Romania: The latest amendments to the tax legislation

04 April 2018 | newsletters

Recently, several amendments to the existing tax legislation have been published, as follows:

The Parliament limits the deductibility of losses from assigned receivables and increases the VAT registration threshold

Law no. 72/2018 regarding the approval of Government Ordinance no. 25/2017 for amending and supplementing Law 227/2015 on the Fiscal Code was published in Romania’s Official Gazette no. 260/23.03.2018. It introduces the following important changes:

  • The net loss representing the difference between the assignment price and the nominal value of assigned receivables is 30% tax deductible at the level of the assignor. For credit institutions, when the assigned receivables are covered fully or partially by adjustments for expected losses or when they had been transferred to off-balance sheet accounts prior to the assignment, tax will be due on 70% of the difference between the nominal value of the assigned receivables and the assignment price. This amount will be treated as deemed income for tax purposes.
  • As of 1 April 2018, the VAT registration threshold increases from lei 220,000 to lei 300,000. Law no 72/2018 also provides for the necessary transitory measures for the application of the new threshold.

The Government amends the reporting and payment system for income tax and social security contributions

The Emergency Ordinance no. 18/2018 regarding the approval of some fiscal-measures and for amending and supplementing various pieces of legislation was published in Romania’s Official Gazette no. 260/23.03.2018. We present below the main changes included in the Ordinance:

  • Income obtained from intellectual property rights were excluded from freelance activities and are now included in a distinct chapter.
  • The income tax for income obtained from intellectual property rights by individuals and the social contributions related to this income now have to be withheld by the income payer. Also, rules are provided for cases when an individual receives income from intellectual property rights from more than one income payer.
  • The individuals who obtain income from salaries and similar to salaries and retirees are exempted from paying the social security and healthcare contributions for income obtained from intellectual property rights.
  • No healthcare contribution is due for income obtained from intellectual property rights by heirs who exploit these rights, as well as for the remuneration representing the reserved royalty and the copyright levies for private copies.
  • The tax on the income obtained by individuals from remote or on-line gambling is to be withheld by the income payer at every transfer from the account on the gambling platform to the bank accounts of the respective individuals.
  • A Single return for declaring the income tax and social security contributions owed by individuals for different types of non-salary income is introduced.
  • As a transitional provision, for the income obtained in 2017 and for the estimated income to be obtained in 2018, the deadline for the Single Return is 15 July 2018. The tax authorities will only issue final tax assessments for the income tax and social security contributions due on income obtained in 2017. For the income obtained in 2018, the final amount of taxes and contributions due will be determined by the taxpayer through the Single Return which will be submitted by 15 March 2019.
  • A single deadline is introduced for the declaration and payment of the income tax and of the social security contributions due by individuals who obtain different types of non-salary income (e.g. from freelance activities, from investments, from intellectual property rights),  namely 15 March, of the year following the one in which the income was obtained. However, the income tax and the social security contributions can be paid in advance, anytime during the year. For the payment within a certain deadline, certain reductions will apply. These reductions will be communicated on a yearly basis.
  • For the full payment by 15 December 2018 of the estimated income tax and social security contributions due for 2018, a 5% reduction from the due amount will apply. Additionally, for electronically filing the Single Return by 15 July 2018, a supplemental reduction of 5% will  also apply.
  • The Single return can be corrected by the taxpayer on its own initiative, whenever the current situation does not correspond to the data previously submitted, by filling a rectifying return on the same form. The taxpayer can rectify the estimated income no later than the final payment due date, namely 15 March of the year following the one in which the income was obtained.
  • Income payers who are required to submit the relevant informative return for the beneficiaries of income subject to withholding tax have a new term of filling said return, namely by 31 January of the current year for the previous year. The former deadline was the last day of February from the current year for the previous year.

The (212) Form "Single Return regarding the income tax and social security contributions due by individuals" was published

The Order no. 888/2018 for approving the model, content, filling and management of the form (212) "Single return regarding the income tax and the social security contributions due by individuals" was published in the Romania’s Official Gazette no. 279/29.03.2018.

New tax changes brought by the Emergency Ordinance no. 25/2018

The Emergency Ordinance no. 25/2018 for amending and supplementing certain pieces of legislation, as well as for approving certain fiscal measures was published in Romania’s Official Gazette no. 291/30.03.2018. We list below some of the main amendments:

  • Micro-companies are allowed to apply the provisions of Title II – "Corporate income tax", if they fulfil some conditions regarding the value of their share capital (minimum lei 45,000) and the number of employees (minimum 2).
  • Micro-companies that grant sponsorships can deduct said sponsorship from the micro-company turnover tax up to 20% of the tax due in the quarter in which the expense is recorded. Unused tax credit may be carried forward over a period of 28 consecutive quarters.
  • Taxpayers who grant sponsorships and/or conclude patronage agreements or grant private scholarships are required to submit an informative return regarding the beneficiaries of the sponsorship/ patronage /private scholarships.
  • The share of income tax that can be distributed to  non-profit entities and houses of worship that are providers of social services accredited with at least one licensed social service is increased from 2% to 3.5%.
  • The income tax and social contributions due on income from sporting activities will now be withheld by income payers.
  • The VAT treatment for research & development and innovation activities is clarified.
  • The differentiated excise duty rate for diesel used as motor fuel by certain licensed EU carriers is updated.

Proof of payment for the special duty for cars, the tax for motor vehicle pollution/ motor vehicle emissions or the environmental stamp duty for motor vehicles no longer needs to be attached to the request for the refund of these amounts.

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Further reading:
Romania to introduce mandatory VAT split payment mechanism

Theodor Artenie

Managing Director Tax

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

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Anamaria Tocaci

Tax Manager

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

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