Government Emergency Ordinance No. 70/2020 on some fiscal measures, extension of deadlines, establishment of tax facilities and amendment of normative acts, entry into force on 14 May 2020 - fiscal measures

In brief

According to Government Emergency Ordinance No. 70/2020 (OUG 70/2020), the Romanian Government has adopted amendments to several normative acts. 

We present below details of the tax measures adopted by this order.

In detail

I.    Tax Code, Article 25, Title II Company tax to be completed as follows:

Expenditure resulting from assignments of government securities, bonds and other debt instruments which give the holder a contractual right to cash are deductible when calculating the tax result.

II.   Fiscal-budgetary measures

Supplies to legally constituted associations and foundations, carried out by 1 September 2020, of medicinal products, protective equipment, other medical devices or equipment and sanitary materials which may be used in the prevention, treatment and control of COVID-19 are exempt from value added tax (VAT) with the right to deduct. The goods subject to this exemption are listed in Annex 2 of OUG 70/2020.

Suppliers have to justify the VAT exemption with a statement of  own responsibility from the beneficiary association / foundation concerning the destination of the goods.

Non-compliance by associations and foundations purchasing goods exempt from value added tax with the requirement to provide a statement regarding their destination constitutes an infringement and is punishable by a fine equal to the amount of VAT for which the exemption was granted when purchasing the goods. This provision enters into force on 24 May 2020, i.e. ten days after OUG 70/2020 was published. 

For taxable income obtained from Romania by residents and non-residents from the organisation of cultural, artistic, sporting, scientific, educational or entertainment events, or from actual participation in such activities, rescheduled until the end of 2021 as a result of the spread of the SARS-CoV-2 coronavirus, the tax is to be calculated and withheld at the time of payment of the income, then declared and paid to the state budget by the twenty-fifth of the month following that in which the event took place. The certificate of attestation of the tax paid in Romania is issued to the non-resident after payment of the tax to the state budget.

In order to benefit from the suspension of the repayment of rates, interest and commissions under OUG 37/2020 on facilities for loans granted, debtors have to submit to creditors a request to this effect, in electronic format or by e-mail, to the contact details specified in the credit agreement no later than 15 June 2020.

Authorised individuals, individual undertakings and family undertakings, people practising liberal professions and professions governed by special laws have to meet all the following conditions in order to benefit from the facilities provided for above:

• Interrupt the activity in whole or in part during the state of emergency;
• Hold an emergency certificate issued by the Ministry of Economy, Energy and Business Environment, which establishes, on the basis of debtors' declarations of own responsibility, a reduction in income or receipts of at least 25% in March, April or May 2020 from the average of January and February 2020, or the partial or total interruption of activity during the period of emergency.

The Takaway

Expenditure resulting from assignments of government securities, bonds and other debt instruments which give the holder the right to cash are deductible for tax result calculations. 

Supplies to legally constituted associations and foundations, carried out by 1 September 2020, of medicinal products, protective equipment, other medical devices or equipment and sanitary materials which may be used in the prevention, treatment and control of COVID-19 are exempt from value added tax (VAT) with the right to deduct. The goods subject to this exemption are listed in Annex 2 of OUG 70/2020.

For taxable income obtained from Romania by residents and non-residents from the organisation of rescheduled events until the end of 2021, as a result of the spread of COVID-19, the tax is calculated and withheld at the time of payment, then declared and paid to the state budget by the twenty-fifth of the month following that in which the event took place.

Borrowers have to submit to creditors a request for suspension of repayment of rates, interest and commissions, in electronic format or by e-mail, by 15 June 2020 if they meet all the following conditions: i) interrupt the activity in whole or in part during the period of emergency; (ii) hold an emergency certificate issued by the Ministry of Economy, Energy and Business Environment which notes a decrease in revenues or receipts of at least 25% in March, April or May 2020 from the average of January and February 2020, or the partial or total interruption of activity during the state of emergency.