expenses when calculating income tax on independent activities.  

Medical services in the form of subscription up to a limit of EUR 400 / year, paid for the benefit of the taxpayer, are included in the non-deductible expenses category when calculating income tax on independent activities.

2.       Income from wages

The phrase “according to Law no. 95/2006 on health reform, republished” in the articles referring to the tax treatment of voluntary health insurance and medical services, either paid by the employer or by the employee, has been eliminated, from the perspectives of income tax and of mandatory social contributions.

Value added tax

As of 1 April 2018, the VAT registration threshold for residents will be increased from EUR 65,000 to EUR 88,500. The measure is applicable until 31 December 2020. Transitory measures have been put in place for the period 1 January 2018 to 31 March 2018.

[Source: Law no. 72/2018 approving Government Ordinance no. 25/2017 amending and supplementing Law no. 227/2015 regarding the Fiscal code, published in the Official Gazette no. 260 dated 23 March 2018]
 

The takeaway

Corporate income tax

Net losses arising following assignment of receivables, as the difference between the assignment price and the value of the assigned receivable, are deductible up to 30%.

For banks, 70% of the difference between the value of the assigned receivable and the assignment price is taxed as an item similar to revenues, under certain conditions.

Personal income tax and social contributions

The amendments align the fiscal treatment of medical services in the form of subscription with that of voluntary health insurance premiums.

The phrase “according to Law no. 95/2006 on health reform, republished” in the articles referring to the tax treatment of voluntary health insurance and medical services has been eliminated.

Value added tax

As of 1 April 2018, the VAT registration threshold for residents will be increased from EUR 65,000 to EUR 88,500.

 

Contact us

Mihaela Mitroi

Partner, Tax Services, Romania

Tel: +40 21 225 3672

Ionuț Simion

Country Managing Partner, Romania

Tel: +40 21 225 3708

Daniel Anghel

Tax and Legal Services Leader, Romania

Tel: +40 21 225.3794

Diana Coroabă

Partner, Tax Services

Tel: +40 21 225 37 94

Ionuţ Sas

Partner, Tax Services, Romania

Tel: +40 21 225 3741

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