We list below the most important legislative changes it brings.
- The percentage for the additional deduction of 20% for eligible research and development expenses has been increased to 50%. Also, this incentive will be granted for research and development activities carried out in other EU and European Economic Area Member States.
- Additional provisions have been established in respect of the fiscal treatment of biological assets, investment property, as well as other assets recorded in the financial statements of taxpayers which apply International Financial Reporting Standards (IFRS);
- Deductibility of depreciation expenses incurred for vehicles with a maximum of 9 seats, including the driver’s seat has been limited to 1,500 lei/month. The fiscal depreciation based on the number of kilometres or functioning hours is no longer allowed for this type of vehicles.
- All taxable income and expenses incurred in this respect must be recorded in the Fiscal Register (previously, similar provisions have been included only in Norms to the Fiscal Code. The Ordinance has now incorporated these into the Fiscal Code with some modifications).
Personal income tax
- The taxable base has been broadened to include assignment allowances and other similar amounts, received by employees during delegation and secondment to another location, for business purposes, within Romania or abroad, which exceed 2.5 times the amount set by government decision for staff working in public institutions.
- Income from forestry and fisheries has been included in the taxable base and this will be taxed at 16% according to the rules applicable to income obtained from self-employment activities for which the annual net income is effectively determined, based on single entry bookkeeping.
- The definition of income from agricultural activities has been broadened to include that from breeding livestock, including the exploitation of animal products, in their natural state.
- Standard notional income has been established for the main agricultural activities and for the types of income for which no previous standard notional income had been established,.These activities will be taxed by applying the general taxation rules for self-employment activities for which the annual net income is effectively determined, based on single entry bookkeeping.
Social security contributions
- The tax base for individual social security contributions has been broadened to include assignment allowances and other similar amounts, received during delegation or secondment in another location within Romania or abroad for business purposes, which exceed 2.5 times the amount set by government decision for staff working in public institutions.
- The situations in which non-resident employers are liable to mandatory social security contributions for their employees who are carrying out work in Romania have been clarified.
- Income from forestry and fisheries has been included in the tax base for social security contributions.
Tax on micro-enterprises
- Starting 1 February 2013, the 3% tax on income of micro-enterprises becomes compulsory for Romanian legal entities with a turnover of maximum 65,000 EUR and which also fulfill the other conditions required to qualify as a micro-enterprises.
- The condition to have a maximum of 9 employees in order to qualify as a micro-enterprise has been eliminated.
- This taxation system is also mandatory for corporate income taxpayers which fulfill these conditions as at 31 December 2012, although transitional provisions have been introduced.
- Taxpayers with revenues of between 65,001 and 100,000 EUR during 2012 which have opted for this system will continue to be subject to tax on micro-enterprises in 2013;
- Newly established taxpayers are required to pay tax on micro-enterprises starting from the first year, provided that they meet all the criteria for qualifying as a micro-enteroprise.
Tax on income derived by non-residents
- Income from services rendered outside Romania, except international transport and ancillary services, have been included in the taxable base for withholding tax;
- 50% withholding tax will apply for dividends, interest, royalties, commissions, income from rendering services in or outside Romania as well as income from carrying out a liberal profession, if this income is paid to a non-resident from a state with which Romanian has not concluded a treaty for the exchange of information.
- Transactions involving granting rights over immovable goods, such as usufruct and right of superficies, against payment, over a certain period, have been specifically mentioned as falling within the operations which are VAT exempt without credit. The VAT chargeability for these transactions will occur at each date specified in the contract for performing the payment.
- The taxable base for supplies of goods / services performed between affiliates has changed to implement Art. 80 of Council Directive 2006/112/EC of 28 November 2006 on the common system of Value Added Tax. The taxable base is the market value of these operations (under certain conditions).
- The provisions relating to the taxable amount for exchanges and payment in kind have been removed.
- Taxable persons are required to adjust the VAT amount initially deducted for goods (including capital goods) found as missing or even stolen. The adjustments can be reversed if the alleged theft is confirmed by a definitive court decision.
- If the list of administrators / asociates holding at least 5% of the company’s capital undergoes changes, the taxable persons registered in the Registry of Intra-Community Operators are required to submit a criminal record check for the new administrators / associates within 30 days of the date of the changes. If this requirement is not met, the tax authorities have the right to remove the relevant taxable person from the Registry of Intra-Community Operators, by default.
- Special provisions have been introduced for situations in which taxable persons are registered into / removed from the Registry of Operators applying the VAT cash accounting system as a result of an error. These provisions are aimed at helping taxable persons and their clients avoid penalties generated by such errors.
- Additional excise duties of EUR 10/hl have been introduced for beer/beer mixed with non-alcoholic beverages mentioned in Art. 20610, for which the percentage of Plato from malt, malted cereals and/or unmalted is less than 30% of the total number of Plato degrees and respectively EUR 25/hl of fermented beverages other than beer and wine mentioned at art. 20612, where the total percentage of alcohol (100%) obtained from fermantation of fruits, fruit juices and concentrate fruit juices in less than 50%.
- For beer, the harmonized excise duty has increased from 0.748 to 0.8228 EUR/hl/1 Plato degree and for beer produced by small independent producers with an annual production capacity not exceeding 200.000 hl the excise duty has increased from 0.43 to 0.473 EUR/hl/1 Plato degree.
- Use of alcohol for other reasons than that for which the exemption has been granted is an offense subject to a fine ranging between 20,000 and 100,000 lei.
- The annual increase of the total excise duty level for cigarettes will take place starting from 1 April of each year until 2017 (as opposed to 1 July). According to the new excises duties schedule, the final increase will take place on 1 January 2018.
- Local tax authorities which register arrears as at 31 December 2012 are required to increase the level for local taxes for 2013 according to Government Decision no.1309/2012.
- Individuals who have already paid local taxes for 2013 and will pay by 30 September 2013 the potential differences as a result of the increase in local taxes, will benefit from the incentives for paying local taxes in advance.
Fiscal Procedure Code
- New provisions have been introduced in relation to fiscal audits of individuals subject to personal income tax:
- A return stating assets and liabilities as well as income must be submitted to the tax authorities, upon request.
- The tax authorities must finalize a tax audit no later than 6 months after the start date or 12 months if information is required from abroad.
Apart from the previously mentioned amendments which generally involve a broadening of the taxable base and steps to mitigate tax fraud, additional anti-abuse provisions have also been introduced (Art. 11 of the Fiscal Code).
The provisions of the Ordinance will be applicable starting 1 February 2013, except for the new levels of cigarettes excises (valid starting 1 April 2013) and for the provisions relating to local taxes (applicable 3 days from the publication of the Ordinance in the Official Journal of Romania).
According to a draft law currently awaiting approval by Parliament, the average gross salary used for the purpose of establishing the public social security budget for 2013 is 2,223 lei.
Government Decision no.22 / 2013, published in the Official Journal of Romania (no.52 / 2013) states that the minimum gross salary will increase to 750 lei starting 1 February 2012 and 800 lei starting 1 July 2013.