17 January 2012
A Government Ordinance amending the Fiscal Code was published on 30 December 2011.
The most important changes are as follows:
I. Profit tax
· Specific provisions are introduced for financial institutions that will apply the International Financial Reporting Standards (IFRS), regarding fiscal value, profit tax computation, adjustments for step-down in value, amortisation and fiscal treatment of deferred profit tax.
· Unrealised gains and losses from the valuation of shares and long-term bonds become taxable/deductible.
· Fuel expenses for vehicles weighing under 3,500 kg and with fewer than nine seats (including the driver’s seat), used exclusively for passenger transport, are now only 50% deductible for profit and income tax purposes.
· Rules relating to the deductibility of expenses for employee benefits – equity instruments, settled with cash or with shares – are clarified. Generally, such expenses are considered to be deductible expenses when the benefits are subject to income tax.
· Income from the cancellation of the reserve registered as a result of participation in kind in the capital of other legal entities is non-taxable.
· Beneficiaries that acquire goods and /or services from inactive taxpayers (while they are inactive) cannot deduct the expenses related to such acquisitions.
· For fixed assets subject to depreciation / intangible assets where components are replaced, the un-depreciated fiscal value is recalculated for the normal remaining useful life. Expenses representing the un-depreciated fiscal value of the replaced components are also deductible.
· Companies dissolved during the fiscal year through a liquidation process have to submit the annual statement and pay the profit tax before submitting the financial statements to the tax authorities.
Entry into force: 1 January 2012
I. Income tax
· Income obtained from the sale of goods on consignment or from activities based on commission or commercial mandates are no longer treated as income derived from independent activities subject to withholding tax.
Entry into force: 30 December 2011
· Taxpayers for which the net income is determined based on income quotas and which during the previous fiscal year obtained an annual net income exceeding the RON equivalent of EUR 100,000 have to switch to the regular income tax system. This category of taxpayer has to submit the statement regarding the estimated income / income quota by 31 January.
· Income obtained by home owners from the renting out of up to five rooms for tourism purposes is considered income from the disposal of property use. The tax due is determined based on income quotas. If the activity exceeds five rooms, the income obtained from renting out more than five rooms is treated as income from independent activities for which tax is determined in the regular system. The income tax is paid in two equal instalments, by 25 July and 25 November.
· Specific rules are introduced related to the taxation of income generated from the lease of personal agricultural property.
· The deadline for the anticipated payment of the tax on income from independent activities, except those for which the anticipated payments are withheld, and on income from granting the use of property and assets becomes the twenty-fifth day of the last month of each quarter instead of the fifteenth day.
Entry into force: 1 January 2012
II. Non-resident income tax
· The templates of the questionnaires used in determining individuals’ residence upon arrival in Romania / departure from Romania will be set by norms.
Entry into force: 1 January 2012
III. Social contributions
· The Fiscal code title regulating social contributions is restructured as follows:
Chapter I - Mandatory social contributions for individuals obtaining salary income, income related to salaries, pension income, as well as individuals under state protection / custody;
Chapter II - Mandatory social contributions for individuals obtaining income from independent activities, agricultural activities and associations without legal personality;
Chapter III - Health insurance contribution for individuals obtaining other types of income and for individuals that do not obtain any income.
Chapter I: Mandatory social contributions for individuals obtaining salary income, income related to salaries, pension income, as well as individuals under state protection / custody
· The social security contribution is now also due for company administrators’ remuneration and for amounts representing employee profit sharing.
· Clarifications are brought regarding benefits not included in the taxable base of the mandatory social contributions, with these benefits being specifically mentioned.
Entry into force: 1 January 2012
Chapter II: Mandatory social contributions for individuals obtaining income from independent activities, agricultural activities and associations without legal personality
§ The types of income presented in this chapter are subject to social security contributions and health insurance contributions.
§ Certain categories of individuals, already insured, do not pay social security contributions for these types of income.
§ The tax base and payment obligations are established based on the type of income, as follows:
o In the case of income for which the income payer is required to withhold the tax:
§ The taxable base for the social security contributions is the realised income;
§ The income payer is required to calculate, withhold and pay the contributions.
o For income not subject to withholding tax:
§ The taxable base for social security contributions is the income declared by submitting a form regarding the insured income;
§ The template of the form will be issued by The National Agency for Fiscal Administration together with the National Pension House;
§ Taxpayers are required to make advance payments for social contributions;
§ For health insurance contribution, the payments are set by the tax authorities through an assessment decision;
§ For social security contributions, the payment obligations are determined based on the declared income;
§ Contributions have to be paid quarterly by the twenty-fifth day of the last month of each quarter.
Entry into force: 1 July 2012
Chapter III - Health insurance contribution for individuals obtaining other types of income and for individuals that do not obtain any income
· Provisions of Law 95/2006 regulating health insurance contributions for certain types of income are taken over in the Fiscal Code.
· In addition, a payment obligation for health insurance contribution is introduced for income obtained from fiduciary agreements if no other income for which health contribution is due is obtained.
· For these types of income only the health insurance contribution is due.
Entry into force: 1 July 2012
The provisions of Government Ordinance no. 58/2010 regarding the taxation of professional income are repealed as of 1 July 2012, with the Fiscal Code provisions then applying instead for this type of income.
V. Value-added tax
The VAT treatment applicable to operations with road vehicles and fuel
· The VAT deduction right related to the acquisition of road vehicles used for passenger transport which meet certain characteristics and also to the acquisition of fuel used for such vehicles is limited to 50%. This provision applies also for the advances paid before 1 January 2012, if the delivery takes place after 1 January 2012.
· The sale of road vehicles for which the VAT deduction right related to their acquisition was subject to total limitation is made under VAT exemption regime.
· The use of vehicles subject to the 50% limitation of the VAT deduction right that are used for other purposes than economic activities or are made available in order to be used free of charge by other persons is not deemed as treated as a supply of services.
Entry into force: 1 January 2012
Clarifications regarding capital goods
· The following clarifications that were already provided by the norms were introduced directly in the fiscal code:
- capital goods subject to VAT adjustment represent fixed assets for which the normal useful life established for the fiscal depreciation is greater than five years;
- fixed assets leased, rented or subject to any other type of contract through which the goods are made available to another person, are deemed to be capital goods for the lessor, if the minimum limit of normal useful life is equal or greater than five years.
Entry into force: 1 January 2012
Provisions regarding VAT registration and cancellation of VAT registration
· Taxable persons not established nor VAT registered in Romania will be able to apply for VAT registration for import of goods, as well as for sales or rentals of immovable property (if they opt for taxation).
· Taxable persons registered for VAT purposes that during the preceding calendar year did not exceed the exemption threshold of EUR 35,000 may submit a request to be removed from the VAT registered taxpayer records between the first and tenth day of each month following the fiscal period applied (i.e. month or quarter).
· At the date of cancellation of VAT registration, taxable persons have the obligation to adjust input VAT related to the acquisitions performed until that date. No VAT adjustments should be made for goods / services acquired up to 30 September 2011 by taxable persons that submit a request during 2012 to be removed from the VAT registered persons record.
· Beneficiaries who purchase goods and /or services from taxpayers declared inactive by the tax authorities (while they are inactive) will not have the right to deduct the input VAT on those purchases, except for the purchases of goods performed during enforcement proceedings.
· The tax authorities may cancel ex officio a taxpayer’s VAT registration, if the taxpayer is in one of the following situations:
- it is declared inactive or it has entered into a temporary inactivity;
- administrators / shareholders have certain offences listed in the tax offence record;
- it did not submit any VAT returns during a semester;
- it did not report acquisitions or deliveries of goods / services in the VAT returns submitted during a semester.
· Taxpayers whose VAT registration code was cancelled ex officio by the tax authorities are not exonerated from the payment of VAT collected for operations performed after the date of cancellation of VAT code. These taxpayers have the obligation to submit by the twenty-fifth (inclusive) of the month following that in which such operations were performed.
· A special Registry will be established of taxable persons whose VAT registration according to article 153 was cancelled. This Registry can be accessed on ANAF’s website.
· As of 1 July 2012, beneficiaries who purchase goods and / or services from taxpayers whose VAT registrations are cancelled will not have the right to deduct the input VAT on those purchases made after these taxpayers were deregistered and listed in the Registry mentioned above, except for the purchases of goods performed during enforcement proceedings.
· Along with the VAT registration cancelation, the taxable person will also be removed from the Registry of intra-Community operators;
Entry into force: 1 January 2012
Other provisions
· The exception regarding payment of VAT in case of advances cashed-in for the payment of imports and of the VAT related to import, as well as in case of advances cashed-in for exempt or non-taxable operations, was eliminated.
· For transactions taxable in Romania between two non-resident companies, not established in Romania, the beneficiary will be the person liable to pay VAT, if only the latter is registered for VAT purposes in Romania (through the direct procedure or through fiscal representative).
· A clarification was brought as regards the registration in the Registry of intra-Community operators, namely the presentation of the judicial record will be necessary only in the case of associates that hold a minimum of 5% of the share capital of the company.
· The list of the goods for which the reverse charge mechanism is applicable was extended and includes among others: ferrous and non-ferrous scrap, waste and recyclable materials.
Entry into force: 1 January 2012
VI. Excises
· The level of the excise duties on diesel increased from 358 EUR / tonne to 374 EUR / tonne.
· The level of excise duties applicable for coffee has not changed.
Entry into force: 1 January 2012
· In the case of registered consignees the deadline for payment of the excise duties is the working day following that when the excisable products were received.
Entry into force: 1 April 2012
VII. Local taxes
· The tax on means of transport due for vehicles destined for commodity transport has been increased.
Entry into force: 1 January 2012
[Source: Official Gazette of Romania no. 938/30.12.2011.]
For more information, please contact Peter de Ruiter, Mihaela Mitroi, Ionut Simion, Daniel Anghel or Brian Arnold.
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