- The corporate income tax treatment of tax losses by taxpayers that cease to exist following a merger or reorganization
- The value added tax (VAT) liability of financing leasing arrangements
Also, new deduction rules for cars used for business purposes apply 1 July 2012.
Tax losses after a merger
The proposal would amend the treatment of tax losses of taxpayers that cease to exist following a merger or division. The tax losses would, in general, be recoverable by newly established taxpayers or by the surviving taxpayer that takes over the assets of the merged / absorbed / spin-off company.
Special rules would apply for a permanent establishment in Romania or for reorganizations involving companies located in the EU.
VAT changes for financial leasing arrangements
The draft legislation would repeal an article under which missing inventory qualifies as a supply of goods. This category also covers tangible property subject to canceled financial leasing agreements when the property is not returned by the lessee within the 30-day deadline from the date of cancellation of the agreement. Such goods are currently considered as missing stock from the point of view of the lessor, which is required to self-collect output VAT.
However, capital goods subject to such agreements still fall under a separate article of the tax law in relation to the adjustment of input VAT.
Read an August 2012 report [PDF 1 MB] prepared by the KPMG member firm in Romania: Financial Services - Proposed changes to corporate income tax and VAT.
Concerning company cars, effective 1 July 2012, a 50% deduction limit applies for:
- Fuel expenses for motorized vehicles that are exclusively used for transportation of people
- Expenses related to motorized road vehicles that are not exclusively used for business purposes
However, if a company car were to be used only for goods delivery by an agent or sales agent, then it would fall under the category “exceptions,” meaning the related expenses are fully deductible. In such instances, there is no longer an issue as to whether occasional use of the vehicle for personal purposes triggers a reconsideration of its tax treatment and a limitation of the deductibility of the expenses to 50%.
Read an August 2012 report, prepared by the KPMG member firm in Romania:
Company cars – what we can deduct after 1 July 2012 according to the Romanian legislation.