Main legislative changes introduced by GEO no. 31/2019 implementing tax incentives as well as amending and supplementing the Fiscal Code

In brief

Government Emergency Ordinance (GEO) no. 31/2019, regarding the implementation of tax incentives as well as amending and supplementing the Fiscal Code, was published and entered into force on 23 May 2019.

In detail

Amendment of the health insurance contribution (HIC) payment deadline and the related anticipated payment deadline for liabilities related to the period 2014 - 2017, in certain situations

The Ordinance extends the payment deadline for liabilities established through annual assessments, issued and communicated by the competent tax authorities between 15 March 2019 and 23 May 2019 (the date GEO 31/2019 entered into force), including HIC due by individuals, for the period 2014 - 2017. GEO 31/2019 provides a final payment deadline of 120 days as of 23 May 2019. If the HIC is paid within 60 days as of the entry into force, a 10% discount is granted, deducted directly from the amounts due.
The payment deadline for such liabilities established through annual assessments, issued and communicated by the competent tax authorities after 23 May 2019 is 120 days as of the date of communication. If the HIC is paid within 60 days, a 10% discount is granted, deducted directly from the amounts due.
A Minister of Public Finance Order will approve the procedure for applying these provisions. It should be issued by 21 June 2019, i.e. within 30 days as of GEO 31/2019’s entry into force.

Cancellation of HIC and related fiscal obligations, in certain situations

The Ordinance also provides for the cancellation, in certain situations, of HIC and related fiscal obligations, as established through annual assessment, issued and communicated to individuals. Such situations are where the monthly or annual base, as appropriate, for calculating HIC, for the period 1 July 2015 - 31 December 2017, was established at /rounded to the level of the minimum national gross salary, or at the value of twelve national minimum gross salaries. For individuals who, between 1 July 2015 - 31 December 2017, did not obtain income or obtained less income from the categories provided by the tax legislation than the HIC monthly calculation base and were issued tax authority tax assessments for HIC due, such assessments are cancelled.
Furthermore, for the same period, the tax authority will no longer issue such assessments relating to the imposition of HIC.
The competent tax authority will cancel the above-mentioned fiscal liabilities through an additional assessment issued for that purpose.
A Minister of Public Finance Order will approve the procedure for applying these provisions. The Order should be issued by 21 June 2019, i.e. within 30 days as of the date GEO 31/2019 entered into force.

Reduction of VAT rate from 9% to 5% for high-quality food products

Effective as of 1 June 2019, a reduced VAT rate of 5% applies for the supply of high-quality food products, i.e. products sourced from mountain areas, organic and traditional products, certified by the Ministry of Agriculture and Rural Development (MARD).
With the exception of supplies to final consumers, the supply of high-quality food products has to be accompanied by a copy of the recognition / attestation / certification document issued by the competent authorities.

[Source: Government Emergency Ordinance no. 31/2019 regarding the implementation of tax incentives as well as amending and completing the Law no. 227/2015, published in the Official Gazette no. 403/23.05.2019]

The takeaway

The main measures implemented by GEO 31/2019 are:

The final payment deadline has been amended for covering HIC and of the anticipated payment deadline for this contribution, in the case of assessments issued starting 15 March 2019, for the purpose of establishing HIC related to the period 2014 - 2017
For individuals who, between 1 July 2015 - 31 December 2017, did not obtain income or obtained less income from the categories provided by the tax legislation than the HIC monthly calculation base and were issued tax authority tax assessments for HIC due and related fiscal obligations, such assessments are cancelled.
The VAT rate has been reduced from 9% to 5% for supply of high-quality food products, i.e. products sourced from mountain areas, organic and traditional products, certified by MARD. The extent to which the differentiated VAT reduced rates for food products may breach the neutrality of VAT should be analysed. The conditions for applying the 5% reduced rate in the context of the specific regulatory requirements for authorisation should also be assessed.

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