Romania: Amendments to the Implementing Instructions for applying the Fiscal Code

30 May 2018 | newsletters

We list below the main amendments included in the Government Decision no. 354/2018 amending and supplementing the Implementing Instructions for applying Law 227/2015 regarding the Fiscal Code.

Corporate income tax

  • Clarifications are brought as regards the tax treatment applied to expenses with receivables assigned between 1 January 2018 - 26 March 2018, while art. 25 par. (3) let. n) was in force. For the provisions currently in force, no instructions have been introduced;
  • The excess indebtedness cost is explained and the newly introduced rule applicable starting with 1 January 2018 regarding the limitation of the interest expenses and other economically equivalent costs is exemplified.

The tax on micro-company income

  • The possibility of micro-companies to opt for applying the provisions of Title II – "Corporate in-come tax", if they fulfil two cumulative conditions regarding the value of their share capital (minimum RON 45,000) and the number of their employees (minimum 2), is clarified by the Implementing Instructions;
  • Along with the individual labour contracts, irrespective of whether these are active or suspended, individual labour conventions concluded as per the special laws are taken into consideration when establishing the number of employees for which the 1% income tax rate is applied.

Income tax

  • The Implementing Instructions clarify the manner in which the tax on income obtained from sporting activities is determined;
  • Clarifications are introduced regarding the option of individuals obtaining income from freelance activities to determine their annual net income according to their accounting data;
  • GD 354/2018 clarifies the manner of determining the income tax due by individuals obtaining in-come both from R&D activities, exempt from income tax, and from other taxable activities;
  • A process is presented whereby individuals can redirect an amount equal to 2% or 3.5% of their income tax, for supporting non-profit organisations, religious organisations or provide private scholarships;
  • The calculation, declaration and payment of the tax due on income from agricultural activities is exemplified;
  • Examples are given for establishing the taxable annual net income;
  • Clarifications are introduced on the submission of the single return regarding the income tax and social security contributions due by individuals and examples are given for establishing the de-duction granted for the early payment of the income tax;
  • Examples are given on how to apply the tax credit for income obtained by Romanian residents from countries with which Romania has concluded a double tax treaty.

Social security contributions

  • Clarifications and examples are introduced for determining the social security contribution for 2018, by individuals who obtain income from freelance activities and intellectual property rights, over the threshold of 12 minimum national gross wages;
  • Clarifications and examples are introduced for determining the social health contribution due for 2018, by individuals obtaining income from freelance activities;
  • A new chapter is introduced for the work insurance contribution, clarifying that this contribution also applies to employers which are not established or which do not have their domicile or residence in Romania, if their employees are subject to the Romanian social security system. 

Value added tax

  • GD 354/2018 clarifies the application of the recently introduced provision regarding the exclusion of R&D activities from the scope of VAT as long as the results of these activities are not transferred to another taxpayer for a consideration;
  • It is clarified that no taxable supply of services, from a VAT perspective, is made by the holders of reproduction rights to users of said rights (producers and importers of blank media and of re-cording and reproduction devices) and that the collection of fees by the organisations collectively managing copyright and related rights is not a VAT taxable transaction.   

Excise duties

  • The formula for complete denaturing of ethylic alcohol per hectolitre of pure alcohol is updated;
  • The methodology and conditions are established for granting the excise tax refund for heated tobacco products subject to non-harmonized excise duties and manufactured in Romanian tax warehouses, which are subsequently supplied to EU or non-EU countries.

Local taxes

  • It is clarified that rental income/expenses as well as income/expenses resulting from any transfer of the administration/use right, are not considered income and expenses from agricultural activities, for the purpose of computing the land tax according to the calculation rules applicable to a plot located outside the limits of the urban area by legal entities holding land in urban areas, registered in the agricultural register in a different category of use than "land with buildings".

Decision no. 354/2018 was published in the Official Gazette of Romania no. 442/25.05.2018.

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Further reading:
Romania: The latest amendments to the tax legislation
Romania: The amendments to the Fiscal Code in force as of 1 January 2018

Theodor Artenie

Managing Director Tax

T: +40 21 319 67 90
t.artenie@schoenherr.eu

Linkedin

Anamaria Tocaci

Tax Manager

T: +40 2 131 96 790
a.tocaci@schoenherr.eu

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