Government Decision no. 864/2020 for amending and supplementing the Methodological Norms for the application of the Fiscal Code

In brief

The Government of Romania has adopted a series of fiscal measures to amend and supplement the Norms for the application of the Fiscal Code in corporate tax, VAT and excise duty matters. We present below the various changes and additions.

In detail

1. Income tax

The example provided for calculating deductible expenses for tax purposes in order to comply with the compensation obligations provided by GEO no. 189/2002 on clearing operations related to procurement contracts for defence, public order and national security needs, has been amended and supplemented.

2. Value Added Tax

The new provisions clarify from a tax perspective certain operations carried out by economic operators in the fields of financial-banking, real estate and HoReCa services regarding the right to adjust VAT, but some VAT procedural aspects.

For individuals who carry out two real-estate transactions during a calendar year, be they land or construction deliveries, the calculation of the ceiling for registration for VAT purposes takes into account the second real-estate transaction, regardless of whether it is a taxable or VAT-exempt transaction.

From the VAT perspective, goods granted free of charge for the purposes of economic activity development or in order to comply with the compensation obligations provided by GEO no. 189/2002 (e.g. protective equipment and work uniforms, for the equivalent value not borne by employees, hygienic-sanitary materials in order to prevent diseases) do not constitute a delivery of goods for which it is necessary to self-collect VAT.

Transfers of food intended for human consumption during the last ten days before the expiry date will not be considered deliveries of goods.

Clarifications have been introduced regarding single- and multi-purpose vouchers. Specifically, when the information required for calculating the related VAT is not known, vouchers (e.g. meal vouchers, holiday vouchers and gift vouchers) are to be considered multi-purpose vouchers. Moreover, vouchers only offering the holder a discount from the purchase price are not considered to be vouchers.

In order to align the Fiscal Code amendments regarding tax base adjustments in situations where the value of goods delivered or services rendered cannot be collected due to beneficiary bankruptcy, the non-exigible tax related to such deliveries will be cancelled for those applying VAT on collection.

The following amendments have been introduced regarding the application of reduced VAT rates:

• The 9% VAT rate applies only to irrigation water supplies transported through main or secondary irrigation infrastructures. The supply of drinking water has been removed from the article;

• The buyer's self-declaration criterion has been eliminated for the delivery of dwellings with a usable area of up to 120m2 and not exceeding a value of RON 450,000 per dwelling for which the reduced rate of 5% VAT is applied;

• The methodological norms have been aligned with the Fiscal Code provisions regarding the application of the reduced rate of 5% for accommodation, restaurant and catering services.

With regard to the scope of duty-free transactions, credit management and / or credit guarantee operations are carried out by one of the persons granting the syndicated loan and who is designated by the other participants in the syndicated credit agreement for the administration credit or the administration of credit guarantees, as well as the administration of occupational pension funds, in addition to privately managed pension funds and voluntary pension funds.

A new provision has been introduced regarding a person’s right to make a positive adjustment to the deductible tax on capital goods  following re-registration for VAT purposes. Such adjustments can be for one fifth or one twentieth of the tax initially deducted for each year of the period during which the VAT code was cancelled and in which the capital goods were used to carry out operations with the deduction right.

With regard to Title VII, the new methodological rules stipulate that the amended Annex 5 details the criteria for assessing tax risk in the procedure for assessing the intention and ability to carry out economic activities within the scope of VAT for entities requesting VAT registration which have previously had their registration cancelled.

3. Excise duties and other special taxes

Economic operators, other than those established under the Companies Law no. 31/1990, applying for authorised warehousekeeper, registered consignee, registered consignor, authorised importer or end-user status have to attach to their applications the relevant authorisations provided for each category, instead of the ascertaining certificate issued by the ONRC showing the value of the share capital, the documents provided for by the specific legislation by which they were established from which to result the value of the patrimony of affectation and/or others similar, as provided in the specific legislation.

The value of the reduced guarantee for authorised warehousekeepers may not be less than the minimum limit established according to point 8 par. (9) or para. (11) as appropriate.

A place can be authorised as a fiscal warehouse for the production or storage of energy products only if it is equipped with separate standardised tanks for each product, calibrated by the Romanian Bureau of Legal Metrology or by a metrology laboratory approved by it.

When submitting the end-user application, the applicant must also submit proof that it does not have outstanding fiscal obligations to the general consolidated budget of the nature administered by ANAF.

The exemption from excise duty on energy products delivered for use as aviation fuel also applies if the aviation fuel shipped from a tax warehouse is received by the person holding a certificate of authorisation as an air operator (or holding the right to use, in any form, an aircraft for which there is an aviation authorisation certificate) in feeders intended for the supply of aircraft owned by it or in tanks held in any form thereof, for the subsequent supply of the aircraft it owns.

In their monthly statements submitted online to the competent customs authority, registered consignee, the authorised importer the tax representative in the distance sales of excisable products have to declare the quantities of excisable products released. ,

[GD no. 864/2020 for the amendment and completion of the Methodological Norms for the application of the Fiscal Code, published in the Official Gazette no. 956 of 16 October  2020]

The takeaway

The expenses incurred in order to comply with the compensation obligations provided by GEO no. 189/2002 on compensatory operations related to procurement contracts for defence, public order and national security needs, as amended and supplemented, are deductible when calculating profit tax. 

Important clarifications have been provided for a wide category of taxpayers regarding the circumstances in which they have to register for VAT purposes for non-recurring taxable transactions, the right to a positive adjustment of deducted tax, goods granted free of charge and the widening of the scope of tax-exempt transactions.

When applying for authorised warehousekeeper, registered consignee, registered consignor, authorised importer or end-user status, economic operators, other than those established under Companies Law no. 31/1990, have to attach to the application the documents provided by the specific legislation attesting to their establishment. Such documents include: the exemption from excise duty on energy products delivered for use as aviation fuel also applies where the aviation fuel shipped from a tax warehouse is received by the person holding a certificate of authorisation as an air operator; - the registered consignee, the authorised importer and the tax representative in the distance sales of excisable products have to include in their monthly statements submitted online to the competent customs authority a declaration of the quantities of excisable products released.