Government Emergency Ordinance no. 117/2010 amending and supplementing Law no. 571/2003 regarding the Fiscal Code and regulation of financial – tax measures provides for the following significant changes to the Tax Code:
1. Microenterprises income tax
A microenterprise is a Romanian legal entity that cumulatively meets at December 31 of the previous fiscal year the following conditions:
- obtained incomes, other than the ones from banking activities in the fields of insurance and reinsurance, capital market or in the field of gambling, consultancy and management;
- has from 1 to 9 employees, inclusively;
- obtained incomes which did not exceed the equivalent in RON of 100,000 Euro;
- the share capital is held by persons other than state and local authorities.
For the year 2011, the legal entities may opt to pay income tax on microenterprises, if on December 31, 2010 they cumulatively meet the conditions for exercising the above option, not being conditioned by the fact that they had previously paid income tax on microenterprises.
Microenterprises income tax rate is 3% .
Romanian legal entities paying income tax have to notify the
territorial fiscal authorities of their option for the payment of
microenterprises income tax until January 31st
2011, inclusively, of the year for which microenterprises income
tax is paid.
Calculation and payment of microenterprises income tax shall be made quarterly, until the 25th day, inclusively, of the month following the quarter for which the tax is calculated. The statement for the microenterprises income tax can be submitted until the payment date of the tax.
2. Corporate income tax
For the period January 1st - December 31st, 2011, the expenditure on fuel for road motor vehicles intended exclusively for the passengers transportation, with a maximum authorised weight not exceeding 3,500 kg and no more than 9 seats for passengers, including driver's seat, are not considered deductible expenses.
3. Withholding tax
Tax rate for dividends paid by a Romanian legal entity to a legal entity resident in an EU or EFTA member state has been increased from 10% to 16% (if they do not meet the conditions for exemption from the payment of this tax).
4. Value added tax
The right of tax deduction for the purchases made during the
procedure of enforcement by a taxable person from a taxpayer
declared inactive by order of the NAFA, or from a taxpayer in
temporary inactivity, registered in the Trade Registry, has been
granted by the amendments brought by the GEO no. 117.
The limitation of the right to deduct VAT on the purchase of road vehicles and the purchase of fuel are extended until December 31st, 2011.
In case of Intra-Community acquisitions of second-hand vehicles performed by persons registered for VAT purposes, for registration, the competent tax authorities will issue a certificate attesting the tax payment in Romania or a certificate from which will result that the tax is not due in Romania.
Taxable persons registered for VAT purposes with a turnover less than 35,000 Euro at the end of the fiscal year, calculated at the exchange rate from the date of accession in EU, will communicate to the tax authorities through written notification, until February 25th, inclusively, of the following year, the total amount of deliveries/services supply performed by persons registered and respectively unregistered for VAT purposes and the amount of the related tax.
Persons which are not registered for VAT purposes who have at the end of the calendar year a turnover of less than 35,000 Euro, calculated at the exchange rate from the date of accession in EU, excluding incomes from sale of passenger transportation tickets, will communicate through written notification to the tax authorities by February 25th, inclusively, of the following year, the total amount of deliveries/services supply performed by persons registered/unregistered for VAT purposes, the amount of the related tax and also the total amount and the related tax of the acquisitions from persons unregistered for VAT purposes.
Any taxable person registered for VAT purposes which does not
exceed during a calendar year the exemption threshold of 35,000
Euro can apply until January 20 of the following year for the
removal from the evidence of the persons registered for VAT
purposes in order to apply the special exemption regime.
The simplification measures will also apply for the transfer of certificates of greenhouse gases emission. Accordingly, for such transactions between persons registered for VAT purposes in Romania the beneficiaries will be obliged to pay VAT by applying the reverse charge mechanism.
The deadline for repayment of VAT amounts paid during the year 2009 in a Member State other than the one in which the taxable persons that require VAT reimbursement are established and registered for VAT purposes, is extended until March 31, 2011.
5. Income Tax
The equivalent of the coupons that represent value vouchers
which are given free of charge to individuals, according to the
legislation in force, represent taxable income.
Only the taxpayers that derive commercial income (acts of
commerce, supply of services, practice of a profession) will be
taxed, this excludes the activities that generate income from
freelance professions, and from intellectual property rights and
determining the annual net income is performed based on the income
norms from the place of activity performance.
There can also be a tax on income for the taxpayers who operate in an association without legal personality, the income norm being determined for each associate member.
In case a taxpayer carries out two or more activities that generate commercial revenues, the net income from these activities is established by summing the level of income norms for each activity.
The incomes achieved by an individual from an association with a legal entity who pays income tax on microenterprises are considered incomes from independent activities. The income earned by individuals is taxed at the rate of 3%, tax which is calculated, withheld, declared and paid to the state budget by the legal entity until the 25th date of the month following the quarter for which the income tax on microenterprises is calculated.
Taxpayers who derive income from independent activities referred to in Article 52 (intellectual property rights; sale of goods under consignment regime; activities carried out under agent, commission or commercial mandate contract; activities carried out under the contracts/civil agreements concluded under the Civil Code, activities of accounting and technical expertise, judicial and extrajudicial expertise), may opt for the establishment of income tax, as final income, at the rate of 16%. The option is exercised in writing by the close of each legal relationship/contract and is applicable to income achieved as a result of the activity that is carries out on its base.
Any income which the source of it has not been identified, will be taxed at the rate of 16%.
There had been an increase in the level of excise duties on energy products, as well as cigarettes, according to EU regulations.
The exemption from the payment of excise duties for cigarettes provided for scientific testing and product quality has been removed.
Also the excise duties for coffee and coffee products have been maintained for the year 2011.
For casinos, the ticket will be issued and paid at reception for
each person entering the casino, no matter if the person
participates in gambling or not, and for slot-machine gaming the
ticket will be collected only from the players. The ticket will be
valid for 24 hours.
Source: Official Gazette no. 891 dated December 30, 2010
Decision no. 1397/2010 of December 28th, 2010 on the model, content, submission and management of "Declaration on the payment obligations of social contributions, income tax and the nominal evidence of insured persons" (Unique statement form 112) which entered into force on January 1st, 2011.
Starting with the declarative obligations of January 2011, with reporting deadline February 25th, 2011, the employers or assimilated to employers will use a single form (112) on the payment obligations of social contributions, income tax and the nominal evidence of insured persons, form which will be transmitted only to the competent tax authority.
By exception, the form 112 can be submitted to the competent tax
authority on paper, signed and stamped, accompanied by the
statement in electronic format by electronic means, until July
The online submission requires the purchase of a qualified electronic certificate and enrollment with the tax authorities. After July 1st, the online submission becomes mandatory.
In the Form 112 information that was previously in the tax returns filed by employers, as well as statements regarding the nominal evidence of the insured, have been integrated, thus eliminating redundant information.
Source: Official Gazette no. 897 dated December 30, 2010
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.